All Forum Posts by: Lawrence Potts

Lawrence Potts has started 8 posts and replied 444 times.

Hi everyone,

I have never purchased a small multifamily home ( to be honest ever purchased a house either) im 25 and want to get into real estate to be financially free. i Decided i want to use my first real estate purchase on small Multifamily homes and house hack in them. The problem is there is not a lot of inventory ( small multifamily homes) in my area. im looking for advice on what measures i should take to take the leap if i don't have anything t work with.

Thanks

I agree with @Account Closed, getting pre-approved is the best first move to make. That way if something does come up on the market, you can make a quick and strong offer. I'd try to find a lender that also invests in real estate that can help you go over your goals and figure out the best strategy with your financial situation. Get your financial life in order and go make it happen! Let me know if you need help getting connected to a lender. Hope that helps!

1 Vote

Baltimore, Maryland

Quote from @Yoffi Storch:

Hello everyone,

I've been spending a lot of time on Biggerpockets and listening to as many real estate podcasts as possible everyday.

I'm an 18-year-old aspiring real estate investor, I've been working for a little over a year now at a real estate office learning everything I can from the people around me.

I'm currently looking for my first house hack, and because of my age, I am open to move to whichever state has the best landlord friendly laws and highest cash flow/appreciation.

My criteria is triplex/quadplex and up to $700k

What markets can you guys recommend. Any feedback or advice is greatly appreciated.

Thank you in advance for your help!

One of the best part of house hacking is that you can make it work in almost any market. So why not take advantage of that and move where you want? It completely depends on what goals, risk tolerance, and what you want real estate to do for you.

If you're looking for a new market, I'd consider the long term: is it an area that is showing growth (job projection growth, new industries, large employers moving in such as Amazon, Target, Tesla, etc.). Run your numbers as if you were renting out every unit. Would you rather cashflow well on paper? Would you rather sacrifice potential cashflow to appreciate over time and use that to buy more real estate?

I'd get connected to a lender that knows what you're trying to accomplish. Because you're going to be a first time home buyer, you can utilize a lot of amazing low-down payment options. You'll need to use FHA on owner-occupying a multifamily 2-4 units and anything above 3 units will need to pass the self-sufficiency test. But you'll need to go over those details with your lender. Hope that helps! Let me know if you need me to connect you to a lender.

0 Votes

Quote from @Vladimir Amazan:

Hello fellow investors, anyone in the community specialize in house hacking small multi family properties?
I am going to house hack a triplex or a quadruplex in Orlando, fl? Possibly San Antonio, TX as well, I don’t mind relocating.
I am working with an agent in the Orlando market and I'm already pre-approved for an FHA loan.
My agent mentioned 3 to 4 units inventory are extremely limited, that’s why I want to also be looking out of state (San Antonio) for more opportunities.
Any referrals for good agents/brokers and LP in those areas?
Any insight would be greatly appreciated.
Working to acquire my first deal in the next coming months

Thank you for taking the time to read this!
Good luck on your own pursuit!

Make sure your lender understands what you're trying to accomplish. Using FHA on anything over 3-4 units will need to pass a "self-sufficiency test". If your lender doesn't know what that means, find another lender. You can find a great lender here, I recommend @Grant Schroeder, he can at least get you connected to someone that is licensed in the state you're wanting to move to.

This is a great strategy! Best of luck for you! Let us know what you're able to find and how it works out for you.

1 Vote

Orlando, Florida

Quote from @Leanna Nixon:

Hi all! We are hoping to put 10% down on a ~$500k-$700k house in Sacramento. We want to live there for a year or two and make some upgrades while living there. Also looking for a home that either already has an ADU or a lot big enough to add one. The plan would be to use the ADU as an office for my hubs while we live then then once we move out to rent the ADU and home separately as long or midterm rentals. Does anyone have any experience doing this in Sacramento and if so have any tips for us? Thanks.

@Daniel Bolduc would have some insight in your specific location!

I'm house hacking my 4plex and have one rental as a midterm and 2 as long term. The difference between the two is significant: operationally the midterm is much more work to manage and takes more work upfront. However, you make WAY more doing midterm. The more work you do up front for midterm, the better off your tenancy will be (professional cleaning between vacancies, good listing pictures, not going cheap on appliances and amenities, etc).

Hope that helps! Best comparison I can give is to treat operation as a short term without the amount of turnaround. Best of luck!

0 Votes

Sacramento, California

Quote from @Jeulissa Gonzales:

Anyone here can tell me what are some common challenges one may face when starting a house hacking or coliving property, and how can they be overcome? Thank you!

Boundaries! Different lifestyles cramped inside a single family home sharing common spaces like kitchens and bathrooms can become difficult. Having a very detailed lease agreement catered specifically toward renting by the bedroom and over common/shared spaces is going to be key in your success. Go over the rules before signing below the dotted line and make sure all expectations are laid out.

I can't remember what podcast episode it is, but there was an episode on Biggerpockets about house hacking by the bedroom and there were some great pointers on there about labeling in refrigerators, etc. All realyl good information that will help you out!

I'd say the biggest one is to make sure you properly record your rent. I'd use apartments.com. It's free, you can create an account for your tenants and they can pay direct out of their bank account and it'll keep track of all your payments come tax time.

Hope that helps!

0 Votes

Quote from @Colby Zeller:

Hello bigger pockets community, I plan on buying my first property after I graduate college at the end of 2023. I have a-lot of questions still but for now i'll narrow it down. I have been worried about how taxes will work once I own a property, Filing for taxes now just for my w-2 job is hard enough, so I can only imagine the difficulties I will have when it comes to a property as well. I know I can hire a Cpa or book keeper to help me out, but I don't know if that will be the right decision until tax season rolls around. Any advice would be greatly appreciated thanks !

You can definitely use any spreadsheet to manage expenses for your rental property! I'd encourage to higher a CPA because they can help you go over depreciation rates, etc. But with a W2, it shouldn't be too difficult at all. If you are having difficulty, I'd hire a CPA. It'll cost anywhere from $300-500 depending but it's well worth it.
Hope this helps!

0 Votes

Quote from @Ashwin C.:

I recently purchased my first property (turnkey) using a conventional mortgage. After purchasing it, I realized that saving up for the down payment (25%) every year is going to be a really slow way to grow my portfolio but I see many investors buy multiple properties a year. How do you do it? How do you fund the down payment?
I understand that the BRRR method is one-way to cycle money and fund future projects but what are the other methods that people use?

There are some products out there that offer lower down payment options. Sometimes you are able to do unconventional financing options as well such as creative financing solutions. You can use private money, hard money, you can leverage your IRA or 401K, borrowing against your equity with a HELOC or Home Equity Loan, you can House Hack, etc., multiple ways to gain properties! Hope that helps!

3 Votes

Quote from @Troy Walling:

I’m moving to Eugene Oregon next year around May for a job. I’m also interested in beginning my rental property journey there, but am afraid of high prices. Any advice for finding great deals or creative investment strategies to make investing in my new soon to be local area possible?

There are tertiary markets within our tertiary market of Eugene and the surrounding Willamette Valley that you can get into with lower prices and high demands for rentals. I guess it really depends on your strategy, risk tolerance, and goals. I highly recommend that you learn these markets or leverage someone that has a good understanding of these unique areas. I'm not anticipating any drops in prices in housing anytime soon, so if you have the means to make moves, waiting is not the best ROI or time. You could house hack if you are worried about capital expenditure for acquisition but that also comes with smaller inventory (multifamily or homes with ADU's) or sacrificing of current lifestyle (rent by the room).

0 Votes

Eugene, Oregon

Quote from @AJ Wong:

If I was a betting man my money would be on Eugene and the I-5 corridor of Oregon becoming the new hot spot for the Pacific Northwest.

I have seen first hand the explosion of growth and missed a few opportunities in the Friendly Area of Eugene in the past 5 years. Notably that in that area particularly there are larger or quality homes often on very large lots (.25 acres of larger) within walking distance to coffee, markets and a community that is well...friendly.

It reminds me most of visiting Boulder in 2015 and saying to myself, 'This place is going to blow up...'

Fast forward nearly 10 years later and I get the same impression with areas of Eugene, Corvallis and Salem.

The reality is that affordable homes in the Pacific Northwest are becoming increasingly unaffordable. Younger investors and generations are looking for an active lifestyle and few areas can compete with the outdoor amenities and facilities of Eugene and the Willamette Valley. It is very centrally located, incredibly accessible (Check out Avelo airlines) I recently took a flight from LA (Burbank) to Eugene direct, non-stop, $100 round trip.

Average home prices have skyrocketed but in my humble opinion there is still considerable value. SFR in prime areas with potential for ADU's or other expansion can still be found in the $350k-400k range. Multi unit properties can still be acquired in the $150-200k/door range and rents are rising.

The University of Oregon has committed hundreds of millions to the future and the 'downtown' has seen recently improvements and investment by national hotels and a new Nike store.

A quick drive around will show you things are happening and the official statistics show tremendous growth with very little developable land to accommodate the population influx. So much so that the State of Oregon has essentially rubber stamped ADU's in cities of sizable populations and the city of Eugene even offers 'pre approved' ADU designs for permitting and construction.

I'm not saying that Eugene offers the same Boulder or Seattle suburb, but the properties are eerily similar for a fraction of the current price points. My sister lives in Bothell and purchased a home 5-6 years ago for roughly $500k, a client made an offer on a beautiful Eugene property last week in the same price range that was superior in every conceivable metric. Her home is likely worth $750-850k present day, I could easily envision this Eugene property being equivalent in value one day.

I am currently working with no less than five buyers from out of state seeking to relocate or invest in Eugene or just beyond.

Affordable homes are seeing multiple offers within days and in comparison to the areas buyers are migrating from (Los Angeles, San Francisco and Seattle) there is a lot of growth potential and value.

I was surprised to learn that the average home price in Boulder is now nearly $1M!? (Boy did I miss that boat..lol)

The average sales price in Eugene is roughly $485k..

Very insightful! Thank you for sharing this.

Most counties in the area are struggling to supply the high housing demands for renters and buyers. We cannot build fast enough. Even in our hyper localized markets, we are seeing prices forcing marginal buyers into the outskirts of main cities. Stayton has grown significantly in the last 5 years. Lebanon has nearly doubled in the last few years. I have buyers that work in Wilsonville that are wanting to buy in Salem and are willing to commute an hour each way for work because housing prices are half that from Wilsonville to Salem.

We've seen all local counties adopt new zoning restructuring to allow SFR's to permit ADU's. Think about it....the city and county decided that anyone can build an ADU in their backyard and become a landlord. That's how short of supply we are. Anything below $400k in Corvallis is seeing MULTIPLE offers within the first week of listing. We are down 40% in inventory than we were last year at this time.

I'm thinking that communal living will become more common: people renting out bedrooms to strangers, ADU's will start becoming a norm, and any form of house hacking is going to be necessary to experience homeownership. As long as we continue to see downward inventory, we will be seeing housing prices move higher and higher. I also believe that renting will be the new normal standard of life as well: forever renters will be the new exception to the American Dream. We may see more government funded housing as well if wages cannot exponentially grow with rent increases and housing prices. In any case, I still believe that buying now is the best financial choice, even with rates sitting where they are.

Thank you again for sharing!

4 Votes

Eugene, Oregon

Quote from @Leah Mohtes-Chan:

Hello. I’m wondering what advice people have on ways to get started in real estate investing when house hacking is not an option? My husband and I had high priority on buying our dream primary residence and now that we have that, we’re looking at other ways to invest our money with the goal of making retirement more realistic. Currently we have about 60k saved up. We’re starting our research and diving into all the bigger pocket resources, but I’m wondering if people have suggestions for what to focus on as we explore options other than house hacking, or if that’s even feasible. Thanks!

There are a lot of options outside of house hacking. House hacking is great because of the low down payment options. Most traditional lending requires at least 25% down. @Grant Schroeder and his team with academy have a 10% down product that I’ve helped use with some investors.

There is also the syndication route. It’s more hands off depending on the group and the deal. But it tends to have less risk and less reward. Private lending is the same, less hands in the pot but risk is placed in the person you are investing into.

Hope that helps!

2 Votes

Spokane, Washington

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All Forum Posts by: Lawrence Potts

Lawrence Potts has started 8 posts and replied 444 times.

Post: Minimal small multifamily homes

Post: Best market to house hack in?

Post: Residential real estate

Post: Sac House Hack - MidTerm Rental

Post: What House Hacking Common Problems Encountered

Post: House Hacking with Small Multi-Family

Post: How to scale your rental portfolio

Post: Finding rentals in expensive Eugene Oregon

Post: Is Eugene the next Boulder?

Post: Ways to get started other than house hacking?