All Forum Posts by: Michael Ehmann

Hi @Tony Arkell Hill, welcome to BP and thank you for your service! Great community with a lot of resources here. If you have not already, check out the BP Podcast. That's how I found BP a few months ago and where I have learned the most so far.

House-hacking is a great way to get started. That's what I'm doing right now while I look for my first pure investment property. A lot of other people on the podcast have gotten started that way, too. In my opinion, house-hacking:

1) Helps you build up equity via rent payments (value you will be able to extract when you sell your home)

2) Provides you with more free cash per month (since you aren't covering the mortgage by yourself - ideally you will live for free or live for cheap)

3) Gives you some experience of dealing with tenants and all of the challenges associated with that in (what I consider to be) a lower risk environment.

One of my coworkers is a veteran and got started in real estate by taking advantage of the VA Loan program. When he moved, he kept his previous property as an investment and still holds onto it today.

Something to consider is your market. I just looked at Reform, AL, and it seems like it's a smaller area (I'm pretty familiar with that drive between Birmingham - Starkville). Is Reform where you are based? If Reform looks to be challenging as an investor, especially finding something you can house-hack, you are pretty close to Tuscaloosa, Columbus, and Starkville, so those might provide additional options.

Great info - I had been skeptical of condos but the prices were tempting me. Glad to see someone can justify a decision with examples. How heavy can HOA fees be?

@Vincent Villani, it all depends on your market and the complex itself. When I was shopping for my personal home, I saw some in Atlanta which were <$200/month and others which were >$400/month.

Depending on the financials, it's possible that a condo could be a good deal. I think most people avoid condos as a rule of thumb because they know that 95% of the time, the numbers aren't going to make sense. I've seen a few articles on the Bigger Pockets Blog about the advantages/disadvantages of  condos, so it's worth a search around the site if you haven't done so already.

Go Jackets! Glad to meet a fellow alum here as well! The house-hacking has been good overall. The only downside is that it's a condo. Location is great (near Atlantic Station, so easy to find renters), but the major downsides are the HOA fees and rent restrictions. It's been a good way to start learning how to manage tenants in a lower-risk environment, though. I'm just getting started and am looking at getting my first pure investment property in the (hopefully near) future. Since financing is my main constraint, I'm looking mostly outside the perimeter. The agent who helped me buy my condo (and a good friend of mine) bought his first investment property earlier this year in Cartersville on the North side. He had no issues finding renters, and it cash flows nicely for him. I might look on the North side as well, and I've noticed the West side near 285 has some newly developed homes pop up recently. Makes me wonder if this will be a similar boom to what's happened over in East Atlanta in places like Reynoldstown (pure speculation though).

Welcome Himanshu!

I'd be very cautious about a condo (speaking from personal experience here...). You're subject to 1) dealing with the HOA and their decisions, 2) paying HOA fees every month, which can seriously hurt his margin, and 3) rent restrictions, where the complex only allows a certain percentage of properties to be pure rentals (fine if you live there, but if you move, you can't hold onto the property as an investment). I house-hacked my 2/2 into a 3/2 by closing off the dining room into a 3rd bedroom. It's a great location, and the rent covers a little over the cost of the mortgage each month, leaving me to just pay the HOA fee. The biggest downside isn't the HOA fees though; it's the rent restrictions. If I could go back, I'd probably go single family so that I could move in a year, get a low down payment requirement on my new property, and still keep the old as a rental.

@Jack Ropp : while you're saving and getting your finances in order to start investing, what are some other ways you can get started in real estate to get the ball rolling? A couple things that come to mind: 1) Keep listening to the podcast and reading Bigger Pockets to learn as much as you can. 2) Attend your local REIA meetings to learn and get plugged into your community. 3) As someone else suggested, see if you can help out another local investor in some way (help with a flip, help a wholesaler, do some research for an investor on a buy-and-hold, etc.).What value can you provide to others in your market? If you help them and they like you, then they will try to help you if they can in the future. 4) If money is a constraint but you have a decent amount of time, you could look into wholesaling as a way to get started. It's still a lot of work but usually requires less capital. 5) If you're planning to get your real estate license, you could do the course and pass your exam while you are saving.

@Nabeel Syed: listen to this week's podcast if you haven't already. They talk about turnkey providers for a few minutes. It's also a great episode if you're based in Seattle but are looking in Indy - the main focus of the episode is long distance investing. David Greene considers turnkeys a reasonable option if you have a ton of money but very limited time to invest. Turnkeys are a convenience factor. A fallacy amongst many beginners is that turnkeys are a good way to start investing. Yes, you can do it, but you're leaving money on the table and will not learn as much as going out and doing it yourself. If you're new to investing, I'd challenge you to look into non-turnkey properties first.

A couple sources I found via Google: https://www.redfin.com/resources/how-to-sell-your-home-without-an-agent-fsbo https://www.biggerpockets.com/forums/311/topics/227800-for-sale-by-owner-fsbo---step-by-step-guidance-needed https://www.biggerpockets.com/blogs/5547/40017-selling-a-house-through-fsbo-hidden-dangers I think you have to do the risk vs. reward here. Let's say your condo is $200k, and you're going to save 3% by not having a selling agent. That's $6,000 potential upside. Now you have to think about the downside. If you don't have an agent, is there a risk you may not get as high of a selling price? How long can you afford for this to sit on the market - even if you can afford for it to sit for a while, what's the opportunity cost of not having that cash now? If you're using the equity from the condo to put towards other investments, then every month you have the condo on the market is another month you don't have tenants paying you rent. If the condo has renters too, then maybe this opportunity cost may not be as big of a deal. But if it's sitting empty, then you start to lose the advantage of selling on your own very quickly. I personally don't like the risk of having to do everything on my own, nor is it worth my time to manage the entire process. But it all comes down to your personal situation.

I second @Bill Hampton's suggestion: check out the Bigger Pockets podcast! There's a ton of great content there. I started at the beginning and have been cherry picking ones I want to listen to. If you're going to Europe, I'd recommend downloading 5-10 episodes for the flight.

Venmo (for now, but I'll be looking into alternatives as I scale)