All Forum Posts by: Michael Ehmann

I did a conventional with 5% down. I bought my place near my alma mater, and I still had some contacts there. I found my tenants simply by posting on Facebook and asking if anyone knew of someone looking for a room near campus. The location is great for college students. There's always demand, and you can often lock people in for a semester or the year. I would be very selective about tenants who are in college. College students don't always take the best care of your property. If possible, grad/PhD students may be better tenants than undergrads. That being said, if you have a good selection process, you should be able to find good undergrad tenants, too. Check out some of the resources on Bigger Pockets about tenant selection to make sure you consider all the right things and have the necessary processes set up. The Ultimate Guide to Tenant Screening is a great place to start.

House hacking is a great way to get started! I house hacked my first home purchase about 6 months ago. It's a great way build equity and gain experience as a landlord.

I think higher education of some sort is extremely important. However it doesn't necessarily have to be a traditional 4 year bachelors. IMO one of the biggest problems with college is that many students go to school with no real idea of what they want to do, get a degree in something non-marketable, and then have $50k in student loans and end up working a minimum wage job after graduation because they can't find anything else. Back in the day (i.e. our parents' generation), you could get a degree in music history and get hired by an accounting firm simply because you had some sort of college degree, and they figured they could just teach you everything on the job (with much lower tuition rates relative to income level as well...). Not anymore. You're part of "generation z". A common theme with your generation is that you grew up during the financial crisis and may have seen more of the direct impacts at home. You also don't know a world without the internet, and you understand how easy it is to learn about anything, usually for free if you know where to look. A lot more people in your generation are skeptical about the traditional college path. I think it's totally fine for you to take some time to figure out what you want to do. Do the real estate thing for a year or two while you figure it out. At the end of the day, if you really love real estate, you can keep doing it full-time. If you decide there's something else you're into, you can shift your career focus but still keep doing real estate as your side hustle. Maybe as a though exercise over the next few months: pretend that you have to give up real estate and go back to school. What would you want to do with your career? What types of things interest you? If at the end of the day you decide you want to do real estate full-time, I would highly encourage you to still explore going back to school for something business or finance related, or at least find some professional certifications. Also think about if there are any other skills you're simply interested in picking up, like Excel, programming, web/app design, etc. These might be useful at some point and could also help you figure out what types of things you like to do (and it never hurts to pick up additional skills and learn new things). Checking out free or cheap online courses is a great way to explore your interests while you figure out what you want to do. I'd recommend Coursera, Khan Academy, Udemy, and Datacamp - at least go check them out.

Small multi-family is a great idea, if you can do it in your market! I'm jealous of the amount of capital you have starting out. If you can get the small multi-family, I'd consider starting out with a conventional mortgage at 5% (when I bought my place, that was the minimum for a conventional non-FHA loan, which gave me a much better interest rate than an FHA - since I had the capital, that was a better option for me).

I say yes, it is possible in rare cases, but I think you should be cautious because 99% of the time, it's probably a bad idea. If you were a brand new investor, I'd say no way. However since you have some experience, you might be able to make it work. In my opinion, it depends on a couple factors, including: 1) is this a good deal if you were to do a more standard loan term, 2) your personal financial situation and your personal tolerance to risk, and 3) the opportunity cost of dumping the extra $$$ into this investment each month. 1) Is this a good deal? Only you can know this for sure based on the financials and your personal market conditions. To me it's a bit of a red flag that this falls under the 1% and 2% rule though. If this deal still makes sense as a 30 year loan, it might work as a 15 year, based on #2 and #3 below. However if you would not do the deal under 30 year terms, I think you may be gambling too much to assume it makes sense with a 15 year (this would mean the only benefit would be the reduced interest, which is only one factor). 2) Your personal financial situation and risk tolerance. If you have a large amount of free cash or liquid investments (e.g. stocks which you would be okay with liquidating if necessary), then you can weather a larger storm if/when things go wrong. Since you're already planning to be in the red on a good month, you need to be very confident you'll be covered during the bad ones. I think a good litmus test would be to think about the worst case scenario: for example, in 6 months you have to replace the roof on this property, evict the tenants for failure to pay, AND replace the refrigerator and dishwasher in another one of your properties (you should consider how this affects your ability to handle risk with your other investments, too...). However, if you can handle the risk then sure, reducing the amount of interest you'd pay in the long term would be a good thing. 3) Opportunity cost of putting additional money into the unit instead of other investments each month. Even if #1 and #2 make sense, this could still be reason not to do a 15 year loan. If you went with a 30 year instead of a 15 and had an extra ~$450/month, what could you do with it instead? If you have a low interest rate on the loan, I would argue you could do something else with this and come out better (even another investment type like stocks or mutual funds if you think you could get a 6 or 7+% return in the long run). Or would this extra cash allow you to find another real estate investment, even if it takes another year or so to find a good deal? Even if your market has a lower volume of deals, maybe there's another market within a few hours which you could consider. To me: #3 may be a good reason to pass on a 15 year, since your interest rate is so low. Like @Mike Dymski suggested, if you get a 30 year you could always pay it off early. Caveat: I'm pretty new, so take what I say with a few grains of salt, as I'm relying primarily on what is learned on here and the podcast.

@Rick Baggenstoss, thanks for the advice! I definitely agree that I will be careful about condos going forward. I love my condo and the location, so it's great for me for right now as a primary residence. But I'm definitely starting to see firsthand the downsides of condos as an investment property, especially with the HOA and rent restrictions in my building.

Hi all,

Happy to be here!

About me and how I got into real estate:

I grew up in the NW Atlanta area and studied engineering at Georgia Tech. I now work for one of the consulting firms in the area. When I graduated, I moved into an apartment complex with a friend. However I travel for work most weeks, so I got tired of throwing away almost $1000/month in rent. I moved back home with my parents when my lease ended last January to save up for a down payment.

My first real estate investment:

I bought a 2 bedroom condo in Midtown in May. The condo had an extra dining room area off to the side of the main entrance, which my parents helped me turn close off into a 3rd smaller bedroom which I'm renting out. This allows me to cover the mortgage with the rent I bring in from my roommates, so I just cover the HOA (which is way less than a rent payment would be and allows me to build up equity instead of just giving money to someone else every month).

How I found Bigger Pockets

A friend told me about the Bigger Pockets podcast about 4-6 weeks ago. I've been going through about 4-5 episodes a week starting at the beginning (cherry picking which episodes sound most interesting for me) and have been occasionally poking around the site. Looking to get more involved here.

Preferred investment strategy:

Long-term, I like buy and hold, and I am a fan of the BRRRR strategy. Building wealth via collecting rent fundamentally makes sense to me. I'm not opposed to flipping or wholesaling, but I think that buy and hold might be easier for me since I am out of town Monday - Thursday and have limited time (not opposed to those flipping or wholesaling though, just not my natural inclination).

Next steps for investment goals:

I want to buy one property in the next 2-8 months and another 1-2 properties within the next year after my second property. Currently I have limited financing because I am rebuilding savings after buying my condo a few months ago. However I can still comfortably save $1-2K/month given my low cost of living since I travel for work most weeks. I have also been encouraged by the podcast and blog with the ideas of partnering with friends/family and exploring different methods of creative financing.

Looking forward to continuing to learn!