All Forum Posts by: Nicholas L.

@Steven P. welcome.  I'm not entirely sure what you're asking.  If you remain living in your current primary, then you will need a standard investment loan, which requires more down.  But, you could turn your primary into a rental, move into the multi-family, do a live-in flip / house hack, and then move out (and refinance again).

Are you working with a realtor or a lender?  Do you have funds for a down payment on a new property?

@Paul Smythe I think this is a valid and interesting question. But it seems to be very market specific. For example, I've read that institutional investors own >5% of all SFH rentals in Georgia... and 0% in many other states. So, logically, mom and pop investors will still be able to invest anywhere they like... but in Georgia, they may be up against the institutions much more as you noted.

@Seher Taskent have you considered house hacking?  This is a great way to get started - it combines the best features of a primary residence (like owner occupant financing) and also investing.  There are people who successfully house hack even in expensive markets like New York.

And to be clear, I do NOT think you have 'analysis paralysis.'  You're asking all the right  questions.  Wanting to invest from a place of financial strength and at least some knowledge is admirable.

Here are my answers to the questions you asked.

Is investing out of state hard?  Yes.

How do we even get started?  Pick a market and start looking at houses.  Working with an agent as a buyer is free, and working with a lender to get prequalified is free too.  Are there markets within driving distance that you're interested in?  I've heard good things about the Lehigh Valley in PA.  Go look at properties.

What was holding you back before your first deal, if there was anything holding you back?  When I moved out of my first primary, a condo, I kept it and rented it out.  I didn't know what I was doing at the time as I hadn't yet discovered BP, but I managed to find great tenants and screen them myself.

What were your biggest challenges?  Estimating expenses correctly and finding good property management.

Is it to early for us? No.  But you should definitely think about how investing will impact buying a primary residence.  If you take on debt to buy a rental that's a good deal, that's great.  But that will impact your DTI ratio.

Did you having trouble finding tenants?  No - there is high demand for quality rental housing in many markets, both expensive and affordable.

How did your first deal go?  It breaks even, but I'm keeping it for appreciation and I don't need the proceeds that I would get from selling it to keep investing.

What's you idea of a worst case scenario?  A worst case scenario would be something that doesn't cash flow, AND that you can't sell.

How do you know a location is going to be cash flow positive?  Run the numbers.  Estimate conservatively.

@John Buffet I'd max out your teacher salary (can you take continuing education to increase it?) and minimize your expenses, while house hacking.  The idea of "a business" that brings in "passive income" is endlessly appealing, but I am assuming that you make a decent salary already.  That's your business!  Save up as much of it as you can while you continue to learn.

@Luke Boff I don't think this will work very well, unless I am missing something about your plan. The whole idea is that the rehab boosts the ARV, allowing more cash out. So if you do this out of order - buy with cash, refi, and then rehab, you will indeed have cash for the rehab from the refi, but you won't have added any value.

Say you buy a property for $100K cash. You cash out for $70K minus closing costs, so you have $65K of your cash back. You spend $25K on the rehab and boost the ARV by $50K. OK, now you have a property worth $150K, but you have $60K in it (you spent $125K and got $65K back). This is not a BRRRR.

@Stephanie Ro you said you're overseas, but can you move back to the US and house hack a duplex?  That's a lot "safer" than buying a random condo in a random city.  You'll get owner occupant financing and also (potentially) have stronger rights as a landlord.

In your example, if the ARV is $200K, you may be able to get $140K in a new loan when you refinance.  You would use this $140K to pay off the $120K in purchase price + rehab.  (There will be closing costs involved in the $140K - you will actually get $140K minus closing costs in funds.)

This is overly simplified. There may be a seasoning period required to get a bank to loan based on the ARV. But this would be an ideal BRRRR.

@Mikael Winkler to answer your question - yes, if there is any.  The property will be appraised without any reference to, or consideration for, your original loan.  So if the appraisal is not high enough, you will be "leaving money in the deal," as they say here on BP.  That's not necessarily good or bad, depending on how the property cash flows once both sides are rented.  You should run those numbers now.

And you'll pay closing costs on the refi, which can be non-trivial.

@Jared McCullough I know this is an old thread but just curious if you were able to find success with the program.

@Cody David are you committed to staying in CA, or would you consider moving to a lower cost market?  I think the short answer to your question is no, buying a single random OOS turnkey property is not the right move for you at this point in your life.  Once you graduate, you should max your W2 income and minimize your expenses.  This will put you in a much better long term position than buying a property as quickly as possible just because you might be able to.