All Forum Posts by: Nicholas L.

@Jessica Yuan

I don't mean the following response to be discouraging... but here goes.  You're trying to math your way to a market, which is understandable given the prices in California, but unfortunately what we see this lead to is investors buying in a random market thousands of miles away, in a challenging neighborhood, without a team that they know in place, and then they just lose money.  And what's the point of doing that?  These properties look like they make money on paper because they're bought with unrealistic assumptions... and then they don't turn out as planned.

https://www.biggerpockets.com/forums/48/topics/1242392-rough...

https://www.biggerpockets.com/forums/48/topics/1137397-balti...

https://www.biggerpockets.com/forums/432/topics/1231840-sell...

https://www.biggerpockets.com/forums/311/topics/840134-memph...

https://www.biggerpockets.com/forums/963/topics/1195280-expe...

If possible, I'd pick a market within a couple of hours of you.  Advantage: you can be there, yourself, in person.  And if you truly can't do that, I'd still pick a market that's closer, where you have family, or went to college in, or vacation in, or hope to move to someday, or are interested in going to.  Basically anything other than a low median home price as the top criterion.

If you're buying a plain long term rental, you are not going to cash flow right away, in any market. Not in Walnut Creek, and not in Scranton.  Just do the math - see how long it will take you just to pay off closing costs if you're "cash flowing" $78 a month.  

I hope this helps.  I'm happy to connect and/or answer any questions you have.  Again, not trying to be discouraging, just trying to protect your capital.

@Becca F.

hi Becca!  i'd go with repairs and prolonging life unless you think a new fence would help you get substantially higher rents.

@Robert Nebel

it's house hacking.

@Cameron Richard

I think CoC is tough to calculate since it's going to vary every year. Right now I'm just looking for deals where I can leave as little as possible in - like a BRRRR where I'm basically buying for closing costs. If I can do that and break even on rent every month, I'm good.

@Andrew Guzman

you'd refinance out of your current loan (assuming you had enough equity) and use a low DP loan again for the next property.

@Andrew Guzman

Short answer: no.

Why not just house hack again?

@Andreas W.

eventual rent increases

selling a property and using the proceeds for something else

selling a property and using a 1031 exchange

tax benefits

@Isidro Rodriguez Jr

I'm with @Travis Timmons on this.

Same point: if you borrow 100% of the purchase price and purchase in an area you're not familiar with, you will just lose money.  Everyone else involved (agent, title company, PM, contractor, bank, etc.) will make money; you will not.

A HELOC feels like free money and definitely is not.

And, rehabbing out of state using 100% borrowed funds is hard mode.  I'm working on a rehab 30 minutes from me, and it's a challenge.

If you posted and said, "I'm interested in Pittsburgh solely because of the price points and don't have any intention of visiting or setting up a team," I'd say, that's nice! Don't buy something here, then.   Keep saving up.  House hack in California instead.

Hope this helps.  We're happy to answer any additional questions you have, and as you can tell, we're trying to talk you out of it, and not into it.    

@Charles Bishop

the 1% and 2% rules have been misinterpreted.  all they do is help screen out properties.  you would never, ever buy a specific property because it met a "rule."  but if you have 100 properties to analyze, you could quickly screen certain ones out and narrow down to, say, 10, or 5.

i don't use the rules at all because all i do is look at specific deals.

it generally makes sense for new investors to start with a house hack.  the purpose of a house hack is to build equity.  then once you're in a stronger financial position, you can look into rentals.

@Erica Morrison

Hi Erica. I (1) don't invest in STRs, and (2) don't know much about you, but I always get nervous when people propose buying an STR solely for tax reasons. And I think it's kind of crazy that a CPA would "tell you" to buy an STR... was that just one option of several he gave you?

So I'll ask... are you otherwise interested in owning and operating an STR?! What if you rush and buy a dud? STR is ruthlessly competitive right, now so losing money operating it will more than take away the tax savings...

We've just seen several posts here in the forums here from folks who (1) bought in this price range, (2) couldn't get enough bookings to offset the monthly costs, (3) started losing money, and then (4) couldn't get their sale price... making them really stuck.

Just trying to watch out for your capital here... if you are otherwise passionate about STR operation or have been wanting to buy a vacation property for years, great. But I did not see that in your post.