All Forum Posts by: G. Brian Davis

Hi @Neil Emick,

Just off the top of my head, those numbers look a little tight. When you project your cash flow calculations, make sure you're including expenses like vacancy rate, property management fees (even if you're managing it yourself), repairs & CapEx, etc.

Have you considered buying a 2-4 unit multifamily to do a true house hack? The numbers might look better.

Also, $30K in repairs is substantial labor and headaches, for what doesn't appear like a massive amount of sweat equity. 

I'm not trying to discourage you, just giving you my off-the-cuff reaction. Finding a good deal involves some considerable hunting in most cases, so don't be discouraged if you don't find the perfect deal right away.

Best,

Welcome @Mark McPherson, glad to have you in the investing community!

Any particular challenges or concerns that you have, as you start looking into rental properties?

Cheers,

Hi @John Mathews, welcome to BiggerPockets!

Higher-end neighborhoods in Chicago may prove difficult places to house hack. Doesn't mean it can't be done, but finding a property where the numbers make sense may be a challenge. 

You'll almost certainly need to put down at least 3.5%, plus you'll need closing costs and cash reserves to pay the first few months of the mortgage, plus money for any repairs/updates. 

While I would never discourage someone from house hacking, you might find it easier for your first deal if you buy a single-family and rent out rooms to cover your mortgage.

Please don't hesitate to reach out over PM, happy to help in any way I can.

Best,

Hi @Danny Ondik, and welcome to BiggerPockets! 

I'm a huge believer in rental properties and passive income, as a vehicle to achieve financial independence. 

What do you see as your biggest challenge or obstacle moving forward?

Cheers,

Hi @Daniel Ortiz, 

@Bryan O. has some good advice about house hacking, and putting all the extra money toward your student loan debt (if that's your highest priority). 

Here's an article I often recommend, a case study of how one investor did his first real estate deal as a house hack: 

https://www.biggerpockets.com/renewsblog/newbie-ho...

As mentioned above, it really helps to stay disciplined and not succumb to lifestyle inflation, even as you start earning more money, and saving money on your housing bill.

Best of luck, and feel free to PM me any time.

Hi @Alex Chamberlain, and welcome to BiggerPockets!

The first thing that jumped out at me with your deal is that I didn't see vacancy rate or property management fees included among your expenses. Your repairs and maintenance also seem low, if they're to also include CapEx.

Always include property management fees even if you'll be managing the property yourself. Ideally, pay yourself the property management fee. It's a labor cost, whether you're doing the labor or someone else is. You also want to make sure the property will still cashflow properly when the time comes to hand it over to a property manager.

A little further reading on that subject if you're interested:

https://www.biggerpockets.com/renewsblog/elite-inv...

Projecting cash flow accurately is one of the first skills you should aim to master.

As to standards, we always encourage our students to aim for at least 7-10% cash-on-cash returns and a bare minimum of $100/month per door. If a deal doesn't meet those criteria, you might as well invest in a mutual fund and save yourself all the hassle. 

Welcome again, and please don't hesitate to reach out over PM!

Hi @Paul Smith, and congratulations on the first rental property purchase!

One of the most important practices in the landlord business is tenant screening. Nothing destroys your returns like bad tenants. Make tenant screening a high priority.

Here's an article for further reading:

https://www.biggerpockets.com/renewsblog/advanced-...

And then the flipside of that: once you find good renters, keep them!

https://www.biggerpockets.com/renewsblog/11-ways-b...

It's a great business Paul, glad you're taking your first foray into it! Please don't hesitate to reach out over PM at any time.

Best,

Hi @Sam Sjoberg and welcome to BiggerPockets!

I highly recommend keeping an eye on the BP blog, there's a lot of incredible content and information there. 

Investing out-of-state is tricky for new investors. It helps to know your your market intimately well before investing. There are so many things to learn and keep in mind when you're first starting out, that we urge our new investors to choose a town and neighborhood that's within an hour max of where they live, so they can easily go spend time walking the neighborhood, looking at prospective deals, talking to locals, etc.

If you're looking for a good case study on how to house hack, I always recommend people read this one: 

https://www.biggerpockets.com/renewsblog/newbie-ho...

Best of luck!

Hi @Jacob Sanders, check out this list:

http://www.bankrate.com/financing/mortgages/first-...

Most of the actual benefits are on the local and state level in my experience, but when you start shopping for mortgage lenders, ask the loan officers about them. Local loan officers should be able to educate you on programs available in your area.

Hi @Jacob Sanders, glad to hear you're ready to dive in!

You have a good list of goals. I particularly like #7  :-) 

I think you're on the right track with your first deal being a small multi-unit house hack. You can get good financing (conventional or FHA), with a low interest rate and low down payment. Finding a good investment property is challenge #1, and then challenge #2 is putting all of the money you would have spent on a housing payment toward future investments. It takes a level of discipline that many people don't have, to avoid lifestyle inflation.

I often refer people to this article, when they're interested in doing a house hack. It was this investor's first deal too.

https://www.biggerpockets.com/renewsblog/newbie-ho...

If you do it right, every deal gets easier, because with every deal you have more cash to work with and more experience to lean on. 

Keep us posted on your progress!