All Forum Posts by: Ty Ash

1.Educate yourself and start to plan/envision where you'd like to be

2. Track your spending

3. Align your spending with your values

4. Give your cash a job and automate it if possible within your accounts (Retirement, Travel, Emergency, Investing)

5. Be creative about how you entertain yourself. It's not where you are or what you do, it's who you're with that makes anything in life worthwhile and enjoyable!

@Jackson Vasey

Looking forward to hear your success story once you close on your first deal! I bought my first deal using an FHA loan about 4 years ago now. I believe that you can only have one FHA loan per person (fact check me here) but as @Eric Kump mentioned, these days you can get low % down conventional loans as well. I would recommend going the conventional route as PMI (private mortgage insurance) can be removed on a conventional mortgage without refinancing whereas most FHA products will likely require a ReFi later on and it's anyone's guess what interest rates will be 8-10 years from now when you're at that 20% equity mark.

Another question you had was type of property you can buy. With FHA and Conventional, up to a four plex should be available to you. If you intend to buy at least 4 investment properties, a common strategy to maximize your debt to income limitations is to go 4-3-2-1 (assuming that a four plex will cost the most and a single family the least in terms of purchase price). This gets you 10 units if you move every other year by the time that you're thirty. Pay those suckers down with the cash flow and you're likely going to be financially independent in no time or..... leverage the equity you're building through tenant's paying down your principal and invest in more/bigger properties.

Hope that this helps, best of luck!

@Joshua Hughes

In response to this question:

"I am ready to start planning for my second house hack. Every one of my dollars has a goal otherwise it gets spent. so thats why I need to know exactly what to do with Rent checks..and how to go about my second purchase. I want to get two doors (duplex) for my next deal. Will all my rent checks go into my normal checking account?"

Sounds like you are just starting to get yourself organized for bookkeeping for your rental. The lean approach is to use a free software for rent collection (there are a lot of them out there, I used cozy/apartments.com my first 2 years) and a expense tracking system (Stessa gets a ton of positive reviews and I used it for my first 2 years). Now that you know what you're tracking results in your business, my recommendation is to separate your business and personal life. This can be easily achieved by opening a checking account specifically for your rentals (you may also need a separate account to hold deposits depending on your state's rules) where rents come in and expenses go out of.

Creating this separation will allow you to give a job to each dollar like you've done in your personal life. I love that you have a good stock position and some cash invested in a CD but you may want to consider changing your view of that to your personal investing fund rather than your emergency fund. If you have to liquidate your stocks to maintain your rental, there is a very high opportunity cost of losing the compounding of your returns over the life of your investment.

This is where @Paul Vail keeps reiterating the point of being conservative with a healthy cash cushion. Be certain that your personal emergency fund is in a good position (many will recommend 6-12 months of expenses). In addition to the personal fund, many investors will recommend a healthy investment capex/repair/emergency fund (covering major mechanicals and several monthly payments of rental's mortgage).

To give an example of this in practice from a novice point of view... In 2020, COVID enters, stock market falls (reducing your current stock emergency fund). Luckily the market bounced back but if a large repair or capital expense occurred while the market was still recovering, you would have lost money on your stock investment and missed on the potential growth over the past year. Many investors also ran into issues with residents being able to pay full rent, thus another chance of your stock investments needing to save the day. Having an emergency fund specifically for your business may appear to be "losing" you money while it sits earning <1%, however, it could keep you from needing to liquidate other investments that historically will build your net worth over time. As you get more rentals, many will agree that your per property reserve could be reduced as hopefully every singe roof and furnace doesn't go out at the same time and will give you the opportunity to replenish the fund.

To sum up, get your personal and business lives separated and plan your emergency funds based on your own risk profile for each. Once those are well funded, save the excess cash flow from your rental to accelerate your savings for that next investment and get ready for the snow ball. Best of luck!

@Joshua Hughes

Congrats on your first investment purchase! My 1st piece of advice, don't compare where you currently are in your investing to where others are. As many wise investors will tell you, real estate is the get rich slow game. 

The house hack is so powerful because it offsets your living expenses and should accelerate your ability to save for that next down payment. My recommendation for you is to pivot from the Real Estate Podcast to the BP Money Podcast. It offers a different perspective and even Scott and Mindy state that it is almost a prequel podcast to the OG real estate focused podcast. 

Their first piece of advice is to learn where your money is going and start setting goals and making plans for whatever that next investment is. I believe that this podcast might help you clarify if you want to just continue to acquire properties over time or lean into a more aggressive strategy like BRRRR. You may just decide that you only need 5-10 properties to get to your own personal goal financial independence goal.

Best of luck on your investment journey! Reach out anytime.

@Grace Olinger

Hi Grace! Very excited to follow your house hacking journey. I also got my start using this strategy almost 4 years ago and still can't believe how beneficial just one investment property can be in accumulating wealth. Here are my thoughts:

1) I'm in agreement with @Danielle Jackson that many first time investors get caught up in the "perfect" house hack where you're living rent free. It's a great goal but the biggest win is offsetting your current housing expenses to accelerate your progress to your next property. Run this analysis as well as how the number will look after you move out. If the numbers are even breakeven post move out when factoring for PITI (principal, interest, taxes, insurance), Maintenance, Capex, Vacancy, and Management you likely have a good investment on your hands.

2) I lean towards trying to select my own residents as soon as possible (which could mean having current long term residents reapply). Knowing the history/employment/credit/background of who is living in your property will improve your chance of success and peace of mind. I also believe there is a lot to be said about "training" your residents from the beginning by setting clear expectations at the lease signing. You might find that the existing long term resident isn't a fan of your rules and procedures and might resist change.

3) As an agent, I avoid removing the inspection contingency if at all possible. We've found that looking at properties with 7+ DOM (days on market) have a higher likelihood of accepting an offer with contingencies. In many cases, these properties have been poorly marketed, bad photography, mis-priced, etc. Otherwise, I have paid to have an inspector walk through a property with me just to be aware of what pitfalls there may be.

4) I'm currently searching for an investor friendly CPA myself. The top factors for me are number of investor clients they have worked with and do they invest in real estate themselves. Expect to pay more than turbo tax (you pay for what you get) but making a mistake on taxes could lead to thousands of dollars of lost deductions.

5) Definitely ask around and start networking. As David Greene always says, "Rockstars know Rockstars".

Best of luck, reach out any time with any questions as you work through your analysis!

@Jose Lopez

There are many consistent themes in the advice that the other members have been sharing, and I agree with them. A big theme that hasn't necessarily been stated but has been eluded to is deciding who to surround yourself with.

-BiggerPockets, a community for you learn from and engage with that share your real estate goals.

-Reading, a conversation between you and experts in leadership, mindset, and real estate.

-Choice of Vocation, a chance to work with the best who can mentor you on your journey to the next level.

The people you choose to surround yourself with and the choices you make around wealth building will determine your success. You're well on your way and have the support of this community. Best of luck!

@AJ Satcher

Hi AJ! I've definitely heard of others using this approach specifically with FHA loan products (only can have FHA loan at a time I believe). Depending on where you are, link up with a reputable investor friendly lender and see what strategies they've used with others in your position.

Best of luck!

@Nathan Simons

Very curious to hear how you work through this! I've been looking into potentially doing STR in the area with one of my duplexes as well (Brewer's Hill) and have thought through how a hybrid approach might work best for me.

The 2 team members I believe you need to execute a hybrid approach would be your cleaner and handyman. With these 2 people, I believe that there are many tools and process examples out there where you could run this remote while leveraging others. On the flip side, you may not have the economies of scale to make paying for those time saving tools a good investment.

I haven't tried this myself but am wanting to give it a try!

Best of luck!

@Daren Peet jr

Hey Daren! Can't wait to see how your investing journey plays out!

I echo everything that @David Mo mentioned. There are a lot of properties out there and where you look and what you're looking for depends on what your goals are. Another tip for you, keep networking here on BP and in area. Find other investors that are one step ahead of you that you can learn from and provide value to. That will help you level up faster by getting advice from others who have recently experienced what you're likely to go through in the near future. It's easy to get lost in what the top level investors are doing instead of focusing on what the next best step for you is.

Feel free to reach out any time as you work through the beginning stages of your investing!

Hi Kasey! Very excited to see how your house hack story plays out. I started the same way! Some quick advice:

-With the purchase price that you're working with, the 1% rule might not be the best quick analysis for your area. I would definitely ground yourself in potential rents in the area you're looing in. Also, understand what your true expenses might be. As an example, a roof of the same sq ft on a $300,000 home vs a $600,000 home doesn't necessarily cost more. However, based on your numbers you're likelihood of getting more rent than that less expensive property is higher (better finishes, etc). If you're using a percent of rent to calculate Cap Ex, you may be inflating your monthly expenses based on rule of thumbs %'s you have seen during your research.

-When you're living in the property, I 100% agree with @Chad Gilchrist so no need to repeat. Number 1 question to ask yourself, will this deal put me in a better position to achieve my future goals than my current living situation. If the answer is yes, and the post move out numbers work... TAKE ACTION!

-Last, a reminder not to worry about the home run on your first deal, it's all about getting momentum and experience. Since you're using a low % down option, once you move on to your next home your amount of capital invested is going to boost your Return relative to a traditional investor putting 20-25% down ($114K down vs $20K (3.5%), Same Cash Flow of $500 / month as an example or $6,000 annually for the property, $6K / $20 = 30% Cash on Cash vs $6K / $114K = 5% CoC). This is your advantage as a house hacker because many investors probably wouldn't even take the time with that return unless they were desperate to utilize their cash.

Feel free to reach out anytime about your house hack questions. So excited for you!