New to REI and looking for advice

[Kirsten Kracke]

Hi all! I am new to real estate investing but have been researching, reading, and listening to everything real estate related for the past few months. I am dying to purchase my first investment property but I am not sure what my first step should be. My partner and I purchased our first house together June of 2021. It is a townhome in Eden Prairie and we have been completely renovating everything ourselves the past year. For background, he is in construction and is very handy, while I am in Data Analytics and love numbers. Months after buying our first house was when I got very interested in real estate investing. So after researching, I have realized that the best place to start may be house hacking. My thought right now is to buy a duplex and move into the duplex to house hack it, while also renting out our current townhome. I think the number 1 thing holding us back right now is how to finance. We have a fair amount saved up but not enough to put 20% down for a $250,000+ property and we do not want to sell our current home. We are obviously saving up but I would love to hear any thoughts about what you would do in this situation or would love to network with anyone around the Minneapolis/St. Paul area to get advice and learn more. 

[Tim Wegleitner]

Hi Kirsten –

Welcome to the world of real estate investing! It sounds like you are taking all the right steps to absorb the wealth of information and knowledge out there on real estate investing. House hacking is a phenomenal way to get started – it’s exactly how my wife and I got started and we have continued to house hack as a great way to acquire a new property each year. It helps to save on your living expenses so you can be saving more each month towards future investments and also is a way to obtain a cash flowing property that you can rent when you move out of it! Great idea to hold on to your current townhome as a rental property and I am sure you have gained some sweat equity by the work you both have put into it yourselves.

There are several loan products available as long as you are willing to owner occupy (both conventional and FHA) that can be a minimal amount down 3.5% or 5%. I would be happy to connect you with a lender so you can review what the best options would be for your personal situation.

High level example of a recent duplex I just purchased to house hack in the twin cities:

Acquisition Cost:

Purchase Price: $475,000

Down Payment: $16,625

Estimated Monthly Cashflow when moved out:

Rental Income (when both sounds are rented): $4600

Mortgage + Insurance + Taxes: $3,600

Utilities (Garbage + Water): $100

Cap Ex: $150

Repairs & Maintenance: $150

Monthly Cash flow: $600

Annual ROI: 43%

There are not many other investments in the current state of the market where you can produce a 43% return in addition to the equity you will gain by having tenants pay down your mortgage amount!

I would be happy to grab coffee with you to connect and see if there is any way that I can help!