What to choose for first Purchase?

Question

I am starting out and trying to learn how to buy real estate and there are just so many options to choose from. Rent to Rent, Buying a house with your own money, buying a single family home, apartment complexes, trailer homes, air bnb's, short terms. I just don't know what to look into and also how to take that step/risk to do so. Any feedback?

River Sava · Answer

Hey Cooper - I would look into MF properties and also turnkey properties for your first investment. We work with new investors all the time and see a lot of success through these routes. Would love to connect and discuss further!

Paul Moore · Answer

Hi @Cooper Heller! You're in the right place to learn a lot about real estate investing. I highly recommend you listen to a couple hundred episodes of the BiggerPockets podcast. I am guessing something will strike you deeply inside and you will know that is the path to pursue. That said here are a few thoughts:

First, someone mentioned house hacking. I highly recommend you house hack with a single family, duplex, triplex or fourplex. You should be able to get Fannie Mae or Feddie Mac debt and that will help. Even better if you are a veteran. BiggerPockets has a great podcast on house hacking.

That said, if I was starting over in real estate investing I would jump into commercial real estate as soon as I can. That could include large multifamily, self storage, mobile home parks. RV parks or more. So many things to choose. I wish you the very best of luck and success!

James Wise · Answer

Do you own your own home or do you rent? If you do not yet own your own home, get an FHA loan and start there.

Sarita Scherpereel · Answer

Hi @Cooper Heller I believe house hacking is the best way to start investing because of the low down payment programs and you get to learn about property management from on-sight experience.

Ryan Thomson · Answer

House Hack. Look into that strategy. Great way to get started. And on of the best ROIs in real estate investing.

1. I would keep in mind that if you get a duplex, triplex, or quad you are going to have to put 15% down with a Conventional loan. So sticking with an FHA Loan might be better if you can get it for only 3.5% down.

2. For resources I really like the following House Hacking episodes on Bigger Pockets Podcast: #352, #252, #350, and #249. Also, Craig Curelop's book on House Hacking is a great resource.

3. Happy to talk if you want any more advice.

Nicholas L. · Answer

As others have said, house hack something small - 1-4 units.

I wouldn't start out with an STR or a trailer park...

Nate Sanow · Answer

I think single family is the best place to start. I’m not certain by your post if you own your primary residence yet or not. Start there. Then, you can start with renting out rooms and eventually moving out and having 1 cash flowing property. From there, you can get another.

Or if that’s already underway you can start by buying one simple single family as an investment. Single family is a little basic and boring and simple but it is also easy to digest and apply and execute on. Sounds kinda like you’re looking at step 100 but haven’t done steps 1-5 yet. Best wishes to your success

Jon Puente · Answer

Hey Cooper,

Don't over complicate it.  Just buy a house and live in it and learn about the buying process.  You are right, there are a lot of options.

1) Find a lender and figure out what you can buy and what the payments would look like.  You can learn A TON right there.

2) Find an agent to help show properties that fit that payment budget.  Start making offers on those homes.

3) Close on the property and fix it up and get it ready to rent out or live in it.  You will learn a lot from experience.

Mason Hickman · Answer

@Cooper Heller

I am a big proponent of house hacking through a small multi-family property. Gives you a good entry into being a landlord and also reduces your living expenses. All while having good low-down-payment options.

Anibal Mijangos · Answer

It's ultimately going to come down to what your risk tolerance is. The idea with most strategies is to get the most with as little money out of pocket as possible. That's why using special loan programs like FHA, USDA, and VA loans are so popular.

I recommend taking a look at what you currently have in disposable cash. If you qualify for an FHA or if it's something you're looking into, then see how much of a downpayment you can afford. For example, if you have $20k and do an FHA at 3.5%, that means you'd be able to get a property that's around $550k.

The ideal situation would be to own the property. Because then you can do strategies like cash out refi, brrr, heloc, and more. If you don't own the property and are just doing things like wholesaling or arbitrage, you don't get the same benefits.

I recommend learning a little form each strategy, taking a look at what each asks of you, and then seeing what's the best for you.

What to choose for first Purchase?

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