Looking to purchase 2nd property, any advice?

Question

So I have a 1 property that I short term rent and rent an apartment for now. I am looking to buy a 2nd property and possibly live in it as the goal is to buy 1 property over the next 5 years. Any advices on t he 2nd property? Should it be a condo or a home, duplex possibly? I've done a ton of research and understand is almost more important than your first property. I am open to LV, Tampa FL, New York, and Dallas.

Thanks in advance.

Nathan K. · Answer

While I absolutely agree with the two Gentlemen who said buy a fourplex and put 5% down as your primary, it's going to be extremely difficult to find anything on market that's affordable and even harder to find anything off market. Obviously, those homes are most ideal. When I started a few years ago I did the same thing as you. Duplex, duplex, duplex, ANYTHING multi-family!! After a year of realizing that's literally every investor's dream property, I went for single family, detached and totally concur with  your plan - 1/year for 5-7 years. I've gotten 3 in the last 2 years and they rent just fine as single and dual-tenant living.

In a more realistic world I would recommend a 4 bedroom and 2-3 bath house near good industries and hospitals. Live in your own private area and rent the rest to cover the mortgage - this will help you leave the apartment and still save money. I'm skewed towards mid-term rentals with travelling professionals on Furnished Finder. The first home was the hardest, no doubt, but this second home is just as fundamentally important.

Great work going for #2 and feel free to reach out if you need anything.

Nathan Gesner · Answer

You already live in an apartment, so buy a four-plex with less than 5% down. Live in one unit, rent the other three out. Repeat in a couple years.

Eliott Elias · Answer

Take full advantage of your primary lending, buy a fourplex and put the minimum down.

Kristina Kuba · Answer

@Blake Rice

If I could do it all over again and not have a spouse and dogs, etc. I would use my FHA loan for a 4 unit building. It is more difficult to house hack later in life if you have a larger family, so keep that in mind.

For example, in Hillsborough an FHA loan can finance up to $809,150 for 4 living-units. That is only 28,000 plus closing costs, well under your budget of 65k liquid to spend. Tampa, the main seat of Hillsborough county, has seen a cool off just like the rest of the country and getting a 4 unit in that price range is attainable.

As you mentioned, you first want to buy a place to live in; this could be the perfect setup: live in 1 and rent the other 3 out to cover your mortgage and maybe even have positive cash flow. Whatever you would normally pay for rent, put that away for 2 years and then after 2 years you have a nest egg for a downpayment for your next property. Rinse and repeat.

I am also a big fan of Robert Kiyosaki’s ‘Rich Dad, Poor Dad 'and in that book taxes are depreciation and tax savings are critical. If you go the multifamily route, I would recommend doing a cost segregation study within the first 2 years to accelerate depreciation, save on taxes and increase cash flow so you can attain your next property quicker.

I am bullish on Tampa because of Bill Gates multi billion dollar investment into downtown Water Street and the GasWorxx projects, both are transforming large swaths of the downtown and the urban core.

Best of luck!

Marc Stevenson · Answer

@Blake Rice  Congrats on your decision to pursue RE Investing.  You've had some great responses... my advice would be to, when possible, start investing in the area you live in first.  It's much easier to build a team in your local area and get hands on experience, then once you're a bit seasoned branch out into other out of market areas.  If Dallas is your choice happy to help.  I purchased SFH in this area both multi-unit and SFH.  I wouldn't write off SFH if the numbers make sense.

Best of luck

Lucia Rushton · Answer

@Blake Rice depends where you want to live. Househacking should be your next investment, in my opinion. Let me know if you have any questions about Dallas.

cheers and best wishes,

Billy Daniel · Answer

Buy a small multifamily and house hack until you save for the next one!

Christina Colon · Answer

@Blake Rice I think you have a lot of good options here. I used my home as a LTR then converted into a STR this year and it's doing great!  Please reach out with any questions! I'm also a licensed real estate agent in the area.

Bruce Lynn · Answer

@Blake Rice   Don't over complicate things.  You already live in one of the hottest markets in the country.   Stay local takes a ton of risk out of the equation.

You could house hack....and I've seen a couple of really nice ones lately....you could buy a 2-3-4plex.

If you like the STR model, don't buy a condo....most in Dallas area prohibit STR.

On the search front, get a great realtor to assist you.  Real estate is a team sport....build a good team.   Off market means you have to do the work and go to the expense.....mail, call, mail, call about 10x to 1000 owners...and hope to get a deal.   A great realtor can probably set up a better and more detailed search for you with all the parameters you want vs any of the public facing websites like Z you mentioned.

Also depends on your budget and borrowing capacity as to what you can buy....so again building a team is important and the very first step is getting a great lender on your team who can get you prequalified for a loan....and then you can go shoppling.

Blake Rice · Answer

I do work totally remote in Tech. I have a ton flexibility for moving and what not. I own in Tampa, Florida so housing hacking there has been a reoccurring theme. Thanks for all of the insight. The goal is apartment buildings long term but as of now.