Process in buying 2nd property right after the first & qualifying for loans

[Alex Yee]

Hi folks! This is my first post on BP (yay!) I appreciate all the advice on this platform and love being a part of this community.

I just came back from Las Vegas where I was looking for my first investment property. I found a new build I like and joined the interest list (it's long) and was told I can expect to be able to purchase a house in 3 months, then take possession after it's built around November. The new build deals are pretty good right now and their prices are comparable to older resale homes. Plus, builders are offering incentives to cover closing costs & things come with warranties. It's a great deal and I 100% want to get in on this new build since it's within my budget. I was really excited to buy a home and kickstart my REI journey but I'm conflicted because it sounds like I'll have to wait 4-5 months to make my first purchase and do another hard inquiry on my credit.

I also found a great home that would need minimum rehab that I could use as my first BRRRR to learn from. It's open to offers now. However, I worry if I put an offer on this resale home, I won't qualify for the new build anymore. I really like this one and can see myself learning a lot from it. Should I even consider buying both?

Does anyone have advice for how to balance purchasing multiple homes? How are people qualifying for conventional loans? Or are most folks using creative financing & hard money? (In Vegas, it's rare to find anything that will cash flow in Y1)

My main goal is to do whatever I can to learn and get the ball rolling. I look forward to hearing any advice you have on starting out! Thank you!!

[Bill B.]

These “Old” properties are almost 25 years old and I’ve owned this one for 22. So there’s almost no depreciation. Vegas is a great place to own these older properties. In the last 20 years with a dozen properties I’ve spent $250 on roofing, zero on siding, and maybe $500  on exterior painting. But houses were built different back then. They’d try to jam 4-5 bedrooms in to a 2000sf house. 3-4 bedrooms in 2500sf homes just live bigger. 

Speaking for the areas of Las Vegas I invest in. I’ve also noticed that neighbors seem to have a natural transition about 15-20 years in. The original buyers have raised their kids to college age and move on to smaller homes in nicer neighborhoods. They tend to be replaced by people are buying the best they can afford, maybe their first home. So they either have no money, no desire, or no knowledge of how to take care of a home. You get more and more oil stains, trash and/or grass in the landscape rock, more vehicles that never move, window heat shields made of newspaper or aluminum foil. That kind of thing. 

I’ll definitely make less cashflow/profit with these new builds but…

I get the $60k discount for not paying taxes, I get about r0% more rent and double or triple the depreciation. Now imagine if a year from now it doesn’t work out as a rental and I move in there instead? A few years go by and I sell because I want to go live somewhere else. It’s almost like I got paid $60k to live in a new house for 4 years. 

I’m really considering buy a dozen properties in the same neighborhood. But I’m 55 and I’m already concerned about the person/people who will inherit them. For the first time I signed a 30 year mortgage that I expect I wouldn’t live to pay off if I didn’t plan to pay it off in a couple years. 

TLDR: yes, the older homes are cash cows, especially wi low maintenance, and what others would probably call c-c+ neighborhoods. But real estate investing is really boring, I might want to live in my first new home ever, and I’m not a huge fan of my current home. Certainly not a perfect financial decision but nobody who buys a new car should bring that up. 

What are you doing to stay interested?