Getting Started with Real Estate Investing - House Hacking and SFR - Kansas City, MO

[Mitchell Bumgardner]

Hello everyone,

My name is Mitch, and I am new to the Real Estate Investing world. I am in the United States Air Force and just moved to Whiteman AFB, MO. 

I will be looking to buy my first property next summer, closer to my current location but still within a 60-mile radius of KC, and my focus will be to start with a house hacking strategy or SFR to just get my foot in the door and start building some momentum. Ultimately, my goal is to build a solid and steady real estate portfolio using the long-term/BRRR approach. My main interest lies in investing in properties that will provide positive cash flow, rather than overall Appreciation and ROI.

For the time being, I am just trying to research and learn as much as possible. I would love to start expanding my network now to connect with other military members perusing similar goals, as well as any agents, investors and contractors in the area.

I look forward to getting to know you all and I am happy to be here.

Thank you!

-Mitch

[Michael Smythe]

Couple thoughts:

1) Buy a 2-4 family, live in one unit, rent the rest for cashflow, but more importantly - experience!

2) Keep in mind at least 95% of agents are CLUELESS when it comes to working with investors. Most only deal with owner-occupied properties. Ask how many rentals they own before dealing with them.

3) Learn the differences between investing in Class A, B, C & D rentals. See below:

In our OPINION (always verify yourself!):

Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenants: Majority will have FICO scores of 680+.

Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenants: Majority will have FICO scores of 620+, some blemishes, but should have no evictions in last 5 years

Class C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should often be used to also cover nonpayment & evictions.
Tenants: majority will have FICO scores of 560-600, many blemishes, but should have no evictions in last 2 years. Verifying previous 2-years of rental history very important!

Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with zero or negative relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenants: majority will have FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, recent evictions.

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.