New here, help me figure out my game plan (Philadelphia area)

[Ryan McHenry]

Hello all. Just as a preface, this is my first post. I'm completely new to real estate and I'm in the process of reading through all the material that got sent to me when I signed up, but I haven't finished any significant portion of it beyond the basics. So there will probably be some dumb questions/questions that are answered in the reading material that I just haven't gotten to. Go easy on me.

So a little about myself. I'm 22, currently living with family in the Philadelphia suburbs. I have no debt; never went to college (beyond some community college) so I have no student loans, own my car outright, pay my credit card off in full each statement period. I recently found out the company I work for is going under, and I will be losing my job at the end of January/beginning of February. I've been looking for a way to move out and gain some financial stability for a while and I feel like this is as good an opportunity as I'm going to get at this point in my life. Between my current savings, projected savings while I still have my job, my upcoming tax return, and my severance package from getting laid off, I should have ~$10K to use. Maybe a little more maybe a little less depending on a few things.

I think the move that makes the most sense for me right now is to try a "house hack", and buy a multifamily with an FHA loan, live in the one unit for at least a year and rent the other(s) out. This would kill two birds with one stone and allow me to move out, while also living for free and gaining some passive income. I guess what I need to know is what the smartest use of that money is going to be. I'm not planning on taking any real steps for a few more months but in the mean time I want to have a plan so when the time does come for me to get the ball rolling, I can just start knocking things off a list and just do it. Ultimately, this is definitely something I can see myself doing full time. Working for myself is absolutely something I want to work towards, but I just need help figuring out what my starting point is and where to go from there. I really just want to get opinions on what I should do from people with more experience than I am. So I guess my first question is what steps do I need to take to get a good deal on an MFD? After that, how do I go about finding good tenants/what do I need to know about being a landlord from a legal standpoint? And last, what's the best way to reinvest that income/turn this into a full time thing? Saving up for a second property? Flipping houses?

Advice, or links to reading material on any of these subjects is much appreciated.

[Mark Nolan]

@Ryan McHenry

Welcome to Bigger Pockets.

[Gerald Harris]

1.  MFD is a great move.   

- Find a motivated seller in your area who is willing to seller carry for as little as that 10k as possible.  Start with 5k.  have the seller carry the rest.  

-  You can find motivated sellers by looking up evictions in your area or eviction attorneys.  If a tenant is not paying rent, that owner is motivated.  Super Motivated!  They will be willing to deal with you, just play the numbers.   

-  Find out what units rent for in the area you are wanting to move to.  

-  Land lording is a different animal.   Just know that you need to screen all tenants.  ALL! 

Go back as far as 7 to 10 years.    Also, verify income.  What do they make?  can they afford the place.    These  2 will solve 1/2 your problems down the road.  Trust me.  

2.   MFD is great, but buying a house can be just as good ( another option)

-  Find a house to buy with seller financing and rent rooms out.  The cash flow from the rooms will pay the mortgage just like with the units.  

3.  Goto your local Real Estate investor club and network with other investors, funders, finders, wholesalers etc.....   you never know, there may be a deal waiting for you there.  

[Cynthia Calhoun]

@Ryan McHenry,

Hi Ryan and welcome to the BP community! 1st of all, congrats on being forward thinking! I'm a big proponent of education; but you have just proven what most of us (possibly more educated) already know...that a degree doesn't equate intelligence...nor does the lack thereof mean one is "not" intelligent. That said, your game plan is brilliant for a person your age. I thought my daughter was brilliant for buying her 1st flip @ 26, but you've got her by 4 years! Awesome! 

2nd thing: There is something that has been coined as W4 Magic. You mentioned a tax return [where you basically make Uncle Sam an interest free loan]. Did you know you can go to your HR dept and file exempt until the end of the year? You can just go ahead and bank that money now, to use towards your plan. Don't wait for the government to use it, invest it, make money on it...and then give it back to you. You use it now! Basically, if you're getting a return, then your withholding amounts are off. This is a smart, perfectly legal way to keep your own money in your own pocket. Since its so late in the year, you will more than likely still get a return for this tax year; but do the math. If you're getting a tax refund of (I don't know, say) $1500; then you can look at your check stub to see how many pay periods are included in that dollar amount, and make the necessary adjustments. Hope this makes sense. I'm slammed with meetings today, and don't have time to touch on anything else; but I just felt that "I had to" touch on that little tid bit. If you want me to go deeper into that, or even help you figure it all out, I'll be glad to. I'm not a tax professional; and would strongly suggest that you consult competent tax professionals;but I'm financially educated and intelligent...and I teach others. I'll be glad to help all I can. 

All the best to your bright future, because I truly believe you have a great one ahead. #ThankfulforJobLayoffs!  #KissCorporateAmericaGoodbye!