What's my first move?

Question

Hey everyone,

I'm new to REI and I'm doing a lot of reading about it. I currently own stocks, bonds and mutual funds and while there are a lot of pros, there are also a lot of cons. I don't like that I have little control over my investments. I'm planning on taking most of my money out of stocks once the market picks up again and keeping it in a savings account until I'm ready for my first Real Estate Investment.

I'm thinking about either House Hacking, investing in a Single Family House and renting it out, or buying a Student Rental house (single family house rented out to college students). I figure by the end of 2016 I should have about $16-20k to invest.

House Hacking
Should I look for a duplex, a single family turned into a mother/daughter, or just look for a great deal on a single family and turn it into a rental myself? Would be in the NYC/NJ area where the real estate is more expensive.

Buy & Hold
I figure I should live within 30-45 minutes of the property so I can manage the property myself. Looking at properties around $100k if I can get a discount, put 20% down and get a 30 year mortgage. Any advice?

Student Property
If I bought a Single Family House to rent out to students it would be in a location 3 hours away and I would most likely have to hire a property manager. Real Estate is cheap in that location ($100k and below) and a single property can bring in $14k/year of rental income plus I know the area very well.

Where would you start if you were me?

Jesse Peña · Answer

@Alex Curtis

Here are some links that I have put together for you, hope it will help you on your path of REI.

I hope this will answer so of your questions.

Much success to you!

https://www.biggerpockets.com/renewsblog/2013/11/0... (Get Paid House hacking)

https://www.biggerpockets.com/renewsblog/2014/03/13/investing-multifamily-ben-leybovich/ (Podcast 061 - How to succeed in multifamily investing-Ben Leybovich)

https://www.biggerpockets.com/renewsblog/2013/04/09/how-to-buy-a-small-multifamily-property/ (How to buy a small multifamily property)

https://www.biggerpockets.com/renewsblog/2015/11/16/how-to-choose-areas-multifamily-deals/ (How to choose multi-family deals)

http://www.biggerpockets.com/renewsblog/2014/07/19/how-to-buy-a-duplex/(How to buy a duplex)

https://www.biggerpockets.com/renewsblog/2013/12/12/bp-podcast-048-duplex-managing-tenants-darren-sager/ (Podcast 048 Duplex investing and managing tenants-Darren Sager)

Much success to you!

Russell Naylor · Answer

Duplex is a great move for a house hack if you can make it happen. Live very cheap/free and be there to handle and oversee any issues.

Josh Mitchell · Answer

@Alex Curtis If you can find a duplex, I think that would be the way to go. You could live on one side and rent the other and basically live for free. This is a great way to start as you are right there if something should go wrong, and you learn what to expect. Also, when you move from the property, hopefully the side you were staying on becomes all income for you each month. This is what I would do if I were you, and you can find it with your down payment amount! Good luck!!

Alex Curtis · Answer

Thanks for the advice everyone! Seems like Duplex is the way to go if possible. If not I think plan b will be to buy a single family house in good condition, touch it up and rent it out. If you have better advice please lay it on me. @John Arendsen I completely agree, I'm not cashing out any stocks right now with the market down. I'm going to leave my mutual funds and index funds untouched since those are long term investments anyway and take out some of the more speculative investments I made when they're in the green again. I still plan on investing in stocks/funds but I might want to have a portfolio more like yours. A better education and more experience is obviously needed on my end. @Jesse Peña Thank you for the links I'll check those out today!@Jessie N. Thanks for the link. Another option is Jersey City where the properties are relatively cheap and very close to NYC. Just have to find a good location and hopefully good tenants.

Kay Boro · Answer

hello and good morning, is it possible to share those links to the podcasts?

Thank you

Jessie Niu · Answer

definitely buy a duplex, live in one side and rent out other side if you can find one, not sure about NY market.

There is an article here at BP talking about why owner occupied duplex is the best option for a newbie ( you don't have to do FHA) https://www.biggerpockets.com/renewsblog/2015/03/2...

John Barrett · Answer

@Jesse Pena  Some great links , Thanks!

John Arendsen · Answer

@Alex Curtis, Actually I have a pretty broad and diversified stock portfolio (approx 10% of my net worth) and RE passive income portfolio (approx 50% of my net worth). Personally, I'm pressing my stock portfolio and in a full buying mode as the market drops but will still stay within the 10% range moving forward.

For my comfort zone dollar cost averaging all the way down is better than buying on the rise. Warren Buffet only started making his billions after he turned 50. His credo is never sell. Only buy and he's done that admirably by investing in high yield dividend stocks which he lives quite comfortably on.

That stated, I'm not giving you investment advice so please don't take it as such. The Stock Market is not for everyone by any means and there are definitely advantages in investing in RE. However, just like the stock market RE has its peaks and valleys as well.

A lot of folks got stuck on the high side of the RE market and ended up losing their shorts albeit that was due to some very loose and whacky lending regs as we all know. Voila, in walks Dodd-Frank.

But you'll get some very good investment tips on BP for sure so by all means keep moving the ball down the field. There's a lot of very good FREE webinars and pod casts on this platform for newbies and I'd recommend visiting some of those before you plunk down any of your hard owned doe, rey me.

That's my 3 cents worth adjusted for inflation.

What's my first move?

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