What would you do if you were me ?

Question

Hey BP

I need some advice from others and just share my ideas and maybe someone can suggest which direction I should go.

I've been investing in the stock market since 2011, I love it I'm a value investor just like Warren buffet . Now I want to move into real estate, something I've been wanting to get into since the housing market started going thru the roof in early 2000s. There is one problem I have a job, to be more specific I'm a truck driver and I am gone 3 - 4 weeks and I'm home 4 - 5 days.

My original plan was to start with condos and town homes because of low maintenance at least on the outside. After doing my research I've learned a lot of investors having issues with HOA. Plus after running the numbers using BP calculator the condos here in my area are over priced.

My backup plan is to start with multifamily homes, I like them because they fit my long term goal which is hold on to them for a long time and have positive cash flow coming in. For financing I would take out the FHA loan live in it for a year fix it up and move on to the next multifamily home and do the same process over as long as I can get financing.

The problem is again I'm home only for 4 days a month and I would not have enough time to do work on the house or even deal with contractors, oh and don't forget I'm new to this so I will be making mistakes.

I will be quitting my job in about 2 years so I can be home everyday, so what would you do? would you go with condos, sfh, mfh ? or just wait until you get local work and start then.

John

Account Closed · Answer

John, multifamily would be a good place to start. At least in the MA area people are excited about Quincy, Dorchester and Worcester area.

I started years ago in the MF space in Boston and have done quite well. Some of the areas I own property in is slightly over-heated though (which is a great position for me, but that's another story).

Since you already plan to start in multifamily, you should find a partner. This alleviates a lot of your fears, lack of knowledge and helps you take the first step.

You mentioned you have $60k to put to work, you can find partners who are in a similar position as yours and do it together. You will see your confidence and desire to pull the trigger sky rocket.

Steve Bracero · Answer

Account Closed

I would pick a niche... If you want to go multi fam, pick a target area, become pre approved, find a realtor, see properties, analyze deals/ educate, put in offers. Know what you are looking for cash flow wise and ROI.

Account Closed · Answer

@Daniel Odess

Thanks for a quick response, I have little over 60K just siting in the bank I could invest now, the rest of the money is in my brokerage account. That is a good idea about talking to my agent if he knows any landlords who want to get out of the business. I travel mainly from the Midwest ( such as kansas ) to the east coast but I have very little time to look at property's in these areas.

I am in the process of looking at craigs list regularly and writing down all the rental prices in my area. When I will get home next week I will be house driving I think it's called so I can get more familiar with my area, I know it well but I'm sure there are things I don't know.

I'll wait what others have to say, but I think I will put it on hold on buying my first investment property until I'm home everyday, the down side to this will be financing, when I switch locally the bank might not want to give me a loan since I just started a new job.

Jonathan Schneider · Answer

@John Hiero I think you have the right idea about sticking to your home turf. Presumably, you know the areas where you would be ok with you wife walking down the street by herself at night. I like the idea of town homes and condos, but you do need to be mindful of the HOA fees and that they don't cut into your cash flow too much. Definitely a good idea to start looking into Property Management companies. Maybe start going to local REIA meetings and asking other investors who they use and would recommend. The good thing about investing close to home is you can personally go check up on a property when ever you are back every 3 weeks or so. That will be especially important before you get really comfortable that a property management company is doing a good job for you. Best of luck!

Daniel O. · Answer

@John Hiero no need to be discouraged. You can do this in your current situation, it just means you have to exercise more care about what kind of place(s) you buy. You can save yourself some headaches by finding a place that is less than 15 years old. But avoid places that were completed during the housing collapse. Too many builders just slapped stuff together to cut their losses then.  Begin working with an agent soon, and let him / her know what sort of place you are after. Agents may know of places that are going to be coming on the market before they are listed, so you might still get a crack at them when you roll back into town. But you will still need a property manager.  Your situation makes it harder, but by no means impossible. And I agree, it will be harder to arrange financing if you are only just recently in your new job. Better to make the purchase before you switch jobs.

John Smith · Answer

people own non local property every where.      You will need a property manager or a sibling or parent etc.     this will lower your cash flow so take that into account

Shane Baganz · Answer

Hi John,

I started in MF housing.  I wasn't on the road as much as you, but I worked incredibly long weeks and most weekends.  I had my tenant do the lawn mowing and snow removal as part of her rent. Over time (about 6 months) I gave her light duties - Cleaning windows, painting, etc. and she turned out to be a gem.

Once I found I could trust her, I let her watch over contractors that I had do work when I was gone.

Let them in, lock up after, periodically check to see if they were working kind of stuff.

I made sure I scheduled them for when she would be around.

Perhaps I was lucky.  But, I treated her well, gave her the ability to save on rent, and she turned out to be a worthwhile tenant. (and GC!)

I sold that property a few years later for 2x what I paid for it.  Use your resources, or find them.

Daniel O. · Answer

@John Hiero sounds like you have set yourself a bit of a challenge. If it were me, I'd steer clear of condos because of all the reasons others have mentioned on BP (HOAs, Condo Fees, Difficulty selling, etc). I don't know what the market is like in your area, and I also don't know whether you are considering looking outside of your area. For what its worth, you could kind of make the case that you don't really have a home area since you are there so little. Do your travels give an opportunity to look at properties in other areas? That might be something to consider.

You also didn't indicate how much you are able to invest. That may dictate the type of properties and locations you should be thinking about and looking at. But at least for the first couple of years, you are going to need to have a GOOD property manager. Someone you can trust and count on to take care of business for you while you are rolling down the back roads of Kansas or wherever else your travels take you. So I guess maybe that is where I would start if I were you. Even a great property with great tenants in a great place will turn into a money losing disaster if you don't have someone who can respond quickly when something needs to be fixed. Be sure to build that cost in as you use the BP calculators.

The next issue you will face is that the logistics of finding a place, looking at it, making a decision, getting it inspected, and doing all the myriad other things involved in actually buying it will be challenging if you are only home to do it for a few days at a stretch. If you haven't already done so, start interviewing real estate agents. Explain that you are an investor, and that you have some constraints on your availability. If you know other investors, ask them for recommendations about agents and property managers. You might also ask them if they know of any landlords looking to get out of the business. Who knows, you might just be able to take over someone else's existing property.

Good luck!