Grateful newbie from DC

[Sebastian E.]

I just recently dove into the BP podcasts and forums. This is an amazing community with incredible resources! I am grateful to be able to contribute where I can and am thankful for the opportunity to learn from so many people.

If it's alright, I'd like to share a little bit about my story in case it might be helpful to anyone out there and to hear some thoughts on my next deal. I'd like to get as much information from different sources as I can to make an informed decision.

I did my first deal in May of 2015 by house hacking a quad (all 1 bedrooms) in Southeast DC. I live in 1 and rent the other 3. I did as much research and learning as I could before the purchase but of course had to learn a bunch along the way. 

Here is the situation as it stands today:

Purchase Price: 380k ($80k down) + 100k renovation costs (using a HELOC)

Current appraised value: $580k 

Monthly cash flow (pre-tax) is approximately $2200 / month on a 15-year fixed mortgage at 3 1/8% (cash flow is variable because I am currently Airbnbing my unit while I am on travel overseas for a few months.). 

I have been using the cash flow and any money I can save to pay down the HELOC. I will have that debt down to $80k by the end of the month. Based on my LTV I can increase the HELOC from $100k to $160k by the end of the year which would free up $90k for my next deal (I plan to pay down another 10k by December off the HELOC).

My plan is to move to the Baltimore city market next to either do a larger (3500 sq. ft +) SFH that I can house hack with roommates and/or Airbnb and then eventually cut into units down the road OR purchase a distressed multi-family and do a combination of long term tenants and Airbnb to improve cash flow on it. My ultimate goal/dream is to purchase a larger (8,000 sq ft.+) mixed use building (warehouse, church, school) that I can be creative with and do a larger Airbnb concept. I have a cash investor who I am working with on that deal but he wants me to get my feet wet one something smaller first.

I am happy to share my experience with how I dealt with my renovations, tenant eviction in DC, house hacking, how to pick a neighborhood (or street within a neighborhood) and I am interested in working with other likeminded folks who are interested in creative urban development. On a personal level I am part of the FI / Early retirement contingency and plan to do this primarily through international geoarbitrage. 

One thing that I think is great about this forum is that the founders make it clear  that there a many different ways to go about real estate investing. I have decided that if it isn't a cool, creative project then it's really not worth it for me. Even if I can achieve a better return by doing something less creative or fun, i'd rather do stuff I like to do. I am trying to find the balance on it and manage my risk as much as possible because some of the more creative projects are a little tougher to run analysis on because there aren't any real comps for these kinds of projects, so in some ways it can be a little bit of a leap of faith.

A few questions to anyone who is interested in responded:

-How do you view doing deals where you are a first mover and there aren't really many comps for what you are trying to do?

-For my next deal do you think it would make more sense to go for something that is already divided into units or try for one of these larger victorians? From what I can tell there isn't really much of a demand for 3,500 sq ft.+ SFH so they have been selling pretty cheap ($200 - 250k) for properties in a decent area that need some work. Are there any tax implications in Baltimore city that I am missing. I know the property taxes are horrendous, so i'd try to mitigate that by getting into a CHAP district to freeze my tax assessment. Would being in a CHAP district have an affect on trying to develop a property down the line if say I wanted to turn something into a multi family.

-Has anyone had good experiences with purchasing mixed-use property and doing a combination of commercial and residential on it?

I look forward to engaging more on the forum and hopeful meeting some mid-Atlantic folks in person when I am back in the area and hopefully others during my travels.

Seb