Which route would you take?

Question

Hello My name is Johanna and I would really appreciate some ideas on which way me and my husband can start building our portfolio.

We are both in our mid 30s, live in Coram, NY which is where we purchased my Primary Home in 6/2015.

We purchased our home at 305,000 and is currently probably easily appraised at 350-365k

The FHA mortgage for our primary is 2774 which taxes, ins, and PMI ($185), 4% fixed rate

I am refinancing this month to get PMI off via a conventional loan.

I am half way through Real Estate Classes to on my way to getting my License as a Real Estate Agent.

This is my current financial picture of me and my husband:

We currently have approximately $60k cash available to me at the time of any closing.

I can have $130000k saved by June if I include the 60k mentioned above.

I spent the first part of the year paying off all my credit card debt including 0 interest cards.

We have Good Credit Scores.We now have $0 credit card debt, work fulltime and we currently generate approx.

Total Gross Income for Household:  Monthly $19,000 or an annual income of $228,000 gross.

We don’t have anything else as debt.

My mother’s house appraised at 930,000 and she has $479000 in Mortgage debt=(451000 Equity?)

My mother supports me 100% with this new business endeavor and can get a HELOC line of credit or loan to help me start my real estate investment business (100-150K)

I would like to get into a multifamily but I am not sure where to start.I would like to close on my first investment before the end of 2017 as a personal goal to start portfolio.

I am interested in Buying to hold and rent property.First I thought of starting small with a SFH but as I read more and more I am attracted to a multifamily but not sure where.

I grew up in Woodside, Queens and know that area well.

My mother owns a multifamily in Woodside and has a list of tenants asking for more rentals but she has no rentals, great tenants she knows.

I have included as much details for some ideas.  Which route would you take?

David Faulkner · Answer

$130000k is $130 Million ... if you can save that kind of money by June, you certainly don't need our help :)

Does your mother use a property manager for her Woodside multi that she likes, or does she self manage? How far away is Woodside from where you currently live (sorry, not familiar with the area)? If it is within say 1 hour drive, you are familiar with the neighborhoods, and already have a network (PM, contractors, etc.) there, then that is where I would start. You can look at small multi-families, 4 units or less ... those can qualify for residential financing, with 30 year fixed terms, and can be a great place to start ... I would not completely dismiss SFRs either ... I'd get whatever you can find the best deal on. You could also attend some local REIA meetups and see if you can network with some experienced local investors to see where they invest, how they invest, what works for them, and what doesn't.

I would not use your mother's money right out of the gate, expecially HELOC money, if you don't have to ... maybe in the future if/when you get a few units and some experience under your belt.

Maria M. · Answer

if i was you i would forget i had the money u said u have .

Go and find other people's money .

Put on a small show with your family members , friends , their friends and try to raise some money without sounding like you need their money .

Make yourself the prize  that people want .

Find a deal that you understand in and out and pitch it to all of them to invest with you .

you do need to have a very very small piece of that skin in the game .

And last if u r trying for commercial , try MLO ( Master lease Option )

If its good enough for the empire state building , it sure is dame good for you .

Hope this helps. If not, sorry .I tried . All the best.

Johanna A. · Answer

David, I looked at Orange county, CA and I wanted to pack.

I agree with your response.

David Faulkner · Answer

You can make money investing in buy and hold REI in expensive areas ... look at where I'm from if you want to see expensive:)

In most cases, it is expensive for a reason, and the opposite also tends to be true as well. There are advantages and disadvantages ... it is really just a matter of understanding what those are and crafting an investment and exit strategy(ies) to maximize the advantages and hedge against the downside disadvantages ... that in a nutshell is what investing is really all about IMO ... the nuts and bolts of how you go about doing that is the tricky part ...

Which route would you take?

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