Looking for some advice

[Kole Kingslien]

Hello there, I am a beginner at this, and thought someone might be able to help me with a few things. To give you a perspective on where I'm at: I'm 22, my wife is 20, we live, and work, right outside of Madison Wisconsin, and we are hoping to start out by house hacking a 4plex. We have $18,000 saved up to start investing. At this stage I have secured lending for an FHA loan, and have been looking at properties. We eventually want to keep investing in buy and hold properties and eventually maintain enough cash flow to quit my job. I'm looking for any guidance you might be able to offer about strategies to reach these goals. Things that are in my mind are questions about being able to obtain multiple financing, is this possible? Can I have multiple loans, even though I carry an average job? Also I am confused about the legal aspect of it, I hear people throw names around like LLC, CORP., TRUST, but I'm pretty confused on this. Also, creating a lease, rental application, and things of similar nature, am I supposed to/can I do these on my own? What about accounting and finances, can I do these things on my own? I want to make sure I'm doing things wisely, legally, and safely, while remaining profitable and protecting myself legally. Also, even though I plan on doing this where I live for a while, I am still curious how owning out of state rentals works? Thank you for taking the time to read this, any information would be helpful. Respectfully, Kole

[Kyle McCorkel]

Welcome to BP @Kole Kingslien

Love all your questions.  I'll answer the best I can, and others can fill in the gaps.

Yes, you can obtain multiple loans.  10 "conventional" loans per person, so keep each loan in either your name or your wife's name (not both!).  Conventional loans offer the best terms.

You will be able to get multiple loans as long as you continue to meet lenders' criteria, which is a constantly moving target.  But it involves keeping a high credit score, low debt-to-income ratio (below 45%ish I believe), and keeping some cash reserves.

For your first house hack I would recommend keeping things simple. Getting an LLC will complicate things and you also cannot easily get conventional loans with an LLC. For asset protection, get a good homeowners policy AND an umbrella insurance policy with $500K-$1M in liability coverage. When you get more equity and more properties in the future, that might be a better time to begin protecting them with an LLC.

Lease, rental application, etc. - I believe some of these documents are available on BP, not sure though.  

Accounting/finances - I'm assuming you mean someone to do your taxes...I personally would recommend it, but you might want to try doing it yourself while you are starting out.

Keep track of your finances like a hawk...I recommend creating a separate account that you only use for real estate investing purposes.

Out of State Rentals - I started locally and now own a few out of state/long distance as well.  I would highly recommend starting locally.  You learn so much about how the business works and those lessons apply no matter how far away the property is.  I bought out of state because I was getting stalled out locally AND I found a trustworthy turnkey provider and property manager AND this offered a solution that was much less time intensive.  Turnkey basically means that someone else does all the work - they find a distressed property, they (should) do a full rehab, put a tenant in place, put property management in place, and then sell to an investor.  Think of them as a house flipper for buy and hold investors.  The key is absolutely ensuring the rehab and PM teams are excellent.  If it works, then it can offer great diversification and a hands-off alternative.  Keep in mind, you won't find stellar deals this way but the time required makes it worth it for some people.