Newbie: Action or wait?

Question

Hello BP Members,

Sorry in advance for the long post.

So, for some background: I have been diving headlong into the material of the site as well as books and other material to get started in REI.

I have settled on the strategy of house-hacking to start off my adventure with the incredible power it can have of reducing expenses to free up for more investments and focusing my research on this niche per Brandon’s principles.

My plan was to simply watch and wait. By allowing myself one year to research REI further and expand my knowledge of the local markets and locate a better deal. This however changed recently when my friend (landlord) recently got a new job and is having to relocate. This creates a bit of a conundrum to me as I really wasn’t planning to buy something this early, essentially moving my one year of waiting into potentially 4-8 weeks.

So, the knowledge base I have so far comes in the form of around 30 BP podcasts, Brandon’s two books on rental property investing (read ~3 times), as well as the newly released investing guide by Josh and Brandon. I have also been looking at random youtube videos for additional content. This was all done within the span of about 3 months.

My current W2 job provides me with enough income that I should be able to scrape together enough money for an FHA down payment quickly, I have a FICO of 780+, I’m in a buyer’s market from what I can tell [Topeka, KS]. I do have a bit of rehab experience, but it’s been about 10 years since I’ve had any real hands-on.

So finally, to my question:

Armed with this little knowledge, should I:

A)Buy something quick after analyzing deals 24/7 over the next few weeks

B)Wait for now, learn more and keep renting (effectively pushing back REI due to a 12-month lease)

My biggest concern is the fact that if I push back the ACTION portion for a whole year, I may lose the enthusiasm and momentum that I’m so excited about. While on the reverse side of this being that I may be too willing to jump head-first and not finding a great deal due to the time-crunch.

Looking for some guidance and/or opinions.

Thank you so much for taking the time to read my post!

-AJ

Craig Sloan · Answer

@Anthony Janke

There will never be a perfect time to start.  Pulling the trigger for the first time is always the hardest.  Having said that I think it is really important to get your first one right.  A bad first experience can turn you off to investing and cause you to miss out on one of the greatest wealth building opportunities in the world.

What kind of properties are you looking for?  Are you considering single family or multi-family?  I think buying a small multi-family and living in one of the units can be a great way to start.  The other units help subsidize your living, you get a taste of being a landlord and you probably get a better rate on your loan because the property is owner-occupied.  Could that be an option?

Anthony Janke · Answer

Awesome, I'll definitely try to connect with them for the short-term rentals. I'll keep my eyes peeled for a multifamily if it comes up. The area really doesn't have many small multifamilies in the "livable" areas of topeka.

There is quite a few in the bad neighborhoods but I really don't think the high vacany/turnover in exchange for a cheap price is a good trade.

Thanks so much for your ideas and input.

Shane H. · Answer

@Anthony Janke - I moved to Topeka 13 mos ago from Wichita - Id investigate heavily into something you could airbnb - Topeka IMO is way overpriced for what you get.  Taxes are higher etc.  You may have a different perspective -unsure how long you've lived here.  Anyways I had met a few people that were doing quite well with AirBnB (due to a lack of quality rentals here) and the general transient nature of Topeka's population - seems a lot of people dont stay here long and I can see why.  My goal for next year is to try and get involved in the chamber or at least put my .02 on development etc - whomever the city and county planners for the past 2-3 decades have been should be crucified and never allowed to work in those roles again.  Topeka has a lot of great things and potential but none of it has been used or it's been misused.  My guess being the capitol is that a lot of money gets put in peoples pockets.   Garden City, KS and Dodge CIty KS have better development plans and are cleaner towns than here.  Saying that about Dodge takes a lot - they've come a ways since the casino was put in.

Anyways I went on a tangent - but do your homework and check out the short term rental market - maybe buy a duplex and use the other half as a short term rental or a small apt complex if you can afford it near the university.  That or just buy in Lawrence where more people want to be.

If you look on available Airbnb's for Topeka there's a gal named Elizabeth Taylor (yes that's her name) - her's are the ones near Huntoon and Filmore and a guy named Larry - cant remember his last name but his wife advertises a ton of them on there - Larry and Elizabeth would be good folks to connect with.  Larry's into horses or horse showing or something like that - Elizabeth is a cool older eclectic gal - (our family lived in one of her furnished rentals for a month and a half when we came here)

Anthony Janke · Answer

Thank you all for the direction in getting started.

@Joshua Hively Yes, my friend is selling their home that I'm currently renting from, so I only received about a 2 weeks notice to vacate essentially - which is fine since there was no formal agreement. I will be staying there and helping him show the home as needed as well as continue paying utilities/yardwork etc. Since he will now be out of state. This will give me some buffer time to continue looking, though the timeframe could be rather chaotic. I do have friends to fall back on, but would really prefer to avoid doing so.

Jay Helms · Answer

@Anthony Janke -  Before you start, you want to Discover YOUR Why. Once you have discovered YOUR Why to get involved in REI, then you can establish your goals and set your investing criteria.  I challenge what @Craig Sloan stated in that the perfect time to start is once you have clarity on WHY you want to start, then you start.

Joshua Hively · Answer

@Anthony Janke Personally I would consider a combination. Analyze and look for a good deal 24/7 over the next few weeks. If you find a good deal, pull the trigger. If you find a mediocre deal you will have to consider whether you would be better off getting started or delaying. Also consider that sometimes the actual closing of the property sometimes can be lengthy for various reason. If you can't find a proper deal in the meantime consider trying to find a more flexible living situation such as with a friend or a short term situation via craigslist. Is your friend/Landlord selling their property?

Anthony Janke · Answer

That is true. Thank you for the input - me assuming there are only two options here is quite restricting. I'll definitely keep looking for a solution.

Chace Fraser · Answer

Hey @Anthony Janke I agree totally with what @Craig Sloan said.... but why not go with the best of both worlds? Don't rush, but you don't have to wait a year... who says you have to sign a 12 month lease? EVERYTHING in real estate is negotiable. Yes, month to month leases will be a little more expensive but with that added expense you get flexibility. If you say "everything in my area is a 12 month lease" then you're right and you'll never find a month to month option because you won't look. If you believe there are month to month leases out there you'll search until you find one. It sounds like you have 4-8 weeks to find one!

Craig Sloan · Answer

@Anthony Janke

Finding something that would reduce what you are paying in rent would be an improvement but I would encourage you to try to find something that would at least cover your expenses.  That way you could use the money that you would be paying for rent to fund your next deal.

Newbie: Action or wait?

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