1st Investment Property with 100k+ in equity

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1st Investment Property with 100k+ in equity

Joshua Meisner
Southern NH · Member since 2019 · 13 posts · 2 votes

Hi BP members,

I just recently joined the website and have been thinking of investing in rental properties for a month or so.

My personal experience is very limited but my dad has done very well throughout the years buying rehabs for cash and fixing them, then renting them for some time prior to selling them. I have used him as a valuable resource recently, to look at my excel sheets and the tools I plan to use when looking into properties/ROI on properties.

He has told me to hold off until the market changes. It is too up in his mind to start right now. I have a 50+ hour, hourly job and live comfortably. But I want to be doing the 40hr or less work week by the time I am 40.

I am self motivated, I have great basic math skills and complete ownership of my work and when I have a plan I put 110% into it. Thats why my plan is to use a HELOC with the equity on a multi with minor renovations required, gain equity and rent them, refi the property to close the HELOC and move to another project with another HELOC.

My question to experienced people, that are moving on projects right now, is it worth it to take that chance with the market up (although it has slowed around here it is still up in NH)

I do have a family and do not live paycheck to paycheck, but also feel I need to do something soon to invest in our retirement and real estate has intrigued me.

What would you do with 100k+ worth of equity? Would you invest NOW? Would you hold off until the market drops? Is there a better way to use the equity other than rentals (I do not have the time to be flipping houses etc due to 50+ hour work weeks)

Thanks for any responses and let me know if you have any other questions about my situation.

Thanks.

Josh

1Reply
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Bill S.Pro Member
Moderator
Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
7y

@Joshua Meisner timing the market is a fools game. Sure the market may be high compared to history but who is to say it won't keep going for another 4-5 years (I doubt it will do this). Where would you be then? The current data indicates that we have another 1 or 2 of upward trend and then we need to check in again because so much of where it goes from there will be determined by what happens between now and then. If you find something, buy it. It won't go as planned but if you have enough cushion, it won't matter. Perhaps an 8% IRR which is not the end of the world. Might also get 15% IRR then you would be smiling.

I don't know your area but the whole BRRR approach can backfire if lending or the market changes. Only buy if you can reasonably have two exits from the deal. Preferably three or more exits.

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  • Heath Ryans
    Investor · Kingsport, TN · Member since 2016 · 412 posts · 254 votes
    7y

    @Joshua Meisner where is this 100k coming from? What multi are you talking about? Is it yours or your dads?

    0Reply
  • Rowen Burney
    Greenville, SC · Member since 2018 · 58 posts · 50 votes
    7y

    Hey Joshua, I would suggest you read this article https://www.biggerpockets.com/renewsblog/how-to-ma... .Basically, there are deals to be found in any market however they are not always easy to get. It is never bad to invest in a hot market like it is now however you always have to be careful. A true deal should be able to withstand market corrections so long as it is purchased and managed correctly. If your deal has solid number go for it and don't try to time the market if you do someone will take the deal or you won't be ready to buy when the market really does drop.

    Best of luck,

    -Rowen burney

    2Reply
  • Nick Rutkowski
    Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    @Joshua Meisner

    It all depends on how active you want to be with your money. You could lend your money and charge interest, buy a commercial multifamily, the list goes on.

    0Reply
  • Joshua Meisner
    OP
    Southern NH · Member since 2019 · 13 posts · 2 votes
    7y
    Originally posted by @Heath Ryans:

    @Joshua Meisner where is this 100k coming from? What multi are you talking about? Is it yours or your dads?

     Hi Heath, 

    Thanks for the response first and foremost.

    The 100k would come from my primary home which is a SFH, I bought it from my parents for a deal and have done renovations.

    The multis I am looking at are for me to purchase to repair / renovate and rent out all over southern NH and dont plan to pull the trigger on anything for another month to get some more things in place.

    Thanks.

    Josh

    0Reply
  • Heath Ryans
    Investor · Kingsport, TN · Member since 2016 · 412 posts · 254 votes
    7y

    @Joshua Meisner oh ok. Now im tracking. What size multi's are you looking for? 

    0Reply
  • Joshua Meisner
    OP
    Southern NH · Member since 2019 · 13 posts · 2 votes
    7y

    Thanks for the response I will definately read through that tomorrow.

    I truely appreciate the response and your opinion on the situation.

    Best of luck going forward,

    Josh

    0Reply
  • Christina Linn
    Investor · Member since 2017 · 83 posts · 46 votes
    7y

    It depends on the numbers.  Some markets are way too high for my taste, but some are more stable.  It seems like investing in the OK, NE, WY, MT, IA, and maybe the Dakotas is still quite lucrative.  Every deal is different though. I would suggest watching the market for something you're interested in and running the numbers.  You can also invest through someone else for interest or partner with someone who can manage the properties.  My own experience has led me away from property managers, but if you choose to buy something on your own and don't have time to manage it that is also an option.

    The best advice I can give is to be creative and ensure the numbers work before investing! If you can find something off the market that is also awesome!! That would be tough since you're new, but easier since you know someone in the game.  Good luck!

    0Reply
  • Joshua Meisner
    OP
    Southern NH · Member since 2019 · 13 posts · 2 votes
    7y

    @Nick Rutkowski

    Understandably lending would be more secure given my situation but I wouldnt want the HELOC sitting for years. I want to be able to refi whatever I buy and take that money to wipe the HELOC, so hopefully I can do it again successfully.

    What would you personally do given your mindset behind realty?

    Thanks!

    Josh

    0Reply
  • Joshua Meisner
    OP
    Southern NH · Member since 2019 · 13 posts · 2 votes
    7y
    Originally posted by @Heath Ryans:

    @Joshua Meisner oh ok. Now im tracking. What size multi's are you looking for? 

    I have been looking at 3 unit and 2 unit 2BR units for figures and they all make sense if the price is right. I am not looking for a turnkey property by any means. I want something upwards of 10%ROI when I am being very conservative using my numbers/cushions.

    How do you feel, multi or single family for a first investment rental? And why?

    Thanks!

    Josh

    0Reply
  • Heath Ryans
    Investor · Kingsport, TN · Member since 2016 · 412 posts · 254 votes
    7y

    @Joshua Meisner If you buying 4 units or less, just be aware that their value is based on the housing market, not solely numbers.

    You may know but based off your wording I'm just going to clarify. When you get a HELOC, its like a giant credit card. You use what you want and you pay interest on it. Whenever you repay it, its still there, you just have the full balance available again. It doesn't close until the end of its term. Which is much longer on primary residence vs a rental.

    What you buy depends on your goal. My goals are large apartment complexes, so I bought a 4 unit for my first deal with the intentions of scaling up.

    If you want more units, buy bigger buildings. Instead of managing a bunch of different properties, your just managing different doors under one roof. 

    1Reply
  • Chris C.
    Raleigh, NC · Member since 2017 · 347 posts · 94 votes
    7y

    @Joshua Meisner

    Best advice I can give is budget for the worst case, then budget some more. Life has a way of throwing curve balls, and it's the same with RE.

    1Reply
  • Bill S.Pro Member
    Moderator
    Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
    7y

    @Joshua Meisner timing the market is a fools game. Sure the market may be high compared to history but who is to say it won't keep going for another 4-5 years (I doubt it will do this). Where would you be then? The current data indicates that we have another 1 or 2 of upward trend and then we need to check in again because so much of where it goes from there will be determined by what happens between now and then. If you find something, buy it. It won't go as planned but if you have enough cushion, it won't matter. Perhaps an 8% IRR which is not the end of the world. Might also get 15% IRR then you would be smiling.

    I don't know your area but the whole BRRR approach can backfire if lending or the market changes. Only buy if you can reasonably have two exits from the deal. Preferably three or more exits.

    3Reply
  • Derek Guivehchi
    Rental Property Investor · Dyersburg, TN · Member since 2019 · 45 posts · 31 votes
    7y

    @Joshua Meisner Don’t let the “market” being high or low become a distraction to your goals. Regardless of overall market conditions there will be deals. There will just be more low hanging fruit in the downswings. The key is being able to truly identify a deal and be in position to make offers.

    1Reply
  • Joshua Meisner
    OP
    Southern NH · Member since 2019 · 13 posts · 2 votes
    7y

    Awesome input from everyone.

    Thanks for taking the time to reply.

    My real goal would be to have these investment rental properties become my income. In turn, try to work away from a real full time job by the time I am 45 or so.

    @Heath Ryans

    That's a great point. I just dont want to go into this without getting my feet wet with something smaller though.

    @Bill S. And @Chris Connolly

    I am planning to leave myself cushion to cover a large expense if needed. I have my dad (contractor) to hopefully help with any extensive repairs that may go unseen during home inspection/walk through.

    @Derek Guivehchi

    Great advice, I really feel I need to just get out and walk properties to get a feel for what is what personally.

    I'll be doing some walk throughs and more research. I will keep any movement posted here.

    Thanks for all the input and its great being part of the BP community.

    Josh

    0Reply
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