Advice on my First Investment!

[Javier Beltran]

Hey all! My wife and I are new into the real estate investing business but are in a good spot to begin. Our goal is to buy our first property (ideally a live-in flip) in June 2019 in Lincoln, NE. By June, we will have saved up enough to put down 20% on a modest single-family home. The big wrench in our plans is a move to Colorado beginning in early 2020 which means we would live in the property for a little over a half year which would be plenty of time for a proper rehab as well as time to assemble a good team (because we plan on continuning to invest In Lincoln even after we leave) including a property manager. Then, once we are ready to move, rent it out and have it as an out-of-state property. 

Do you guys think this is a wise move? If not, what complications do you think could arise that could make this a disaster? Overall pros and cons?

Like I said, this will be our first investment so I'm sure not everything will be perfect but I'm willing to try my best to minimize any problem that could potentially arise. Any other tips and advice regarding my situation would be greatly appreciated! Thank you!

[Natalie Schanne]

@Javier Beltran - I 100% believe everyone’s first investment should be within 30 minutes of your home (or ideally your first investment is your own home, bought ugly, fixed up, with working professional roommates or Airbnb who help pay your bills and give you tax deductions (repairs, property taxes). Certain homes can be shared without a lot of privacy issues. It all depends on the tenants you pick.

Self manage it and you will learn a lot, quickly, so you make less future mistakes. Most PMs are not worth their pay. They call their plumber who charges you $300 to plunge the toilet and they get a 30% markup over that for administration. They don’t care if you’re bringing home profit. Your team isn’t any good until you try them. I’ve received dozens of names for every trade and am constantly looking for new guys because the current ones are too expensive (vs Rehab estimating book) or performed shoddy work when I hired them. You will love your realtor until your fixed up property doesn’t rent for the projected $$ for six months because your price is too high. 

Remember in a hot market with good job opportunities, if a zillion homes aren’t being built, then the price of housing will go up. If I bought a home in New York City or San Francisco or Denver 5 years ago I would have thought it was overpriced at the time but it’s worth 30-100% more today while Lincoln Nebraska is probably still worth about the same. A good example might be checking historical prices in a condo development. Here in ewing Nj, the value of decent 2/2 1980’s condos worth $180-200k has fallen to $130-150k as property taxes and hoa fees rose. They rent for $1500 consistently today where they compete with apartment complexes. I’d rather have a home in NYC or Denver that has economic fundamentals to appreciate massively.