Business Plan to begin investing

[Chris Garzino]

Hi BP Community,
Has any one written a business plan when starting their buy & hold investing?

Thanks

Chris

[Corey Hawkinson]

@Alexander Lang Great question, I have lots of thoughts on condo investing. Let me start with my story on why I own 2 condos as that’ll help. I bought my first condo as my personal residence when I was 23 I believe. At that time I had limited motivation to become a landlord. I just wanted a place to live. Bought for $105k. This was a very small association, 12 units total.

After that the recession hit. Prices fell drastically. Another unit was a foreclosure listed for $50k. I bought it for $49k knowing that I could make money instantly. That has turned out great for me. (Lots more thoughts here but that’s a different conversation)

One thing about condo’s that I didn’t realize is that if 1 person owns multiple units that equal more than 10% of the units, financing for other units becomes a problem. With my $49k purchase at least one other owner in the association was pissed and claimed that I took away property value from everyone else. That was a problem as that person was a board member and became a ——- whenever I tried to improve either of my units. But we got through those issues.

I eventually moved out of my unit into a house and I’ve had the 2 condos rented since that time. Rent has increased consistently here in the Twin Cities. The condos are located in Newport, a small suburb of St Paul. (Woodbury school district but Newport is not anywhere near as good as Woodbury, hence the $49k purchase price)

Something that’s nice about a condo is that typically it is a lot less work. That does help out if you’re getting started in real estate investing. It was easy (compared to other options) for me to get 2 units and keep upgrading as I was able to move into a starter home and then into more of a forever home.

Dealing with an HOA can be an issue, but typically is not as long as they allow rentals. The main issue I had was that a board member was bitter towards me. We got through that, I just had to brush aside the attitude. You want to know that the HOA has reserves. Enough to cover a roof, driveway, etc.

Overall, I’m happy with the condo purchases I’ve made. They’ve provided good cash flow, not amazing but consistent. They have built up equity over time and have put me in a good position to upgrade (1031 exchange) into more units when the opportunity is right.

With that said, if I could do it all over again I would convince my younger self to buy a 2-4 unit and house hack.