Where do I start? Minneapolis Area

Question

My wife and I have paid off all of our consumer debt besides our residence. We have been following the Dave Ramsey money principles and we have a fully funded emergency fund of 6 months living expenses and we are investing 15% of our income in Roth’s for my wife and I and 529s for the kids. We both have solid jobs and have $2000-$3000 left over each month after our mortgage, bills, and investments are paid.

I have been interested in real estate investing for a long time and now that we have paid off all our debt I want to get started. I have thought about getting my license but don’t know if it’s necessary. I don’t know where to start....

Noah Chappell · Answer

@Luke Nelson @Evan Kraljic Luke congrats on getting started. To echo what Evan said generally the higher on the discomfort scale you get, the greater your reward. So, first think about how much you're willing to dive in, given you have a family & w2 job, etc.

House hacking is when you buy a property up to 4 units with a low down payment loan, such as FHA or Minnesota Housing. The low DP option buys you into a lot of property at low out of pocket cost. You then rent the other unit to mostly cover your mortgage. You can rinse & repeat after 1yr. These is a relatively simple way to grow quickly.

I'm pretty familiar with Minneapolis, not so much with the 'burbs, let me know if I can help with anything else.

Tim Swierczek · Answer

@Luke Nelson Great job so far.  In your situation, it seems like networking with other local investors to find out their real-life experiences and learn areas, rents, etc would be a perfect next step.  There is an active local investor community.  I think you could find it useful and with COVID you can do some of it virtually.  We are not allowed to post other groups here but if you PM me I can send you a list of 7 meetups I have attended.  Good Luck

Taylor Hudgins · Answer

Hi Luke!!! Congrats on such a solid financial foundation!  You're off to a great start!

You don't need a license, but you can get one later on if it would be beneficial for you!

What are your goals?  Are you looking to flip or buy rentals?  I would definitely suggest starting with education through podcasts, books, youtube, etc.  Once you feel confident with the basics - start building your team such as lenders, real estate agents, and contractors (if needed).  And then you'll be able to rock and roll with putting in some offers!

Adam Tafel · Answer

@Luke Nelson - welcome to BP! Just to clarify, house-hacking involves occupying an investment property for at least a year, in order to obtain favorable loan terms and a low down payment. I have yet to see a family of four pull off multiple house-hacks, but perhaps you could be the first?

Where to start? I'm going to assume you're already consuming plenty of information via forums, books, and podcasts. If not, that's where you'll want to start. Before too long you'll have a basic, well-rounded education on the main forms of REI, at which point you can start to analyze deals. Get on the MLS and auction sites, and learn to use the BP calculators. Keep asking questions in these forums, and attend meetups. Before you know it you'll be closing on your first deal.

Luke Nelson · Answer

@Evan Kraljic what is house hacking ?

Evan Kraljic · Answer

Hey @Luke Nelson, congrats man! It sounds like you're in a great situation financially to start real estate investing. I think where you have to start is being real with yourself on what you're willing to sacrifice with your current lifestyle in order to buy a rental property.

Normally house hacking is where I'd encourage people to start, but you have a wife and two kids so maybe that's not as attractive of an option for you. The reason I'd recommend it is just so you can qualify for a low-down payment purchase, but it sounds like you have the discipline to save up some money fast and who knows where the market is heading, maybe 1-2 years from now will be a prime time to buy. Also I feel like I should add, there are some damn nice duplexes in the west metro so house hacking a side by side 2000+ sq ft/unit house wouldn't be bad for a family, I'm just thinking more along the lines of your typical 2/1 1000 sq ft duplex in Mpls/St. Paul.

But yeah, aside from that I would just say to decide on what type of property you want, where you want it, and link up with a local agent for an MLS search and lender to determine what you can be prequalified for. The rest of your team can be found later but those two roles are crucial to you getting serious about finding your first property. I can offer some recommendations too if you want. Good luck!

Where do I start? Minneapolis Area

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