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HEY THERE EVERYBODY!!
My name is Abigail (Abby), and I’m an MI realtor looking to begin my real estate investing career. My goal is to buy properties in both Florida and Michigan so that I can escape the cold MI winter and hot FL summers.
I’m having a bit of paralysis when it comes to actually pulling the trigger on any deals. And, I’m not sure which direction to go in first. I’m a huge fan of the multi-family model of investing and would like to eventually build up to owning apartment complexes.
I’ll be very upfront and honest- I have about $20,000 saved for a down-payment/closing costs. But, in today’s world, I’m very unsure of how much is enough before sealing the deal on a place. Not to mention, where should I buy first? Somewhere in MI that cashflows to eventually buy in FL? Or, reverse that? Any/all advice is welcome!
If you would like to connect further, feel free to message me! Can’t wait to meet some of you guys!
Abby
Do you have a primary yet? 20k will maybe cover a 5% down loan a 400k house. Otherwise, you would need 10-25% down to use a investment loan. Look into a vacation home loan as well if you own primary. @River Sava may be able to help you as well for financing options.
Hey there Mya,
I do not have a primary residence yet. My goal would be to house-hack my way in. But, due to being self-employed, it is extremely difficult to get accepted for any kind of FHA loan. The biggest question I'm teetering with right now is buying in Michigan or Florida first. If i buy the place in Florida, I have a place to go in the winter and will hopefully be able to refinance and buy my place in Michigan within the next year. If I buy my home in Michigan first that cash flows, I can save that money and buy the Florida property as soon as I have enough saved. Really not sure where I should be buying first! I was born in raised in Michigan and know almost all there is to know about Michigan Real Estate. But, I love Florida and am also itching to buy a place of my own down there.
As you can see, I'm very torn. Any advice on how to pick which location to jump on first??
How long have you been an agent? You will need 2 years of track history unless you have another job/someone else on the loan. 20K is not enough to start. You can find a house hack locally but you need reserves and savings. I would focus on being an agent and building your business. Down the road you can look into Florida when you have the funds to do so.
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#2 Managing Your Property Contributor
- Property Manager
- Royal Oak, MI
@Abigail Irvine so you don't show enough income to qualify for an owner-occupied mortgage, so that leaves DSR loans on rentals as your only option.
At the minimum 20% down required on DSR loans, your $20k barely gets you to a $100k purchase.
That fact alone rules out Florida.
The biggest mistake we see investors make is blindly investing and not understanding what is going on with their properties. Another reason to stay in Michigan for your first investment.
So, what can you buy within an hour of where you live? You want to be close so you can visit to keep tabs on everything and NOT trust anyone.
How “new” are you to investing? I’m in the learning stage of starting up and it is a steep learning curve with tons of information to digest. Some people take a year or more to finally pull the trigger. Everyone does it different. Just curious what you’re truly feeling lost about.
I am personally looking close to home, but part of that is due to time commitments and the desire for direct oversight. If you don’t have any experience with construction, home maintenance, or people management, you’re going to be at huge risk on remote projects. Getting experience local where you have more opportunity to vet things and see things in person will help you navigate building teams from a distance.
I would suggest you network locally and find deals you can make work. Right now you have zero deals, so the question isn’t which one to go with, but where are the deals at all? It’s hard to network from afar and build the relationships you’ll want in place for your investment journey. Focus on relationship building. Look for deals where you’re at. Grow into your goals as you learn.
My honest advice- you'll struggle with the amount of cash you have. If your goal is to have properties in markets that have weather you like, that's awesome, but you don't have to START there.
House hack with a conventional loan in your own market. Build up some reserves and some equity while you learn the ropes and offset your living costs. You'll make more money, save more money and be able to do all of that with much lower risk and less capital.
I recommend you get another source of income and keep saving. You’re $20k will be your future savings that you will need to have around in the bank for when your property needs repairs or there is a vacancy. Dont buy until you have enough for downpayment, closings costs, a mortgage, AND savings. Research how much these things cost. Much more than 20k. Good luck! You’re on the right path.