60k to invest.. whats next?

Question

Hello everyone,

I am a first time poster and relatively new to the real estate investing scene but I am kind of stuck on where I should take my next steps.

A little about myself:

I'm 25 and purchased my first property last year. I have been renting it out on Airbnb for a few months now after moving in with my gf and doing quite well with roughly $1800 cash flow positive per month. The property is worth 210k and I owe about 140k on it.

This is a more detailed breakdown on that property,

Purchased the property for 195k, put 40k down, did some renovations and had it reappraised for 210k

HELOC payment- $1150 per month

Utilities: $250 per month

Taxes- $200 per month

I have had it on Airbnb for 3 months now and am averaging $3100 per month (June, July, Aug). I do expect this to come down a little now that the summer months are coming to an end.

$3100- $1600 = $1500 cash flow.

I have another 80k saved up and would like to put about 60k towards my next property (leaving 20k for emergency funds, rehabs, personal fund etc.)

I have zero debt (no student loans, no car payment) outside of the HELOC I had to purchase the first property I stated above and most of my living expenses are paid by my employer (car, gas, cell phone).

I am based out of Central Pennsylvania and am looking to stay somewhat locally for my first few properties (Harrisburg, Camp Hill, Lancaster, Hershey etc.) and am not really interested in out of state investing.

Just looking for some advice or input on what you would do next if you were in my situation,

Any input and info would be greatly appreciated,

Thanks!

Charlie Claxton · Answer

Nick,

Great post! - A thought occurred to me, that since you already have experience running short term housing through your Airbnb stuff, perhaps the cash flow projections would make great sense for you to start your own or invest in a existing corporate housing company, obviously this is more of a business investment rather than a strictly real estate , as the name of the game is stretching your existing capital out to a few different units. We do corporate housing for the film and tv industries here in Georgia and this provides our family with tremendous returns-- It was just a thought, since you already have some experience and see the returns you can expect, maybe you should look into it! :)

Joshua D. · Answer

Hey Nick!

Great job on the cash flowing property. It sounds like you are off to a great start. Is your market strong enough to rent it out as a full time rental in the winter months? Agreed with a poster above on renting to corporations if possible, we'd have some great success with that on short-term leases and charged easily double our usual asking price.

With 60k, I would do several things. First, start making those around you know that you are investing in real estate. Put it out on FB. Maybe they know someone who wants to sell and you could buy below market value, potentially.

I also like the idea of putting 30k down on 2 properties.

Have you looked into tax sales? It's a volatile market and VERY risky, but PA is a tax deed state and you may have some success there, if your threshold for risk is somewhat higher. I say this because MOST of the homes need extensive work, but it's worth it if you can get them for a song.

Know any realtor friends?  Make some! They can keep you in the loop on properties that they have for sale that they can alert you to.

Just some ideas! Good luck my man! Wife and I started last year and are just tomorrow getting ready to close on our 7th unit tomorrow. We love it. Best thing we ever did together!

Josh Mitchell · Answer

@Nick Liddell Depends a lot of what the inventory available is, what you're looking for. In my area, if this were me, I would split the 60k in two and put 30k as 25% down on two separate properties. Also, if you can't find anything, probably wouldn't hurt to pay down that HELOC some.... $1,150 is a pretty large HELOC payment monthly....

Stephen Franco · Answer

Please PM me, I am a REI and wholesaler in the high cap rate and low cost market of Scranton PA...

I may have several ideas for you

Nick Liddell · Answer

Dylan S. Hey buddy, the renting term varies. I have a 3 night minimum set because it really isn't worth my time to have people stay for less than that which means less cleaning and meeting guests. The longest I have had a guest stay was 9 days from 3 guys from California who were working in Downtown Harrisburg. I also have a older couple from out of the country who are booked for 15 days from early to mid October which is pretty cool.

I have the price a little higher on weekends but not much. I have people who stay through all days of the week.

I think the success of this is based on the house itself. If I were to try to do this with a normal cookie cutter rental house, I doubt I would have as half as much bookings and probably a much lower price.

Nick Liddell · Answer

@Shanna Bechtel That is interesting point you brought up. I sent you a PM.

@Joshua D. Thanks man! I think I could rent it full time for the winter but I am not sure the amount I could charge would be worth it. Its a rather nicer home but a smaller square footage (3BR, 2BA) so I think my ceiling is capped. I think I am leaning towards short term renting over the winter and seeing how it does.

As far as connections, my mom has been a realtor in the area for about 15 years so that has helped me out a lot as far as having access to the MLS and looking at properties. I also have a good connection with a local bank as far as being able to obtain loans.

I have been looking at tax sales but haven't pulled the trigger on any. I am definitely leaning towards splitting the money I have saved on 2 down payments on 2 different properties like you said. Just figuring out which route I want to take as far as location and property type.

Thanks again for the advice and congratulations on getting ready to close on your 7th unit. That is awesome news. Best of luck to you and your wife!

Shanna Bechtel · Answer

Nick, I am local to you in Harrisburg. I'm looking to break into real estate investing with wholesaling. If you would like, I can add you to my buyers list so when I get a good property deal, I can notify you. There's a lot of hidden deals and gems around this area especially since there are several colleges and Hersheypark being such a large attraction. Have you considered buying a large home walking distance from a university and rent it out room by room? It can be a very profitable investment considering you can get 2-3x market rent for one property.

Please let me know if you want to be added to my list.

Dylan Succa · Answer

@Nick Liddell Go get 'em brother.  The airbnb success that you are having is somewhat surprising to me.  How long are the renters usually in the house?  I would assume most people stay on weekends, do you have people that stay through the week?

Nick Liddell · Answer

@Jason Stutenroth I am not really sure at this point, still weighing different options. I would eventually like to break into the MF property market but want to wait for the right property.

I help manage my families portfolio of commercial industrial/flex properties along with brother so I am learning a lot with that and would be interested in expanding into commercial as well.

@Christian Bors The property is actually located in a rather nice area in Lemoyne. Most of my past guests have been Hershey Park families along with people in town for business or attending conventions. As someone who has lived here his entire life, I almost took for granted how much there is to do here and in the surrounding areas. I would like to either buy another short term rental property closer to Hershey or Lancaster, those markets seem to be doing well. Eventually, I would like to diversify my portfolio between Commercial, Multi Family and Short term rental properties. I am also looking at properties that I would have no problem switching to yearly rentals if anything were to happen to the short term market.

And i will definitely look coming into the CARPOA, Thanks!

Christian Bors · Answer

@Nick Liddell  I am assuming the Air bnb is in Hershey.   Are you looking to continue the air bnb or buy a more residential rental?  You should come to carpoa sometime.

60k to invest.. whats next?

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