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Updated almost 7 years ago, 02/15/2018
What would you do in my situation??
So I am going to try my best to tell you all the variables in my situation to try to get the best game plan.
1. Me and my wife (23 and 24) have 1 rental property that has 2 doors. The top makes $1300 and the bottom we currently live in but when we get into the next property it will rent for $850.
2. The mortgage for property 1 is $1434.00 a month. (I did end up jumping on a property based on emotion and excitement so I won't do that again... In hind sight I would have looked for a BRRRR property)
3. Me and my wife have $7500 in savings.
4. I have a personal line of $15000 untouched.
5. I have a credit score of 745.
6. My wife and I have made a budget we can live with where we can save $20000 a year.
7. I am interested in buy and hold, flipping, apartments, really anything but wholesaling.
8. We have no debt other than the mortgage of the suited property that we own.
9. Lastly... I am very impatient and am itching to get my next property and I don't want to make a bad financial decision based on my being impatient.
I know it's a lot but I just am looking around how best to use my resources to further my portfolio the quickest.
Thanks! :)
Hey @Amadeus Hladun
Your first property sounds like a pretty typical Lethbridge rental. From the details you provided, it seems like you would be a good candidate for doing a BRRRR model property.
My family is from Magrath, I went to the University for a while and my brother currently lives on the the south side. I have looked at doing rental properties in Lethbridge in the past and found that it could be difficult to get a good BRRRR property. It doesn't mean they aren't there, it just means that patience is definitely going to be one of your virtues if you plan on investing in Lethbridge.
I always think that no deal is better than a bad deal. Be patient, but look diligently. Take a look at your goals and determine which investing model best fits where you want to be in 5, 10, or 20 years. Having the end goal in sight will help you determine if you want to pursue varying investing options.
Good luck and happy investing!!
Amadeus, I echo the advice of your first responder. You’re a young man, practicing patience as you move forward will reap far more rewards than buying something at the wrong numbers. Wait for the right deal, save more cash, learn more and meet more wholesalers.
How much equity do you have in the duplex? To me, equity is the most powerful tool you can use to grow a portfolio.
- Corby Goade
... I knew that was the answer was coming, to be patient.
So what would you say to me if I was looking into getting into a condo that would have mortgage+condo fees that would equal that of my basement unit that I currently live in. Therefore if I got into it and then rented out my downstairs suite as well, then I could be saving an extra $800-$900 a month. Like I know it's not a great deal but I would then be truly living for free and then I would have another property, and the basement isn't completely finished there so I could put an extra bedroom and bathroom downstairs and make it more valuable for when I would sell it. Or would you say just be patient and wait for a GREAT deal which honestly I haven't been able to come across as of yet?
@Amadeus Hladun This has nothing to do with actual deals, but some of the lessons I've picked up along the way that have been a tremendous help building the funnel so that you aren't just looking for your next deal.
1. Don't let money burn a hole in your pocket, but when you see an opportunity jump on it.
2. Knowledge and a solid network is how you get ahead in this industry (any industry for that matter).
3. Network, leverage your connections to meet more people that are doing real estate in different areas/niches.
4. Commit to lifelong learning through a multi-pronged educational approach that includes learning from others, learning from experience, learning from books, learning from sites like BP, learn from podcasts, learn from school, learn from seminars, etc.
5. Always be on the lookout for deals and opportunities.
6. Understand financing and how money works.
7. Engage in your community.
8. Become an authority.
9. Learn about entrepreneurship, self-mastery and mindset.
10. Have a balanced work/home life. Don't give up your outside interests.
11. Encourage your wife to participate and make sure you both come up with common goals. Nurture your marriage and give your wife praise and recognition. Often our spouses are the ones that go through a huge emotional roller coaster learning how to support their entrepreneurial partners and the last thing you want is for her to resent your business.
@Amadeus Hladun Moved from Calgary to Texas and have been around Lethbridge.
The best advice was already given: patience. I would like to add that you should also consider other real estate like multifamily (2-4 units, in your case) or commercial properties like a retail shop in a heavy traffic area. With AB economy recovering as oil prices inch up, you will find deals especially because a lot of people who made bad deals are now throwing in the towel (at exactly the wrong time).
You should also look into diversifying your real estate by investing in REITs through your TFSA (to avoid paying a withdrawal penalty) while you save up cash for your next purchase. This way you keep getting a reasonable income return and mentally, do not feel the urge to jump on a mediocre deal.
@Amadeus Hladun one of the most important skills of real estate investing is finding good deals, if you have a good deal, finding money is no issue. I would focus your time on figuring out what you can do to get better deals, this will be your highest $$$/hour you can make.
Thank you everyone for all the great advice, I truly appreciate it!
Wow, pretty much the same situation me and my wife is in. You're doing great man & as long as your thinking/ trying to figure things out. You can't go wrong. Continue to educate yourself & no matter what anyone say. Follow your instincts. Ultimately, there no right or wrong. In REI everybody has their own journey. Congrats on jumping in this buisness and good luck the rest of the way.
I'd start by identifying a market that fits your investment profile.
Cities like San Francisco, Arlington VA, Seattle, and Austin have experienced incredible appreciation for BRRRR projects and those that purchased 2-7 years ago. At the current cost basis, however, these cities will be less likely to provide you satisfactory income per dollar unless you add substantial value to the property.
Conversely, cities like Houston, Cleveland, Jacksonville, Detroit, and Tampa have experienced less dramatic appreciation and still offer a great cap rate with a stable industry base, but you are less likely to get massive appreciation.
It ultimately depends on your goal - if you would like to be more aggressive, you could pick up a rehab property in a low cap city listed above, but be conscious that the appreciation experienced since the recession may not continue forever, so I'd recommend being quick with your hold time. If you would like to be more conservative, build a team or buy into a syndicate in a market pillared on cash flow.
Either way, the first step is to ask questions, so you're on the right track!
Best,
Salem
Originally posted by @Amadeus Hladun:
... I knew that was the answer was coming, to be patient.
So what would you say to me if I was looking into getting into a condo that would have mortgage+condo fees that would equal that of my basement unit that I currently live in. Therefore if I got into it and then rented out my downstairs suite as well, then I could be saving an extra $800-$900 a month. Like I know it's not a great deal but I would then be truly living for free and then I would have another property, and the basement isn't completely finished there so I could put an extra bedroom and bathroom downstairs and make it more valuable for when I would sell it. Or would you say just be patient and wait for a GREAT deal which honestly I haven't been able to come across as of yet?
Don't do a condo, 0 appreciation, usually increasing fees and difficulty turning it into a rental.
Live in one of the units of your duplex or to save up additional money to properly buy the next place.
The reality is you don't have enough money for a downpayment or to qualify for a mortgage. My immediate next step if I was in your position is to save and do anything you can to find a deal and then an investor
Getting into a Condo.. why? Unless it is a lifestyle decision I find it a risky proposition
