Rental Property Investor · Saint Albans, VT · Member since 2015 · 76 posts · 5 votes
Hi everyone,
I am from Vermont I make pretty good money for my age, 22 and making 19 a hour with little to no bills. I found a house foreclosed for 50k, I have a few ideas on this. I would like to change my tax form at work for the 2 and a half months I can do max over time so I don't get any taxes taken out. Work 12 hours days six days a week get as money saved as I can, hopefully pay off half of the house cash finance the other. Being a 3br 2 bath in the city it should rent (hopefully) for at least 1200 a month. May take 10-15 in TLC but my brother is a carpenter other is a electrictian and close friend a plumber. So hopefully cheaper to fix that. Does anyone know if what kind of tax breaks come from buy a house? If I should set up a LLC in my name for this? Rent for the long run here or selling a better bet?
Investor · Springfield, VT · Member since 2014 · 158 posts · 75 votes
10y
Congrats on having your head on straight. Starting at your age, if you play your cards right, you should reach financial security before you hit 40.
Forget the LLC right now, that is more of an asset protection move which is not yet needed as you are just starting out.
If I were you, I'd plan to move in so you'd get more favorable owner occupied financing and you might even try to get one of those FHA 203(K) purchase/remodel loans to fund your repairs.
After you live there awhile, then consider renting it out when you've found your next project to buy/renovate... Then, rinse and repeat... Do that 10 times and you will be well on your way to financial security.
Rental Property Investor · Saint Albans, VT · Member since 2015 · 76 posts · 5 votes
10y
Okay do you have any insight on the tax breaks that can come with buying a home? Also if I should live there until it is complete payed off or rent it before then?
Rental Property Investor · Palm Beach Gardens · Member since 2013 · 15 posts · 0 votes
10y
Shane, I own Grunts Move Junk and I'm a real estate agent at KW Vermont if youd like to sit down and chat about how to get into some properties no charge no commit just a coffee and chat let me know! I was 23 when I bought my first house and Its the best thing I did
Investor · Springfield, VT · Member since 2014 · 158 posts · 75 votes
10y
Mitchell, can teach you about the "true cost of ownership".
No, not live there that long... there might be some term requirement by the lender, if not, once the project is done, when you have found your next project you might see what the value is of your first project and if you've added enough equity, you might even be able to refi and pull your cash out and then do it again. Keep in mind that renting might be more than owning, so use the BP tools to analyze your proposed deal.
Real Estate Agent · Burlington, VT · Member since 2015 · 108 posts · 46 votes
10y
Hey Shane. Do you have the cash to buy out right? The problem with foreclosures is that they are very hard to get financing on. Especially if they are in bad shape.
Myself and a couple friends went in on a foreclosure on 62 Fairfield St. in Saint Albans. We are all investors and own rental properties and have some cash on hand. We got our offer accepted but then could not get a lender to touch the project. We were going for commercial financing.
I would say your first step is to talk to some lenders. If you can't get the financing and don't have all the cash-- doesn't matter how many hours you work you can't do the deal.
The easiest route that I see young people take, myself included, is to buy their first property with an FHA 3.5% down loan. You can buy up to four units with an FHA loan. In my mind this is the "sweet spot" for a first property purchase.
You sound like a real go-getter! I am sure you will do well.
I am happy to recommend some lenders for you to talk to you if you would like.
Rental Property Investor · Saint Albans, VT · Member since 2015 · 76 posts · 5 votes
10y
No unfortunately I do not, I can scrape together close to 30k maybe a little under including take from my 401k and the hit that brings. But being only 22 most of my friends do not have a huge stock of cash laying around or even thing about wanting to invest in real estate.
The main thing with a four unit building is the price, it makes me a little nervous to be honest due to how much bigger the loan is, that is why I was looking at places around or below 100,000.
But I appreciate all of your info it was very helpful!
How's it been going? I hope you are still looking! Any new updates? It's tough to find anything for less than 100k around these parts that is in any kind of decent shape. I would be less nervous to buy something in better shape with a bigger loan than something in bad shape for less. Especially for you first one. I think most people get taken to the cleaners when they underestimate the amount of the rehab cost.
One of the lessons I hear investors say over and over is "cashflow". It doesn't matter how much your loan is for as long as you are making money every month. So if your tenants (or friends- whoever you are renting those extra rooms out to) cover the cost of your mortgage and then some you will be on your way.
Rental Property Investor · Saint Albans, VT · Member since 2015 · 76 posts · 5 votes
10y
Hey @Blair Knowles to be honest a bit discouraged looking at some of these places that are 200,000 seems like a lot to jump into at my age. Especially if you are unable to find someone to rent it because it seems like the only good areas in Vermont are the Burlington area and St. Albans but both are quite expensive. Any advice?
Hey @Blair Knowles to be honest a bit discouraged looking at some of these places that are 200,000 seems like a lot to jump into at my age. Especially if you are unable to find someone to rent it because it seems like the only good areas in Vermont are the Burlington area and St. Albans but both are quite expensive. Any advice?
Don't get discouraged! There are great properties all over the state, it just takes a minute or two to find them and an agent patient enough to walk you through it. $200k isn't unreasonable at all, especially for a cash flowing multi. Using an FHA loan you'd only news $7k down and a few grand in closing costs. There are well qualified tenants in every town, and if you have a quality unit it won't be hard to find a great tenant.
Rental Property Investor · Saint Albans, VT · Member since 2015 · 76 posts · 5 votes
10y
@Samantha Hiscock yeah that is true, but even a area like enosburg where the population isn't the highest you don't think it would be to hard fill the vacancies there?
@Samantha Hiscock yeah that is true, but even a area like enosburg where the population isn't the highest you don't think it would be to hard fill the vacancies there?
Shelter is a basic human need. Quality housing is needed in every size town. You shouldn't have a problem finding tenants.