New member from Annapolis, MD

[Ken Nyczaj]

Hello everyone, My names Ken Nyczaj (pronounced Niche-I) and I'm a 29 year old from the Annapolis, MD region. I've lived in the state of Maryland most of my life. The beginning of last month I was introduced to Bigger Pockets by a friend from Severna Park, MD. The first Podcast I listened to was #247 "How to buy your first (or next) property by the end of the year", and all I can say is I was captivated to learn everything I could after that.

Been reading the forums and listening to Podcasts ever since. Podcasts work out great for me as an outside sales rep for an aerial lift manufacturer. I'm constantly on the road, driving as far away as Florida or Montreal every other week and Podcasts help the 10 hour car rides go by, and there's nothing better than learning while doing something monotonous like driving. I saw the immediate value in Bigger Pockets Pro and decided to jump right into it. Can't thank Josh Dorkin, Brandon Turner and all the guests on BP enough for the enthusiasm and guidance on these Podcasts.

I'm definitely a newcomer in every facet when it comes to real estate. My current goal is to buy and hold two properties- either a single family, duplex or townhome before the end of 2018. The markets I'm looking at are Anne Arundel County, Prince Georges County and Queen Anne's County. Preferably within 10 miles of my house to cut down on travel time. I've learned a lot about setting criteria before investing in a property and I can't thank Bigger Pockets enough for that knowledge. I'll be looking for cash flow of at least $300 (50% rule being at least $150) and cash on cash return of 14%. It may seem like demanding criteria, but I will not get into a deal to lose money, and I won't have the additional expense of property managers, I'll be self managing. Looking at properties that are built in the late 1980's to help cut down on maintenance issues, I hope. Vacancy, CapEx and Repairs are all set at 6%, that seemed to be a reasonable percentage for homes built within the last 30 years.

Great to be part of this community. Thank you.

Ken

[Malcolm Lawson]

Hey Ken,

Welcome to BP.  Have you started speaking to lenders yet about getting a loan?  I know a lot of people will say "find the deal first" but I actually don't agree with this approach.  The interest rate you get from a lender will influence whether a property will cashflow or won't so you really need that number before you a properly evaluate a property.  It is never too early to start talking to lenders and shopping around for the best deal.

Do you currently own a home? In my opinion, the easiest way to get your first rental property is to move out of your home and turn it into a rental. The great thing about this is you get to keep your incredibly low-interest rate which is probably around 4% right now. If you were to purchase a property as a straight up investment property, lenders would probably charge you 7-8% interest. This difference in interest rates could be hundreds of dollars a month. This is how I got my rental property in Annapolis which I purchased for $0 with the VA Loan. That property gets $1,900 a month and my mortgage is only $1,350 a month.

The biggest challenge with this approach though is most lenders will require you to have a tenant in the home paying you to rent for a set period of time, I think 3 months before they will qualify you for another mortgage. So you would have to move out, rent it out and you would have to rent out an apartment or possibly live with a friend for a few months before you could qualify for another mortgage. This inconvenience is why not a lot of people go with this approach. This is what I did, rented a townhome for about a year while I shopped around and ultimately bought a short sale at a huge discount as my primary residence and for $0 again with the VA loan. Eventually, I will turn this place into a rental property as well.

Do you think this approach would work for you?