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Updated about 6 years ago on . Most recent reply
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Newbie investor in need of advice: Rent or Lease Option??
Hello everyone!
My name is Michael and I'm a 24 year old graduate from The Ohio State University with a passion for entrepreneurship. I currently work as a project lead for a quickly growing startup in the Cleveland, Ohio area and recently became obsessed with REI. Working for a startup, I don't make a ton of money.. obviously.. Both my family and I have never had a lot of money, but I've always been motivated and a self-starter. I see real estate not only as an entrepreneurial challenge, but a key to financial freedom and being able to support my family. I was never someone interested in working in the corporate environment..
So, I've been saving the little money I can for a potential down payment on a house (I'm talking like 3-5%). I became interested in lease options after watching a lot of Kris Krohn's stuff and it seems like a pretty good strategy for a beginner with less capital. I've contemplated buying his course. I guess in his course they actually give you all of the paperwork you need to go out and start doing deals which is what really made me interested. However, I also have a wealthier family member who may be willing to get into some multi-family investing, she just doesn't have the time/will to learn about investing so is leaving that up to me. With my full time job (about 60 hrs a week) I don't have a ton of extra time to be a landlord. But, I also don't know how time consuming it will/can be and if it would be something I could balance with a full time job.
As a new investor which path do you think you'd pursue in terms of having a work/work balance (being able to keep my full time job and invest at the same time)? Why would you choose this route?
Any and all help/advice is appreciated!
Most Popular Reply
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That ^^ or: find a good enough deal to afford you money to pay for a good PM while still cash flowing. While a good PM won't make REI passive for you, it will alleviate a lot of the "dirty work" (filling units, collecting rent, etc.). @Brandon Turner always says, always budget for PM in your expense analysis (10% of rent plus various fees for filling units) even if you plan to manage the property yourself. Not only does managing take your time and so you should therefore be compensated, but you likely won't manage the property forever so plan for this expense ahead of time.
I haven't done any deals but am quickly working in that direction while also working full time. I will be sticking to small multifamily slowly working into larger commercial deals. If you can/need to, house-hack (live in a unit while renting out the others). This gives you "low-money-down" options via FHA loans and makes it easy to collect rent/manage the tenants yourself.
Most of all read, learn, network, and ask questions.
Good luck!