What would you recommend for first property? Flip, rental..

Question

Hi,

So, I have been searching for properties for a while now. These past few days have been doing lots of research and calculations. I would like to know what would you recommend for a first time property. I am interested in buying a property that needs some work and repairs in which I would do most of repairs by myself and then Flip. Then build capital to get into the rental game. But looking for what strategies worked for people and what they would recommend. By the way, I have been searching for properties here in Milwaukee if makes a difference. Thanks!

Brett Kash · Answer

@Muhammad Elzeibagh

I recommend looking for a small multi family (2-4 units) and trying to “house hack” by living in one unit and renting the others to reduce your living expenses. I used an FHA loan with just 3.5% down to get my duplex which worked out great. If you can find a property that needs some updating the. That’s a great way to build “sweet equity” and get your feet wet with rehabbing.

Karen F. · Answer

You're 19?  Do you have a full time job so that you have income?  If you don't have a job, you can't get a loan to purchase a property.  On the other hand, if you don't have income, you can do a flip and the taxes on it won't kill you, because it would be your only income.  If you do have income that would make you eligible for a mortgage (and it's really hard to get a mortgage if you're self-employed), then by far your best bet is to buy a multi, move into it with your family while you renovate it, and quickly be living for free while collecting rent on the other units.  Then do it again, over and over. Honestly, I'd consider just selling the primary residence to fund all of this - except since you're 19, I doubt the house belongs to you.

Who owns the house that you would be taking the HELOC on?  Do you?  Does a family member?  If someone other than you is the owner, and they're willing to do a HELOC on the house to fund your first deal, I would strongly recommend that you do NOT do this!  You're a beginner and you're playing monopoly with someone else's money.

If you don't want to go to school, then I suggest you get a job doing renovation work for somebody with a crew doing renovations on flips or renovate and hold rentals.  That way, you'll get some on the job training for what you want to do in the future.  Unless you're already bankrolled, you're really not in a position to do this yet.

Karl Krumholz · Answer

Hi Muhammad, I would recommend starting by house hacking a duplex or single family that needs a cosmetic update. This will allow you to live in it at a lower cost, build equity through your improvements, and then HELOC that into your next property in a year. Keep the property as rental vs selling so you will already have your first rental. This is my current stategry with a single family that I am putting 3% down on and after some updates expect it to have at least 20% equity in it by this time next year. This opens up the door to refinancing out of the original loan and having the option to repeat with a new property while renting this one out or using a HELOC to find a rental property.

I am focusing on the Eastside/North Shore (Shorewood, Whitefish Bay, Glendale, Fox Point) part of Milwaukee for this strategy.

David Maradiaga · Answer

What type of Marketing are you doing? Have you put out any Bandit signs or Ads anywhere? Maybe try driving for distressed properties and finding the owners through a public records search. Those are my suggestions. If you ever need anything feel free to shoot me a DM.

Muhammad Elzeibagh · Answer

@Brett Kash Thanks Bret! That might be the route! I do have a full time job, I work from home. House hacking would be a great option but my mother wouldn't like for me to leave! lol. I do have an uncle that is willing to loan me the down payment and work a payment plan with me so not really worried about that. Just need to make sure I have a good strategy and do things properly and in the best way possible.

Michael Henry · Answer

@Muhammad Elzeibagh Start with rentals and try to partner with experienced flippers to learn the business.

Muhammad Elzeibagh · Answer

@Brian Ploszay Thanks!

@David Maradiaga Haven't put any ads, something I should consider. I have been driving around and searching and networking and asking people. Also, Have been searching Craigslist and FB marketplace which surprisingly found few good leads. Thanks for the advice!

@Tchaka Owen I don't plan on moving into the house as I currently still do live with my family, and we plan on attacking this project together. As also, my father and brother have experience in plumbing and HVAC takes some of that trouble or major expense out the way. I have also dropped out of school and currently work from home and have more flexible schedule to be working on the property as this will be full time for me. Thanks for the advice!!

@Karl Krumholz Thanks Karl! My goal is to do this to gain financial freedom for my family and for us to do something together that we can enjoy. So, We currently live in Franklin and I was planning on using HELOC to fund first investment property. And those are really good locations you're looking into!

Brian Ploszay · Answer

Both properties will require you to be on a learning curve since you just started.  The hold property would most likely be easier, because the amount of construction detail should be less.

Tchaka Owen · Answer

@Muhammad Elzeibagh - you've already answered your question. You said you want to flip. So flip.Do you plan to move into the house while working on it? If not, I strongly suggest that you hire people to work with you to get it done as fast as possible. The first time I worked on a flip with my business partner, we were hands-on and the project took 9 weeks. We both agreed that we would have been better off hiring out most of the work we did because that time would have been more looking for additional property to renovate. FYI, we did put on a new roof, new AC, new kitchen, new flooring and landscaping - all done by vendors. It's everything else that did take up time. Plus we were perfectionists and that only made things more tedious. Good luck!

What would you recommend for first property? Flip, rental..

Most Popular Reply