Introduction and first investment home purchase

[Corbin Jones]

Hi, everyone! This is my first big post on BP. I should've posted my intro a while ago, but I'm finally getting that done now. I'm Corbin, and I live out in New Jersey as a district manager for Mazda North American Operations. I really love cars, especially the German makes. It's definitely fun working in the automotive industry, but I'm drawn to the hopes of managing my own business in the future. In the meantime, I am working toward financial independence. I've been reading a ton of articles on BP, as well as listening to many of the podcasts over the past year and a half.

I'm 27 and unmarried as of yet, but hope to have a family one day. Since I have extra money after my living expenses are paid, I have decided to invest in real estate. My best friend, Casey, is a realtor in the Milwaukee, Wisconsin area. We grew up in northern Wisconsin together (Wausau), so that is why I am investing in Milwaukee even though I no longer reside in Wisconsin. I love Wisconsin (and its cheese and beer) and hope to live there again one day. Go Packers!

Next Friday, I finally close on my first deal. I don't even own a primary residence yet - I rent, because I plan on transferring to the Midwest as soon as an opportunity arises with my current company. I'm starting out small so that I can learn, but I hope to scale quickly through gaining more and more knowledge in the process of owning my first rental property. The single-family home that I'm purchasing is on the north side of Milwaukee in a safer area, and the reliable tenant has been living in the property for five years. The current owner is selling the home so that he can scale up. The loan is being secured through conventional financing, with 25% down. I will have to write a new lease for the tenant, who is currently month-to-month. A few of the questions that I have are:

1. What is the best proposal for lease term length? 1 year? 6 months? Monthly?

2. How do most of you accept payment and what would you suggest? Is Zelle a good choice? I currently pay my landlord through Venmo. 

3. Which forms do I need the tenant to sign as soon as the home is in my possession?

4. Do you have any other suggestions for me as I dive into my first investment home?

I look forward to hearing from some of you and learning from you as well! Feel free to connect with me on here or on LinkedIn. - Corbin Jones

[Natalie Schanne]

@Corbin Jones - I’m an agent in Princeton NJ. My favorite real estate strategy for starting out is always buying a too big house (foreclosure/estate sale, “rent-ready” but with problems like smokey or smelly or painted weirdly), near where I work and and living in it for free with 2-4 roommates. You can see my other posts for details but essentially I used the income from other professionals to pay all the mortgage, utilities, such that I was rent free and +$500/mo and then I upgraded the house piece by piece, learning the whole way. Because I bought near my job in a growing area, I realized good appreciation too. Many high rent to price or low cost areas have low appreciation. (Ie buy for $50k, rent for 1k/mo, price of house in 10 years is still 50k.)

If you’ve got a done deal for this out of state investment property, my best advice to you is to read lots of BP where they’ve already answered all of your questions and/or provided opinions on each.

Note: In the app I can’t see your original post questions to reply.

-Zelle is easy and I use it. There are other platforms. Best is to write in your lease they need to deposit the money in your local-to-them branch bank account by the 1st.

- Year leases ending in May-August are the best because you have rent protection and can’t be dumped without repercussions in the middle of the winter. I had 5 tenants on month to month and 4 gave notice in November and in December I had 80% vacancy and had to cut prices to get new tenants.

- If you’re definitively moving in less than 2 years and would need to sell a home here to buy your next home, I don’t recommend buying. The costs to get into and out of real estate can be significant and not worthwhile if you aren’t buying a fixer upper and collecting a profit on sweat equity every 2 years with free owner occupant capital gains.

Good luck. Let us know how it goes!!!