Beginner Real Estate Investing in PG County Maryland

Beginner Real Estate Investing in PG County Maryland

Member since 2019 · 1 post · 2 votes

Hello Bigger Pockets Community!

I was hoping to get some input from people in this forum. I am a 25 year old fairly recent grad (2 years out of college) looking to purchase a home and get into real estate investing. I'm just not sure to go about it. I have about $30,000 in student loan debt and $5,000 in credit card debt (car repairs and such). I currently live at home and do not pay rent, my current income before taxes in $48,000 annually. However, I will be starting a job in the new year where my salary will increase to $70,000 annually. Most of the money for the down payment will come from my parents as a gift, they will be selling their house in the next few months and giving me part of the profit to give me a kind of "head start" in life. Here are my questions/options as I see them. Should I:

1. Purchase a home as a primary place to live, and wait a few years to purchase another property as a rental. Most properties in my price range in my area are condos and/or town homes

2. Purchase a cheap rental property with a higher cash flow and then use my income to rent an apartment

3. use the full amount I will receive from my parents on the down payment (lets say about $10,000) or should I use half to clear my credit card debt and the other half on purchasing a home? 

Just looking for some insight here. I know many home owners so I do have some insight as to how the process works, but nobody in my immediate circle has every approached the process from the perspective of an investor. Thank you for taking the time to read this and hopefully give some helpful input.

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
6y

Id buy a house, rent out the room to do a house hacking strategy.  Close to metros draws premiums on room rentals.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y

    Id buy a house, rent out the room to do a house hacking strategy.  Close to metros draws premiums on room rentals.

  • Alexandria, VA · Member since 2017 · 22 posts · 12 votes
    6y
    Congrats @Taylor washington on your recent graduation. As far getting into the RE game there's no right way. Its all about what works for you. Regardless of where your credit score is. I wouldn't use big chunks of your parents money towards debt. Just talk to a credit counselor about the best way to pay down your obligations. #1. Might be your best option. I would look into possibly closing on a house that needs slight work or a foreclosure. Those options will provide built in equity and then you can House Hack for additional income. Use your renters to pay down your mortgage as quickly as you can then in a year or 2 you should have some decent equity, a higher credit score and a new gig paying more money. Which all will work towards helping you land the 2nd property. Its all about finding the right deals. I'm new to RE investing but not new to the PG County area. Working on Networking and building a team. I'm actually looking for a RE Buddy to attend the RE meeting in Oxon Hill on 1/8. If your interested in sitting down sometime hit me up.
  • Realtor · Washington, DC · Member since 2013 · 91 posts · 32 votes
    6y

    One good way to maximize a few of the things you have going for you would be to "house hack." You could use the down payment gift to purchase a place to live in (either single family, duplex, or triplex) and rent out the other rooms or living spaces. If you live in the home, you could make a lower down payment, and the rents could cover the mortgage, repairs, and even provide a bit of cash flow. Then save more and in another couple of years, buy another place and keep moving up. 

    I'm a Realtor and investor in PG county, and there's a lot of possibility for this here, plus in the right area you have the opportunity for a good deal of appreciation. If there's anything I can help you with, definitely let me know!

  • Investor · MD · Member since 2019 · 8 posts · 2 votes
    6y

    First, no reason to use your parents gift to pay for anything just yet.  If you are staying home and starting a better paying job in a few weeks, budget, pay off your CC debt.  If you want to keep using the CC, pay your cell phone bill with it.  Nothing else.  Pay it off monthly. 

    After that, just keep saving your money.  Minimize what you spend on unnecessary items. Be frugal. Maximize your savings by putting your money in a high yield savings account (since it will be a short period). Once your parents sell their house, do the house hacking as stated by Russell Brazil.  

    In essence you will have no CC debt, a better credit score by a few points, and have more money for a bigger down payment or more for repairs. Find a partner to invest with if possible.   

  • Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes
    6y

    @Taylor Washington I would house hack no question. It's an easy way to get your first one under you belt with very little on the line! 

  • Investor · Ellicott City, MD · Member since 2016 · 22 posts · 10 votes
    6y

    I would take part of the gift and pay down the credit card debt then look for a townhouse thats 3 bed 2 bath. Make sure the numbers look good for it being a cash flowing rental but instead of buying it as a rental I would buy it as primary residence to house hack. Rent out the other two rooms to keep monthly living expenses low. Then start saving up with the plan to move out rent it out and move into another property you can house hack that will be a good rental when you move out.

    or if you and your parents are content to stay living together when they move I would continue live with them to save money and pay down the credit card debt then over time let that credit score go back up to a strong number so you can get a loan with a good rate then buy the townhouse. 

    Most of my rentals are townhouses in Anne Arundel county but I did do a flip in PG count this year a Townhouse thats 3 bed 2.5 bath. I bought it because it was a good deal but I didn't hold it because it didn't cash flow well enough for me. There are plenty in PG county that would cash flow though so make sure to check your numbers. 

  • Rental Property Investor · Washington D.C. · Member since 2019 · 41 posts · 42 votes
    6y

    Taylor,

    I agree with everyone else. I am also a new investor as well from the DMV area and I am very familiar with PG County as I grew up in that area. I invest in Detroit at the moment. I would recommend househacking as well - purchasing a multifamily, living in one unit and renting out the other. I am currently looking for a 4plex myself in various states and I plan to househack my way into purchasing several multifamilies within the next few years. You can try getting an FHA loan which only requires a 3% downpayment and then use the rent from your tenants to pay the mortgage.

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