New to Real Estate from Reading, PA

[Wes Talada]

Hello everyone. You can call me Wes or Wesley. I've lived in Berks and York counties in Pennsylvania my whole life, (but I'd love to move somewhere with nicer weather and less traffic.) I don't have any experience in real estate other than a few books and seminars, but I'm intrigued by the concept of leverage. I have a few years of experience working in a warehouse, managing a few stores, and working in sales, but none of them felt like I could be happy doing them as a career.

My current goals with real estate are to move into my own place and to get enough cashflow that I won't have to work for someone else. House-hacking seems like a great way to meet both of those goals. And if house-hacking covers my housing expenses entirely, I think I would only need about $400/month cashflow to "leave the rat race." I've heard that $100 cashflow per unit is a decent deal, so I'm thinking I should look into 4-6 unit multi-family properties. What do you think?

Since I haven't invested in any properties yet, I'm open to doing a smaller deal or 2 to start out, like a single family. Either way I'd really appreciate the opportunity to work with people who are more experienced. I might not have experience or money, but something I have lots of is time. And because I don't have much money right now, I'm going to be studying creative financing for the next few weeks.

One of my long term goals is to buy or inherit my grandmother's trailer park. She doesn't think anyone has what it takes to run it except her. I'd love to be able to set her up with enough money to retire, but also keep the trailer park in the family instead of her selling it to a stranger. My hope is that by doing some of my own real estate deals and running some rental properties, she'll see that I can handle it. And at the very least I could get some experience with financing and maybe create a group of investors that could help me buy it, if that's what she would prefer.

Let me know what you think. Is my house-hacking plan a good idea for meeting my goals quickly? Is there another method you would recommend I look into? Any advice for making deals in my area? Also where should I start in terms of keeping everything legal, like would I need a business license? Should I find an accountant or a lawyer? The whole legal end always seems to be skipped over in books. Anyway, thank you for reading. 

[Bryan Smith]

Wes, 

I think house hacking would be the best way to start real estate investing for your scenario. You will get the most inexpensive financing available if you house hack in your own name and you would also have the smallest up front cost to purchase (possibly no cost if you use a VA or USDA loan). Unless you have a significant amount of assets, I would recommend that initially you put everything in your name and at a later date transition to an LLC as you grow your real estate portfolio. I always recommend seeking out a cpa/accountant and lawyer who specializes in real estate and have them available for any questions that might arise.

Contact your realtor or initiate contact with an established realtor to assist you in your property search.  
This approach will also help you develop or strengthen your relationship with a realtor which is invaluable for real estate investing.  Have an open conversation with the realtor about your goal(s) and I would be honest about what you are looking for.  For example, do not look at an inexpensive property because of the low listing price and that property is located in an urban environment if you prefer not to live in an urban environment.         

In the Reading area, you should be able to find a multi-family property where the rent will cover most of the cost or cover the entire cost of your mortgage.  Congratulations, you just eliminated the majority of your housing expense!  Once that property is stabilized and performing to your expectation, continue on to the next property.

My recommendation is under the assumption you have the ability to acquire traditional financing (stable employment the last 2 years, have funds available for closing cost, good credit, and have a decent debt to income ratio).  If you can not acquire traditional financing, you can still proceed to house hack but will need to look at alternative borrowing strategies.

I hope this helps.  Good luck!