BRRRR vs. House Hacking in the Twin Cities

[Eric Bate]

Hi all!

My job income: $22k/yr

Current rent that I pay: $955/mo

My savings: $50k in the stock market; $11k in a Roth account

I've been looking for a duplex for a couple of weeks as my first property, and stuff is either just out of my range (roughly $150k), or else it's in a sketchy part of town. Three out of the four duplexes I've visited on the MLS have gotten multiple offers within days of being listed. The last one is in a neighborhood where all the residents call it the hood (Thomas-Dale / Frogtown).

Even at the county tax-forfeited auction, stuff has been selling higher than I'd expected — one SFR with an minimum opening bid of $20k and a foundation crack sold for $93k. I couldn't believe it! Are foundation cracks really not that big of a deal?

Should I keep looking for a duplex to house hack for my first property, and just hope to get lucky with the MLS? Move into Frogtown, and hope it turns around (which is seems like it eventually might)? Or would it be better to buy a distressed house, renovate, refinance, and repeat? I have no experience fixing up a house — just minor stuff like painting and fixing toilets.

My current mid-term goal is to buy-and-hold enough properties to cash flow around $30,000/year so I have a net to fall back on if I'm injured and can't work.  Long-term goal is six figures per year from investments by the time I'd like to retire (about 30 years from now).

Thanks!

Eric

[Michael Lee]

Hello and welcome to BP! Where do I start? Since the inventory is kind of low right now everything is hunted down that I would probably start with a BRRRR method over rentals but it is what kind of deal you are looking at. Every , just about, is try to go through the MLS. Use less popular places and you might find a good deal. Be creative and hustle to find a good deal. Do not react too slow when you find something worth offering on. Know the phi all things on the market you select and know it's best locations. Financing should not be a problem to work with and don't shy away from a property because you think it's not affordable.

Always try to do the analyst numbers and try to look at the property before you make an offer or at least have a clause in the sales contract that allows you to look at the property and possibly back out with little or no penalty.  Find/Hire a local and experienced Team to use when you need them when you call.  Do not try to do everything yourself.  The typical main Team members are Attornies, real estate Agents, CPA's ( or accountants), Inspectors, and General Contractors.  Also, as soon as you can after closing, change the locks on exterior doors.  If the locks are still in good shape just install them at another address.

I am 59 years old and I found BP about 8 months ago and I am still trying to make a decision on what I am going to do.  I also went to college, not that it is mandatory, and I got a business degree that emphasized real estate.  Since I was in Texas and planned on staying ther I found out that I was qualified to take a broker test without taking anything extra.  I kept that license for about 30 years and closed a few deals for others, both residential and commercial.  Regardless of what I had I felt more comfortable with the construction business.  I was in the construction business since I was 17 including the college years.  My father has been in real estate sales as a broker for about 40 years and he taught me a little bit.  If you think I can help you please contact me through BP at any time. Good luck!