Kickstart into real estate investing

[Maryrose Matanza]

New investor here. I'm 28, and purchased my first townhome at 25 which currently has been my primary home for the last 3yrs. I do have a small idea of what it's like to deal with maintenance issues, and all the 'baggage" that comes with owning a home. After refinancing and learning that the value of my home increased by 15%, I saw an open door to opportunities to invest in real estate. But I would like to do it right. I have enough to put down 3.5% on a condo/townhome, I'd like to start small (is this the best approach?). What I'm worried about is finding renters. On trulia, I see rental listings that are over 1month old. Id hate to purchase a home and not be able to find renters month after month. How is the market right now, and is it that hard to find renters? I'm thinking Clairemont, north park area. Would it be best for me to live in the rental property first, and then rent it out? 

Will take all the tips/advice I need to kickstart into real estate investing. I have some money saved up, and not sure how to take the first step. 

[Dan H.]

The only way to put down that small of a down payment via traditional financing (excluding owner financing, subject to, etc) is to owner occupy.   As a non owner occupied, you will need to put 20% down and I’ll get better terms with 25% down. 

We have one rental in Clairemont and many through San Diego county.   We have never had an issue finding a tenant.  However, realize that many/most good tenants have to give their current LL a month’s notice.  I will also add that pre covid we would have an open house after advertising a few days.  We would get massive turnout and typically get 1 to 4 applications.  We have had 3 units that we needed to find tenants since Covid.   With covid we scheduled one viewing at a time.  One unit rented real quick.  The other two I estimate took over 20 hours. About one out of 3 schedule appts do not show even if confirmed the same day.  I would allocate over 20 hours of viewings to accomplish what we used to get in a 2 hour open house.   Post covid, we will transition back to having an open house as we believe the frenzy results in urgency on applying.

You may only have the money for a townhouse/condo. My issue with condo/townhomes is not the HOA fees, but the power of the HOA. The HOA can dictate whether the unit can be rented, the type of flooring, etc. I do not want an HOA to have this large a say in my investment. I do believe most HOAs are good stewards of the HOA fees and have the advantage of scale for maintenance/cap ex costs to minimize those costs.

Good luck