New real estate investors looking for a little help
New to Real Estate · 01886 · Member since 2023 · 23 posts · 8 votes
New real estate investors looking for a little help
Most Popular Reply
Member since 2022 · 50 posts · 24 votes
3yQuote from @Keith Davighi:
Hi Folks!
After a long career in the IT industry I am focusing my attention on real estate investing. However, I'm challenged with trying to make the right decision on the first property so that I can maximize what little capital I have so that I can potentially start generating enough cash flow to live on which could be as little as 50-60k per year. I know this could be a tall order but since Im new to the game, there are likely financing options that I can leverage that "might" help achieve my goals. I am not afraid of fix and flip but Im hoping for fix and flip to myself for passive income. Thanks for listening. :)
Congratulations on focusing your attention on real estate investing!
Based on your goals, I would highly recommend considering short-term rentals (STRs) as a potential investment strategy to generate monthly cash flow as a passive income.
While Boston may not be the best location for STRs,there are plenty of other cities and vacation destinations that can generate way higher monthly cap rates.
19 Replies
- Investor · NH · Member since 2023 · 54 posts · 25 votes3y
It is a tough market to get started in, especially in the Northeast. The inventory is so low here and rate increases haven't helped the situation but don't let it stop you from investing in the right property.
Financing options are out there, my best advice is find a lender that can help with the type of project you want and be patient. Don't over extend in this market and find something that is a good long term investment.
- Real Estate Agent · Member since 2023 · 91 posts · 80 votes3y
It will take a while to make that passively. After operating expenses and insurance, (unless you have a STR scenario) you will be surprised how little you will cash-flow in this market out of the gate. That being said, make the right long term moves and one day it will flow well. Just be patient and don't try to squeeze too much out of a property on the first go.
- Real Estate Consultant · Ann Arbor, MI · Member since 2022 · 463 posts · 253 votes3y
Hi Keith-
This is a great question!
I am a big fan of the idea of Occam's razor or finding the simplest solution to a problem with the least amount of steps or variables.
That being said and not knowing your exact specifics I will give you an example.
You could buy 7 houses in Lansing, Michigan for $50,000 each for $350,000. Each house will cashflow about $700 after property management, taxes and maintenance a month. $700 a house X 7 houses = $4,900 a month or $58,800 a year--fastest, easiest solution.
If you don't have $350,000, you leverage what you do have into value add duplexes in the same location buying them so you can pull out as much of your downpayment as possible after adding value for about $120,000 a duplex. It will likely take more houses and this plan has more steps with fixing up the houses, which your property management company will help you do, and refinancing out your downpayment--more steps, more potential for miscalculation.
To your success!
- New to Real Estate · 01886 · Member since 2023 · 23 posts · 8 votes3y
Quote from @Paul Pratt:
It will take a while to make that passively. After operating expenses and insurance, (unless you have a STR scenario) you will be surprised how little you will cash-flow in this market out of the gate. That being said, make the right long term moves and one day it will flow well. Just be patient and don't try to squeeze too much out of a property on the first go.
Great thanks for the feedback Paul. This is why Im sort of agonizing over the first purchase.
- 3yBenjamin AakerPro MemberRental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
It will take a while, but if you plan to keep your IT career for a while longer, you can use that money to start making your purchases. If you are willing to move, you can buy up to a 4 plex on a FHA loan (if you are willing to live there). That might be a way to jump start your plan.
- Realtor · Providence, RI · Member since 2022 · 404 posts · 262 votes3y
@Keith Davighi - Being in BP forums I suspect you should be familiar with the BRRRR strategy. This is great for what you are looking to do; recycling capital from deal to deal will allow you hold properties for the income while you move on to the next and build a portfolio. Of course always easier said then done but I would spend some time looking into it if you haven't already.
- 3yAlecia LovelessPro MemberMember since 2019 · 3k+ posts · 2k+ votes
@Keith Davighi I’m in a fairly inexpensive (relatively speaking) market in the Northeast. I’ve got 20 doors which only average about $200 cash flow per door. If you’re not afraid to invest in out of state markets the return is better for sure according to what others say.
I’d say I’m averaging $65,000 cost to purchase per door on larger deals, 4-8 units but smaller deals are anywhere from $145-300,000 per unit for 1-3 units. And then like I said mostly averaging only $200 per door so you have to be in it for the long haul.
And even then those prices don’t take into account the cost of renovations after the purchase which I’ve bought a few buildings with $0 renovations and then looking at one now that depending on the direction we take if we buy it could run $80-100K after PP of about $345K for a 5 unit.
- Member since 2022 · 50 posts · 24 votes3y
Quote from @Keith Davighi:
Hi Folks!
After a long career in the IT industry I am focusing my attention on real estate investing. However, I'm challenged with trying to make the right decision on the first property so that I can maximize what little capital I have so that I can potentially start generating enough cash flow to live on which could be as little as 50-60k per year. I know this could be a tall order but since Im new to the game, there are likely financing options that I can leverage that "might" help achieve my goals. I am not afraid of fix and flip but Im hoping for fix and flip to myself for passive income. Thanks for listening. :)
Congratulations on focusing your attention on real estate investing!Based on your goals, I would highly recommend considering short-term rentals (STRs) as a potential investment strategy to generate monthly cash flow as a passive income.
While Boston may not be the best location for STRs,there are plenty of other cities and vacation destinations that can generate way higher monthly cap rates. - Member since 2022 · 50 posts · 24 votes3y
Quote from @Keith Davighi:
Hi Folks!
After a long career in the IT industry I am focusing my attention on real estate investing. However, I'm challenged with trying to make the right decision on the first property so that I can maximize what little capital I have so that I can potentially start generating enough cash flow to live on which could be as little as 50-60k per year. I know this could be a tall order but since Im new to the game, there are likely financing options that I can leverage that "might" help achieve my goals. I am not afraid of fix and flip but Im hoping for fix and flip to myself for passive income. Thanks for listening. :)
There are financing options available for STRs that can help you achieve your financial goals. For example, there are lenders who specialize in short-term rental mortgages, and you may be able to leverage Airbnb income to qualify for a loan and use that as leverage.
If there's anything I can help you with regarding finding the right location and property and also finding a lender, just let me know.
- 3yJay ThomasPro MemberReal Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
Real estate investing in the Northeast can be daunting. Inventory is low, and rising rates don't make it any easier. But with the right property and patience, you can still find success. Look for lenders who specialize in financing projects that fit your needs - this way you won't have to overextend yourself during these uncertain times. Investing wisely will give you more stability in the long run so do your research before taking on a real estate project. Good luck!
- 3yBrady GrahamPro MemberMember since 2022 · 21 posts · 9 votes
Hi Keith,
Congrats on the vision! I commend you for it. I am curious, you mentioned "after a long career." Does that mean you are approaching the end of that career or are already retired?
So many choices to consider from short-term offering higher reward for higher input (think of it like buying a business), BRRRR, etc.
I'd have to say the resounding idea to keep in mind is not to be so focused on One-ism, that one deal will be a mega-hit, or as @davidgreene24 would say a grand slam. Focus on base hits.
From my perspective and a local realtor, it is difficult for cash flow with rates where they are. Tapping into Pace Morby's content on Youtube is an eye-opener into creative finance. I believe this will be the best path to cash flow for the coming years until rates adjust back down.
Hopefully this is helpful. Let me know your thoughts and good luck!
- 3yMin ZhangBusiness MemberReal Estate Agent · Member since 2022 · 1k+ posts · 1k+ votes
Hi Keith,
I'm glad to hear to you are redirecting your focus in real estate investing. I'd love to help you get started. To get on the right path on your first deal and maximize your limited capital for generating sufficient cash flow, focus on setting clear goals, researching the local market, and analyzing potential properties which most local agents can help you. I would try to connect with wholesalers. They typically have undervalue deals that you could buy to flip. The next step is to find a hard money lender that can help you finance this deal. They typically can lender you 80/90% LTV and 100% of the construction. Having a good understanding of the market is vital.
Let me know how I can help!
- Member since 2022 · 10 posts · 0 votes3y
Quote from @Keith Davighi:
Hi Folks!
After a long career in the IT industry I am focusing my attention on real estate investing. However, I'm challenged with trying to make the right decision on the first property so that I can maximize what little capital I have so that I can potentially start generating enough cash flow to live on which could be as little as 50-60k per year. I know this could be a tall order but since Im new to the game, there are likely financing options that I can leverage that "might" help achieve my goals. I am not afraid of fix and flip but Im hoping for fix and flip to myself for passive income. Thanks for listening. :)
Hello Keith, the less means to acquire property in my opinion is via sub2's. Recommend you look into this method. - Real Estate Agent · Boston, MA · Member since 2016 · 446 posts · 214 votes3y
@Keith Davighi congrats on starting your investing journey. There's a lot of great info here already, so I'll try to offer a different perspective.
First, ask yourself if you want a more passive way to earn cashflow or something more active (maybe even both) to replace your job. This will inform how you construct your portfolio and determine your next move.
Flipping is more hands-on and can be a full-time endeavor if you want to flip multiple houses. Do you just want to do a live-in flip or apply this strategy outside of your living situation? In the northeast, houses are more expensive, but areas like Boston tend to have more natural appreciation couple with the forced appreciation you can get from fixer-uppers, which is why I love live-in flipping (low down payment, building equity, no tenants).
Rental properties speak to your cashflow dreams. If you invest in the northeast, it'll take longer to build up 20% down payments due to the higher prices to enter the market. If you want cash flow asap, it sounds like out of state investing might get you to $6,000 faster. Keep in mind, that you build wealth from more than just cashflow though (appreciation, loan pay down, tax savings, etc.).
Good luck! - Columbus, OH · Member since 2023 · 427 posts · 254 votes3y
Fix and flip is good but the real money is in holding post-fix. You can refinance and get the rehab money back in equity, and get good cashflow from rents that are now up to market. Flipping is a good way to make quick income, and perhaps use towards other investment opportunities, but after all the work, high construction costs, unforeseen issues and fees sometimes it may not be the most fruitful investment. With a rehab and subsequent refinance, you can build equity fast and still continue to cashflow. Homes needing cosmetic rehab allow you to build equity, raise rents, buy low, and ultimately cash flow.
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes3y
Quote from @Keith Davighi:
Hi Folks!
After a long career in the IT industry I am focusing my attention on real estate investing. However, I'm challenged with trying to make the right decision on the first property so that I can maximize what little capital I have so that I can potentially start generating enough cash flow to live on which could be as little as 50-60k per year. I know this could be a tall order but since Im new to the game, there are likely financing options that I can leverage that "might" help achieve my goals. I am not afraid of fix and flip but Im hoping for fix and flip to myself for passive income. Thanks for listening. :)
The only question you need to answer, how much cash do you have ? Depending on that will determine which route to take
- Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes3y
I do not know the Boston market but I suspect it is much like what we have out here in San Francisco Bay Area in terms of prices/rents/tenant base. Here in Marin County a fully-paid off 4/2 or spacious 3/2 SFR can clear $50K-$60K/year. You do not have to deal with the headache of managing multiple properties. Focus on buying a fixer in the best area near you, bringing it up to rental condition and paying it off as fast as you can. $50-$60 per year is eminently achievable.
- 3yBrian BurdsBusiness MemberInvestor · El Paso, TX · Member since 2017 · 6 posts · 1 vote
Hey! Congrats on making the decision to explore real estate investing after your career in IT. It's an awesome opportunity that can help you generate cash flow and achieve financial independence. Let's chat about some strategies and considerations to help you make the right call for your first property!
1. Define your investment criteria based on financial goals and risk tolerance, considering factors like location, property type, and potential returns.
2. Conduct thorough market research to identify areas with strong rental demand and potential for property appreciation.
3. Explore financing options and consider strategies like fix and flip or buy and hold, seeking expert advice and conducting financial analysis to mitigate risks and maximize cash flow potential.
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