21 and First Investment Property

[Austin Steed]

BP,

I just wanted to share a success story that I have been blessed with having. I was in the military and stationed in Lemoore, CA. Lemoore is a town of 25k people and they are expanding the base and adding about 5k billets to it. Supply and demand I knew it would be a good time to buy.

Tons of people tried talking me out of it but I still bought my first home at 21 for 186k. The cash-flow that I'm getting from the property is just about even right now which isn't the best thing, it's actually more of a learning experience. Although, this is including my property management company too. 

I was able to get the home rented in about a month of me moving out and the process was stressful but relatively smooth. 

In about a year I have about 12k in equity and not to mention all the tax incentives I'll have from the property. Furthermore, with a property management company that is GOOD, I hardly hear a thing about my property. I just get a check for $1102 every month and my mortgage is $1112.   

The point is I bought a house young and am seeing the benefits of owning a home now. I hope to soon be able to get a LOC on the equity in the home and buy another investment property in the Columbus area by June 2017.

Just thought I would share a little success from a young investor, thanks BP!

[Tony SanFilippo]

I don't understand why we investors buy without Minimum $500 positive cash flow and more if the location value will not double over the next 10 years (that is a 7% gain year after year).  @Austin Steed, Congrats for having the motivation to get in the game and I am sure you have learned a lot.  However, I think every new investor should look at this and think, what happens when the Furnace or hot water heater goes out.  If you don't have cash flow, it comes out of your pocket, hey even if you have cash flow it comes out of your pocket.  At your negative cash flow you not be able to make up for any expense.   Yes you may be able to increase rent in the future, but what about NOW?  Should we be losing money for taking a risk of appreciation?

What happens when the market takes a down turn?  Now you own more than the property is worth and have no cash flow.  This has happened in the past (2008) and helped the foreclosure boom.

As I see it investors like the example above are paying too much for property, we investors are accepting too low of a return on investment (time and/or our Money) for our risk.  It is not a get rich quick business, but new investors, don"t put your selves in a position to fail right out of the gate!  Deals are made in this business when you buy a property, not when you sell!

If we all played the game for a better return on investment, we would be getting houses a lot cheaper, instead making higher offers competing against each other or our selves.  Which puts us in higher risk position.  

Austin Steed

Austin Steed

Austin Steed