New Investor Tips

[Josh Deever]

Hey everyone, I recently moved to Dallas a month ago to start my career in wealth management as a client associate, working 40 hr weeks, with an above average salary. I just turned 22 and want to purchase my first rental property within the next two years. More than likely, it would end up being a house hack somewhere in the 300-375k range. I’d like to have about 25k for a down payment and I currently have 15k saved up already in a high yield savings account. My strategy would also be going for more price appreciation than cash flow. Ideally, I’d prefer to invest in my hometown, Tyler, TX, about 2 hrs from Dallas, because I’m more familiar with the best areas to invest in and real estate is much cheaper than DFW. To my knowledge though, I would need a 20% down payment in order to avoid having to live in the property. I have a couple questions,

1. What are the best and safest areas to invest in that are relatively close to Dallas? I.E Midlothian, Cedar Hill, Grand Prairie etc.?

2. Are there any ways for me to achieve buying a property in Tyler? I.E. private money, seller financing etc.?

3. What would be some good side hustles that could generate extra monthly income to hit my goals faster or sooner along with the 9-5?

I’m sorry if I asked too many questions in this post, these are just the three biggest ones on my mind right now that relate to house hacking and real estate mindset?  If there’s anything that needs clarification I’m more than willing to help. Thank you for the responses in advance?

[Bruce Lynn]

Sounds like you're on a great path to success.

With the house hack, do you not plan to live in the house?  You'll get better loan terms and lower interest if you owner occupy.  If you're living here, why not buy here in DFW.

I like Tyler, but is it growing, incomes growing, jobs increasing.  That's how you get appreciation.  What are the demand drivers for Tyler and will those continue to grow?

Your best deals will probably be bank/broker financing.  Private money and seller financing is typically the most expensive.  Think 10-15% interest rates.  Think about your private wealth clients.  If they are going to take on risky loans, what kinds of returns are they looking for?  5% or 15-20%?

Probably your best wealth builder is buy a 4-5 bedroom house in Dallas as close to your work as possible.  Rent bedrooms.  Do this for a year or two and build up more cash, and then do it again.  Get 2-3-4 of these going, maybe eventually moving every year if you can.  It's work, but you have plenty of time and income it seems.  Let's say after you get 4 of these, then either turn them into LTR or roll them up into some smaller and easier to manage multifamily or commercial property.

[Wale Lawal]

@Josh Deever

To invest in Dallas, look for areas that are growing well, have fair prices, and are safe. Some top choices include Midlothian, Cedar Hill, Grand Prairie, Garland, Irving, and Arlington. Investing in Tyler, TX, can be done in different ways, like traditional loans with 20% down, loans for living in the place, FHA loans, VA loans, private lenders, and buying from the seller.

To make more money, think about side jobs like freelance work, teaching, driving/delivery, renting out a room, gigs, and investing on sites like Fundrise or RealtyMogul. To move forward, save aggressively, network with local real estate investment groups, educate yourself on real estate investing, get pre-approved for a mortgage, and continue researching Dallas and Tyler markets.

Good luck!

[Jason Giomboni]

First of all, congratulations on your new career and your decision to invest in real estate at such a young age! Your foresight and planning will serve you well in achieving your financial goals. Let’s dive into your questions:

1. Best and Safest Areas to Invest Near Dallas

When considering areas to invest in near Dallas, especially for house hacking, you'll want to look for neighborhoods that have strong growth potential, good schools, low crime rates, and amenities that attract renters. Here are a few areas to consider:

- Midlothian: Known for its good schools and community atmosphere. It's growing and has a mix of new developments.

- Cedar Hill: Offers affordability and a suburban feel with plenty of parks and green spaces.

- Grand Prairie: Centrally located between Dallas and Fort Worth, it has a diverse economy and growing population.

- Arlington: A bit further out, but it's a vibrant city with strong rental demand due to its large student population and attractions.

- Plano: A bit more expensive but offers excellent schools and a strong job market.

 2. Ways to Achieve Buying a Property in Tyler

You have several options to consider if you want to invest in Tyler without a 20% down payment:

- FHA Loan: If you're willing to live in the property for a while, an FHA loan might be an option. They typically require only a 3.5% down payment.

- House Hacking: Purchase a multi-unit property, live in one unit, and rent out the others. This can often qualify you for lower down payment options.

- Private Money: Look for private lenders who might offer better terms than traditional banks. This could include friends, family, or real estate investors.

- Seller Financing: Negotiate with sellers who might be willing to finance the property themselves. This can sometimes result in lower down payments and more flexible terms.

- Partnerships: Team up with another investor. They can help provide the capital, and you can manage the property. This way, you both share the benefits and risks.

3. Side Hustles for Extra Income

Generating extra income can help you reach your goals faster. Here are some side hustle ideas that can be managed alongside your full-time job:

- Freelancing: Use platforms like Upwork or Fiverr to offer services such as writing, graphic design, or financial consulting.

- Real Estate Agent: Get your real estate license and help others buy/sell properties on weekends or evenings.

- Tutoring: If you have expertise in a subject, offer tutoring services.

- Ride-Sharing/Delivery: Work for companies like Uber, Lyft, or DoorDash during your free time.

- Online Store: Start an e-commerce store on platforms like Etsy or Shopify.

- Investment: Look into stock market investing or peer-to-peer lending to grow your savings.

Summary

1. Best Areas Near Dallas: Consider Midlothian, Cedar Hill, Grand Prairie, Arlington, and Plano.

2. Buying in Tyler: Explore FHA loans, house hacking, private money, seller financing, or partnerships.

3. Side Hustles: Freelancing, real estate agent work, tutoring, ride-sharing/delivery, or starting an online store.

By diversifying your strategies and staying focused on your goals, you can successfully purchase your first rental property and build a strong foundation for your real estate portfolio. Good luck!

[Diego A.]

Congratulations on your move to real estate investment.

You don't need to have a 20% down for a conventional loan. You can just put 5% though the number needs to work as you will need to pay a PMI.

1. I would say as you are first time investor look at places that are close to you so you can manage the property and growing. 

2. I loved Tyler but I am not sure if it is growing. Possible AirBnB may work over there but you should do a market analysis.

3. This will depend on your expertise and what you are willing to sacrifice. There are many side hustles, and there is no "one fit all".

Real estate investment is a long run and if you like to go there is neither is easy nor passive.

[Vanessa A Martin]

Hi Josh, 

Congratulations on your move, love Texas, I have family there. House Hacking is a great way to start, however you do need to live in the property. If you have 20-25% to put down you can certainly use a DSCR loan to buy your first investment property. This type of loan is popular as it does not require any personal income. You buy the property in an Entity, you must have at least 3-6 months or reserves. The better your credit score the better the rate. If you have any other questions or concerns feel free to reach out any time.

Good luck 

[Josh Deever]

Quote from @Bruce Lynn:

Sounds like you're on a great path to success.

With the house hack, do you not plan to live in the house?  You'll get better loan terms and lower interest if you owner occupy.  If you're living here, why not buy here in DFW.

I like Tyler, but is it growing, incomes growing, jobs increasing.  That's how you get appreciation.  What are the demand drivers for Tyler and will those continue to grow?

Your best deals will probably be bank/broker financing.  Private money and seller financing is typically the most expensive.  Think 10-15% interest rates.  Think about your private wealth clients.  If they are going to take on risky loans, what kinds of returns are they looking for?  5% or 15-20%?

Probably your best wealth builder is buy a 4-5 bedroom house in Dallas as close to your work as possible.  Rent bedrooms.  Do this for a year or two and build up more cash, and then do it again.  Get 2-3-4 of these going, maybe eventually moving every year if you can.  It's work, but you have plenty of time and income it seems.  Let's say after you get 4 of these, then either turn them into LTR or roll them up into some smaller and easier to manage multifamily or commercial property.

 Hey Bruce,

Great points! I would plan to live in the house if I did the house hack here in DFW, I was mainly looking at Tyler because it is not just more affordable, but prices have been increasing around 4.5-5.5% YoY depending on the area. No one knows the future, but my plan is to be in DFW for the next 5-10 years so you might be right with just sticking to the area I’m in, plus being able to get more affordable loan terms.

Thanks for your response!

[Josh Deever]

Quote from @Wale Lawal:

@Josh Deever

To invest in Dallas, look for areas that are growing well, have fair prices, and are safe. Some top choices include Midlothian, Cedar Hill, Grand Prairie, Garland, Irving, and Arlington. Investing in Tyler, TX, can be done in different ways, like traditional loans with 20% down, loans for living in the place, FHA loans, VA loans, private lenders, and buying from the seller.

To make more money, think about side jobs like freelance work, teaching, driving/delivery, renting out a room, gigs, and investing on sites like Fundrise or RealtyMogul. To move forward, save aggressively, network with local real estate investment groups, educate yourself on real estate investing, get pre-approved for a mortgage, and continue researching Dallas and Tyler markets.

Good luck!

Wale,

Thank you for your advice! I will research those markets over the next few months as well as look into meetup groups nearby. Thanks again!

[Josh Deever]

Quote from @Jason Giomboni:

First of all, congratulations on your new career and your decision to invest in real estate at such a young age! Your foresight and planning will serve you well in achieving your financial goals. Let’s dive into your questions:

1. Best and Safest Areas to Invest Near Dallas

When considering areas to invest in near Dallas, especially for house hacking, you'll want to look for neighborhoods that have strong growth potential, good schools, low crime rates, and amenities that attract renters. Here are a few areas to consider:

- Midlothian: Known for its good schools and community atmosphere. It's growing and has a mix of new developments.

- Cedar Hill: Offers affordability and a suburban feel with plenty of parks and green spaces.

- Grand Prairie: Centrally located between Dallas and Fort Worth, it has a diverse economy and growing population.

- Arlington: A bit further out, but it's a vibrant city with strong rental demand due to its large student population and attractions.

- Plano: A bit more expensive but offers excellent schools and a strong job market.

 2. Ways to Achieve Buying a Property in Tyler

You have several options to consider if you want to invest in Tyler without a 20% down payment:

- FHA Loan: If you're willing to live in the property for a while, an FHA loan might be an option. They typically require only a 3.5% down payment.

- House Hacking: Purchase a multi-unit property, live in one unit, and rent out the others. This can often qualify you for lower down payment options.

- Private Money: Look for private lenders who might offer better terms than traditional banks. This could include friends, family, or real estate investors.

- Seller Financing: Negotiate with sellers who might be willing to finance the property themselves. This can sometimes result in lower down payments and more flexible terms.

- Partnerships: Team up with another investor. They can help provide the capital, and you can manage the property. This way, you both share the benefits and risks.

3. Side Hustles for Extra Income

Generating extra income can help you reach your goals faster. Here are some side hustle ideas that can be managed alongside your full-time job:

- Freelancing: Use platforms like Upwork or Fiverr to offer services such as writing, graphic design, or financial consulting.

- Real Estate Agent: Get your real estate license and help others buy/sell properties on weekends or evenings.

- Tutoring: If you have expertise in a subject, offer tutoring services.

- Ride-Sharing/Delivery: Work for companies like Uber, Lyft, or DoorDash during your free time.

- Online Store: Start an e-commerce store on platforms like Etsy or Shopify.

- Investment: Look into stock market investing or peer-to-peer lending to grow your savings.

Summary

1. Best Areas Near Dallas: Consider Midlothian, Cedar Hill, Grand Prairie, Arlington, and Plano.

2. Buying in Tyler: Explore FHA loans, house hacking, private money, seller financing, or partnerships.

3. Side Hustles: Freelancing, real estate agent work, tutoring, ride-sharing/delivery, or starting an online store.

By diversifying your strategies and staying focused on your goals, you can successfully purchase your first rental property and build a strong foundation for your real estate portfolio. Good luck!

 Jason,

I will definitely look into financial consulting tutoring as a side hustle, as that is basically what I do and love for my 9-5. I appreciate your thorough response and advice!

[Josh Deever]

Quote from @Diego A.:

Congratulations on your move to real estate investment.

You don't need to have a 20% down for a conventional loan. You can just put 5% though the number needs to work as you will need to pay a PMI.

1. I would say as you are first time investor look at places that are close to you so you can manage the property and growing. 

2. I loved Tyler but I am not sure if it is growing. Possible AirBnB may work over there but you should do a market analysis.

3. This will depend on your expertise and what you are willing to sacrifice. There are many side hustles, and there is no "one fit all".

Real estate investment is a long run and if you like to go there is neither is easy nor passive.

Diego,

I think you are probably on the right track, especially after hearing what the other group members had to say. Something close by would probably be in my better interest, seeing as I can personally manage it. Thank you for your encouragement and I will keep you guys updated!

[Josh Deever]

Quote from @Vanessa A Martin:

Hi Josh, 

Congratulations on your move, love Texas, I have family there. House Hacking is a great way to start, however you do need to live in the property. If you have 20-25% to put down you can certainly use a DSCR loan to buy your first investment property. This type of loan is popular as it does not require any personal income. You buy the property in an Entity, you must have at least 3-6 months or reserves. The better your credit score the better the rate. If you have any other questions or concerns feel free to reach out any time.

Good luck 

 Vanessa,

Thank you for your thoughtful post! I will look into that loan type. Thanks for the suggestion.

[Wale Lawal]

Quote from @Josh Deever:

Quote from @Wale Lawal:

@Josh Deever

To invest in Dallas, look for areas that are growing well, have fair prices, and are safe. Some top choices include Midlothian, Cedar Hill, Grand Prairie, Garland, Irving, and Arlington. Investing in Tyler, TX, can be done in different ways, like traditional loans with 20% down, loans for living in the place, FHA loans, VA loans, private lenders, and buying from the seller.

To make more money, think about side jobs like freelance work, teaching, driving/delivery, renting out a room, gigs, and investing on sites like Fundrise or RealtyMogul. To move forward, save aggressively, network with local real estate investment groups, educate yourself on real estate investing, get pre-approved for a mortgage, and continue researching Dallas and Tyler markets.

Good luck!

Wale,

Thank you for your advice! I will research those markets over the next few months as well as look into meetup groups nearby. Thanks again!

 My pleasure!

Keep learning and growing...

[Matthew Kwan]

HI Josh,

There are several ways to run and make sure you are maximizing your rental income while keeping your living expense as low as possible. Try looking into zillow/Redfin and see what your potential rents you can get near the neighborhood by filtering the bedrooms/bathrooms of the intentional property that you are planning to buy. This will allow you give a reference point on how much potential rent you can receive. (Max vacated rents - your monthly mortgage payment) = +/- net cashflow.

On the other hand, you could also look into multifamily units where you can live one of the unit and rent out the other vacant units with as little as 5% down payment. The main hurdle that many of our borrowers face are the income aspect of it, especially expensive markets like the West coast. However, it allows you to use the vacant rents of 75% market rent as an alternative income to help the borrower to qualify.

Happy to connect and assist you in your real estate investing journey. @Albert Bui @Carlos Valencia

[John Mason]

Uber doordash and becoming a runner for real estate investors. You can also be lucky and find private investors too.  Also go on Facebook groups and observe the posts. Also attend meetups. Real estate ones

[Sonny Dong]

If you plan on house hacking your first property, you can use your IRA like 401k or use an FHA 3.5 down if you plan on residing in it for 1 year. For safe areas, I am not to sure, but you can use rental comp averages to find a decent location to rent out your other rooms. That is what i did.

[John Mason]

Try these

https://www.facebook.com/DFWREI/

https://www.meetup.com/find/?keywords=real%20estate%20invest...

[John Mason]

https://www.redfin.com/city/30794/TX/Dallas/housing-market