How would you start?

[Caroline S.]

Hi BP Family, I originally started looking at out of state properties but have recently been looking in my area in DC/ Northern Virginia. At first I was not interested in looking in the Nova area because of the high prices -- it is darn expensive here, but I am trying to keep an open mind as an open mind is required on this real estate adventure. However, I am way too all-over the place right now. I've thought about a multifamily househack, but multifamilies are scarce in NOVA and I dont know why. So then this leaves me with expensive single families here. The astronomical prices are scary. Then I thought about acquiring a piece of land and building a multifamily on it, but I think this project level is not for beginners. sigh. Then back to out-of-state multis. Im going in circles. Lets move on. My credit score is 800+, I have a decent paying job with the gov, have extra income from rental properties my parents left me, but downpayment is limited as im paying off a 30K personal loan. What are the odds in getting financing for my first REI project/property? And knowing my financial stats, does it matter starting off in an expensive market like mine or should I look elsewhere, i.e. Columbus OH, Kansas City, etc. I sort of believe that it doesn't matter if one starts in an expensive market or not, what matters is that you know what you're doing. And to add to that, though I'm educating myself, I still dont know what I'm doing. I do, however, want to pull the trigger. I apologize for the long post. And thank you to everyone in advance. Caroline

[Manolo D.]

Caroline Somera The basics of expensive markets are you aren't there for cash flow, but you are playing with appreciation. As what I have read, and don't hold me to it, your regular gross income * 40% - recurring payment (car, utility, rent, average of sum of all credit cards over the last few months) = your mortgage. I don't know if the rental cash flow affects this. But on the equity side, many will lend at 80% on high priced markets (maybe 70% if very low rates) but I know more or less you could leverage your rental property's equity against this (in one way or the other). Your 800+ credit score will bump up those lending capacity and lower the rates, but lenders tend to cover their own behind in all cases. Why not go back to a rental in hawaii instead of VA? Since you already have a rental, it's easier to expand their since you already have the network, plus the siblings can help out in case of emergency/best critical decision making. The great thing about high dollar properties are the margins are also large if you'll flip it, not so much for rentals except appreciation, which can defeat most cash flow numbers.