All Forum Posts by: NA H.

@NA H.

you may get people chiming in with advice on Kansas City or other out of state markets that they want to recommend to you, but I am going to be blunt.

it is very, very difficult to cash flow right now unless you are using some kind of creative strategy (or combination of strategies).

you might be able to use your HELOC to buy 1-2 properties... but if you use a HELOC for the DP + a mortgage, that will likely be so expensive that you won't cash flow at all and will be negative every year.

@NA H.

For the "short" timeframe and the given market conditions, you need to lay this out more closely.  Lots of people lose money in real estate.  You just don't hear about it.  Even the "successful" ones (or any investor for that matter) lose money, but they just win more than they lose.  In your case, you have very limited room to lose.

https://www.biggerpockets.com/forums/48/topics/1159104-overl... you might want to take a look at this very long thread.  Becca put it all out there, and we've had some varied/insightful comments.

I think it was mentioned to trade out of your current home so you can take everything tax free.  Is the one acre property too tight if you use all your capital?

Quite honestly, depending on your resources and projected future income, you might consider other investments to help bolster your income.  I am assuming that "tight" means you can at least make the payments.  So, you just need a little bit more income to live "nicely" and have some buffer.  Generally, equity real estate investments are large, all-or-nothing, deals.

for opt1, its up to you if you want to bank on appreciation.  however, why wouldn't the farm have appreciated as well.  You need to get ahead somehow.

Good luck.

my first thought is to use the 75k heloc to BRRRR as fast (and as well) as you can in a low cost market! but there are missing pieces of information that would make this a great or not-so-great idea, like your skill set, the amount of time you can dedicate to RE weekly.. BRRRRing can be done remotely for sure, but is more project-management-heavy than a turnkey buy and hold property. if you could BRRRR STRs or MTRs that would be even better! i have a great contact for bridge financing too if you need a lender to help with projects like this. excited for you guys!

I find it strange that you are concerned about the hobby farm payment to be a little tight but are okay with the risk and expense of buying a second property.  

Cincinnati is a good option to look into. The city has an annual output of $132 billion and a heavy concentration of Fortune 500 companies, making it a top economic metro. Homes are still meeting 1% rule there as well.

 I don't know the cost of things in your area but you would get the proceeds of the sale tax free from federal income tax from the primary residence exclusion. I'm guessing you owe around 150-100k so you would have 225k to play around with.  I know that 3% rate is great but look at the bigger picture. If you rented it out, youd make 800 a month, or 9600 a year ( lets assume paydown of loan pays taxes and capex/repairs insurance etc, maybe its more or less you know the numbers not me ) So if you have 225k of equity and make 9600 a year your return on equity is only 4.2% , maybe less. Could you make more than that buying an investment property with 25% down ( roughly 100k down if im not mistaken ) , put a downpayment on your hobby farm, and throw the rest into 3 month treasury bills /whatever ? Just an idea. 

I wouldn’t wait 5 years to make your hobby farm dreams happen. You can make more money, but you can’t make more time.

Consider finding an area where you hope to start your hobby farm. Then jump on landglide or onx and find out who owns the property. idaho, especially ada and canyon county has some funny development laws but a lot split would be possible. Reach out to the owners directly and convey that you want to start a hobby farm and are looking for roughly x acres, would they consider selling that portion of property. Most of the older folks in the area who hold the land are approached constantly by developers so a small family looking to do what they did 30 years ago might tug at their heart strings. You’ll cover the split fees and do the leg work for them.  It’s labor intensive but really how the best properties are found.

Meanwhile keep looking for deals in your other target markets. It doesn’t need to be an exclusive one or the other. There is always a way to find the money when an amazing deal comes up, so don’t make the mistake and just pigeon whole into one path. 

I wouldn't wait 5 years to go after your dream....time flies by way too fast. Whatever you do, do it now. Does your 'hobby farm' have to be in Idaho, or are you open to other states?

Of your two options, I like some version of #1......

 I would use the proceeds to buy some cash flowing 1-4 units. Cleveland, Cincinnati, Fayetteville etc all have some good options to get into with a lower price point