All Forum Posts by: Alban Celiku

Quote from @Stephanie Lynn Narcisse:

Quote from @Alban Celiku:

Quote from @Stephanie Lynn Narcisse:

Quote from @Alban Celiku:

Hi @Stephanie Lynn Narcisse,

It's really great you are starting in the real estate investing journey and thinking about your future! It's difficult to give general advice to others. I think it would be helpful to get more responses if we had a better idea of understanding who you are, why you invest, what you’re capable of, what your capital overhang is/budget, what can you be pre-approved for, who do you know in the area, have you established your core four (looks like you have a lender, what about real estate agent, property manager, contractor) as David Greene talks about, what your timelines are, what else you’ve invested in, what your exit expectations are and how you behave as an investor.

"I just want to get a property that provides me with a place to stay and enough profit to cover my basic expenses and save some money." Are you looking for a specific number for profit that will cover your expenses? How much money do you want to save monthly? Are you okay with living with others? House hacking or co-living could be an option for you. 

I'm unfamiliar with tax deeds and what that process is but if there are local investors in your area who are knowledgeable in tax deeds, it might be a good idea to identify them, research them, follow them on social media/website, and find a way to provide value to them. That in turn will hopefully allow you form connections and they can be a guide for you in the tax deed arena.

Starting out is probably one of the hardest places to be. Finding out what your "Crystal Clear Criteria" is would help you significantly into focusing your time and energy so you're not spinning your wheels in the beginning. Take some time to really write down and evaluate your goals and skillset. That should at least begin to point you in the right direction and then you can make adjustments and change course as needed. Hope this helps and hope others provide you with some more guidance.

Alban

@Alban Celiku

Thank you for your advice. I took the time to create my crystal clear criteria. I'm looking for a multi-family with 2-4 unit in the North Miami and Golden glades area. It can be a fixer upper, but it must be livable. I will make repairs overtime to increase the property values and rent. My maximum price is 300k. I have about $30k available. I'd like a minimum cash flow of $150-$250 per unit.

I will live in one of the units and will manage the property. I haven't picked an agent or a contractor as of yet. House hacking isn't a good option because I don't do well with living with strangers. My goals is to buy my first property by the end of the month. I plan to acquire a real estate license in the next 6 months and purchase a second property within a year's time. I'd like my third property to be in Canada.

What kind of skillset do I need in order to success in real estates. I plan on making up for what I lack by taking classes. I'm open to suggestions in you have any.

 That’s great! Good job getting your goals written down and hopefully this provided some clarity for you. When you say you don’t do well with living with strangers, what does house hacking mean to you? Are you uncomfortable living with tenants above or below you like an apartment or you dislike living with them in your house?

I thought house hacking was only for single family homes, where you buy a house and rent out the rooms. I can handle it with a multi-family. I'm a very flexible person but I think I'm at a point in my life where I want a place all to myself. Even if it were an apartment building it would be fine for now. However, I want my fourth property to be a single family home.

That’s one way yes! If you were able to find a duplex that’s side by side, you can almost have best of both worlds. The more units likely the more chance for cash flow. Then when you move out you get even more cash flow etc as you repeat. By 4th house a single family residence might very well be fully supported by the cash flow from the other units! Now you have 4 properties that are being paid down, cash flowing, and appreciating! Might be something to consider if you can sacrifice the first few years of living with tenants for long term benefits!

Quote from @Stephanie Lynn Narcisse:

Quote from @Alban Celiku:

Hi @Stephanie Lynn Narcisse,

It's really great you are starting in the real estate investing journey and thinking about your future! It's difficult to give general advice to others. I think it would be helpful to get more responses if we had a better idea of understanding who you are, why you invest, what you’re capable of, what your capital overhang is/budget, what can you be pre-approved for, who do you know in the area, have you established your core four (looks like you have a lender, what about real estate agent, property manager, contractor) as David Greene talks about, what your timelines are, what else you’ve invested in, what your exit expectations are and how you behave as an investor.

"I just want to get a property that provides me with a place to stay and enough profit to cover my basic expenses and save some money." Are you looking for a specific number for profit that will cover your expenses? How much money do you want to save monthly? Are you okay with living with others? House hacking or co-living could be an option for you. 

I'm unfamiliar with tax deeds and what that process is but if there are local investors in your area who are knowledgeable in tax deeds, it might be a good idea to identify them, research them, follow them on social media/website, and find a way to provide value to them. That in turn will hopefully allow you form connections and they can be a guide for you in the tax deed arena.

Starting out is probably one of the hardest places to be. Finding out what your "Crystal Clear Criteria" is would help you significantly into focusing your time and energy so you're not spinning your wheels in the beginning. Take some time to really write down and evaluate your goals and skillset. That should at least begin to point you in the right direction and then you can make adjustments and change course as needed. Hope this helps and hope others provide you with some more guidance.

Alban

@Alban Celiku

Thank you for your advice. I took the time to create my crystal clear criteria. I'm looking for a multi-family with 2-4 unit in the North Miami and Golden glades area. It can be a fixer upper, but it must be livable. I will make repairs overtime to increase the property values and rent. My maximum price is 300k. I have about $30k available. I'd like a minimum cash flow of $150-$250 per unit.

I will live in one of the units and will manage the property. I haven't picked an agent or a contractor as of yet. House hacking isn't a good option because I don't do well with living with strangers. My goals is to buy my first property by the end of the month. I plan to acquire a real estate license in the next 6 months and purchase a second property within a year's time. I'd like my third property to be in Canada.

What kind of skillset do I need in order to success in real estates. I plan on making up for what I lack by taking classes. I'm open to suggestions in you have any.

 That’s great! Good job getting your goals written down and hopefully this provided some clarity for you. When you say you don’t do well with living with strangers, what does house hacking mean to you? Are you uncomfortable living with tenants above or below you like an apartment or you dislike living with them in your house?

Quote from @Scott Trench:

Following - confused why you aren't able to use a 5% down conventional for a house-hack in your situation. Have you talked with several lenders on this point? I'd start there. 

I could be completely off on this, but I'd bet you CAN use a low down payment conventional loan to do a house-hack on a small multifamily in this situation. 

 I agree with @Scott Trench, I have been quoted 5-20% owner occupied for residential MF as long as it meets the self sufficiency criteria in MA. If you’re going to owner occupy the property, then you should qualify for as low as 5% down payment. The traditional 20-25% down payment requirements refer to investment properties to my knowledge, unless things have changed in the past 30 days. I’d be happy to connect you to my lenders if you’d like!

Hi @Stephanie Lynn Narcisse,

It's really great you are starting in the real estate investing journey and thinking about your future! It's difficult to give general advice to others. I think it would be helpful to get more responses if we had a better idea of understanding who you are, why you invest, what you’re capable of, what your capital overhang is/budget, what can you be pre-approved for, who do you know in the area, have you established your core four (looks like you have a lender, what about real estate agent, property manager, contractor) as David Greene talks about, what your timelines are, what else you’ve invested in, what your exit expectations are and how you behave as an investor.

"I just want to get a property that provides me with a place to stay and enough profit to cover my basic expenses and save some money." Are you looking for a specific number for profit that will cover your expenses? How much money do you want to save monthly? Are you okay with living with others? House hacking or co-living could be an option for you. 

I'm unfamiliar with tax deeds and what that process is but if there are local investors in your area who are knowledgeable in tax deeds, it might be a good idea to identify them, research them, follow them on social media/website, and find a way to provide value to them. That in turn will hopefully allow you form connections and they can be a guide for you in the tax deed arena.

Starting out is probably one of the hardest places to be. Finding out what your "Crystal Clear Criteria" is would help you significantly into focusing your time and energy so you're not spinning your wheels in the beginning. Take some time to really write down and evaluate your goals and skillset. That should at least begin to point you in the right direction and then you can make adjustments and change course as needed. Hope this helps and hope others provide you with some more guidance.

Alban

Quote from @Bjorn Ahlblad:

Two rules have guided me through thick and thin: never put all your eggs in the same basket or even basket type; and 2 never place yourself in a spot where you can be forced to sell. 

Yes, buy real estate but don't forget 401k, high yield savings, index funds etc. Spread it around.

 Thanks for the reply! I agree, diversification is crucial, that is why I will continue with my current W2 income and 12% 403(b) contributions that are 4% matched by employer that increase annually.

What are your thoughts on the old mantra of BP talking about going a "mile deep but an inch wide?" It seems like being a "generalist at all, master of none" is difficult in investing, especially real estate investing. Most of the success has come from those focusing on a specific niche in the market or what the market gives them i.e. Brandon and mobile home parks, Andrew Cushman and commercial MF, Rob and STR, and the numerous guests with MTR, condo conversions, rent by room, land, building, etc etc.

I feel like being in one area and getting to know the market, the players, the resources, the trends, etc will help in knowing when a good opportunity presents itself. Warren Buffet is also well known for saying "put your eggs all in one basket and watch that basket very careful" Granted, none of us are the Oracle of Omaha or anywhere close to his knowledge.

Could you expand a little more on what would a position to sell be? Would it be a shift in market trends, housing costs, loss of job, lack of capital, etc? If everything in my personal life stays the same (of course no one can predict a Black Swan event) in terms of W2 and if we hold for a while, are there any outside factors that could be that severe that we'd be forced to sell?

Quote from @Melissa Hartvigsen:

Hello Alban,

You live in one of the move expensive markets in the country, and that makes it harder to have any cash flow for the first several years of your investments.

1) I do not recommend this. If you get caught, mortgage fraud will mess up your future investing plans. How about looking at a multi-unit property? With up to 4 units you can get a FHA residential loan with 3.5% down payment, owner occupy and have rental income subsidize some or all of your mortgage. (Need some actual numbers to comment further). FHA maximum loan amounts in your area: $828,000 for 1 living-unit homes to $1,592,350 4-unit. 

2) Your $850K option, when you look at the monthly payments compared to the market rent in your area for this type of home is it close to breaking even? If so, this could be a great play for appreciation, just know that you will see very little cash flow. Yes, you have one property to deal with, but as you scale up, your portfolio will be in multiple locations. For ease of management and maintenance the 2-4 unit option has an advantage.

3) Will the housing prices increase more over the next 12-15 months in your market? Then it may be possible for you to use a home equity loan on your primary residence (taken out before you move on) to help you fund the next purchase. 

I think one thing you are overlooking is investing in a cheaper market. While you may forgo appreciation, the early cash flow will be higher and that may allow you to scale your portfolio faster.  I just started reading "Long-distance Real Estate Investing, How to Buy, Rehab and Manage Out-of-state Rental Properties" by David Greene. I think you should add it to your reading list. :)

Melissa

Thanks for responding Melissa! I was absolutely joking about committing mortgage fraud =). Sorry if it wasn't clear in #1 our opinion on FHA/house hacking. Since we are currently living rent free, house hacking doesn't seem like a big upside for us at the moment besides what I mentioned in the original post. We have also gotten similar numbers for 2-4 units that would need to meet the self sufficiency numbers.

It does seem many of the areas surrounding Boston are starting to appreciate as inventory continues to be limited and with the accessibility of Commuter Rails and the T, WFH, people are living further and further from the city. We anticipate with the biotech, hospitals, and Universities, demand to be quiet strong with an appreciating housing and rent market (if anyone knows more please comment).

In terms of out of state investing, it seems the tide has switched. My reservations are that it will be difficult to find a location that isn't already saturated. Second, the democratization of information, increased awareness, and social media, real estate investing out of state has exploded. The market that David Greene wrote about in 2019 was significantly different to what it is now nation wide. A property of 300k with a net cashflow 6k annually while it appreciates 1-2% annually can see all its cash flow wiped with a capex expense. However, if a 800k property in a market that appreciates 5% with no cash flow will produce 4x the cash flow with annual appreciation of rents and property values. Scaling doesn't necessarily mean number of doors, but net value and total ROI can be helpful.

Have you had success with out of state investing? I have a few friends that have gone over the boarded in NH and CT but not the traditional out of state in the sense of going to Indiana or Ohio or somewhere in the Midwest where traditional investors go to find higher cash flowing properties. Interestingly enough, if you have followed David Greene, his opinion and strategy has shifted from his/Brandon's initial opinion of cash flow vs appreciation (not speculation). I'm on episode 630-ish and David's tune has changed throughout the years with the shift in market/economical trends.

Hello BP Community!

Knowing what you experienced investors know now, given the current housing, and economy situation, how would you attack if you were us?

My partner and I live north of Boston and we're looking to start our real estate investing portfolio with small multifamily properties within Route 128 (about 10 miles of Boston). We're both 6+ figure W2 employees, 770+ credit scores, and currently are co-living with her parents, so our expenses are very low. We are qualified for 850k at 6.10% and potentially could afford more as our DTI is strong. We are hoping to eventually replace my partner's income with cashflow and have my income continue for a while to make us more financeable. Also, I only work three days a week currently so it gives me a lot of flexibility to invest and work.

We have a few thoughts:

1) Currently, it seems like we would not gain much by house hacking; besides lowering our down payment with an FHA loan and having more capital to use. We could possible both be able to acquire two properties <500k with FHA with the caveats of being in a market further from Boston, being required to live in one of the units (unless we commit mortgage fraud- not recommended I hear), and having lower cash flow since we'd be living in one of the units instead of collecting rent. The upside could be that now we have two income properties appreciating, building equity, depreciation, "easier" to learn on, and leverage to name a few. Cons would be possibly less appreciating market, more challenging tenant class/pool, more properties for management/repairs.

2) Taking FHA out of the picture for example above, would going all in for example on a 850k property within a couple miles outside the city be a better play than going further out and acquiring two <500k properties? A few pros and cons for 850k option that we thought of: pros- higher potential for asset and rent appreciation, higher potential for tenant quality/pool, lower vacancy rates, one location for maintenance/repairs. Cons- using all of the capital, potentially biting off more than we can chew? Pros and cons of the two <500k properties are the same as above in #1.

3) It seems like utilizing all our capital at once and waiting another 12-15 months before being able to purchase again if we are solely relying on our W2s for savings would make scaling a "longer" process. But, at the same time, it isn't about the number of doors that matters necessarily; but more about value of the property(ies). You can argue that the 850k property has a "better" upside in terms of an appreciating asset and market rent, which would possibly make it a lower risk. Where the other properties further our are less expensive but also less appreciating and a different tenant class/pool.

4) With all that being said, it would seem that all in on a 850k property would be a better option financially. We could go all in, potentially cash flow year 1, let property and rents appreciate, cash-out refinance 12-15 months later, and repeat the process. Every year we'd ideally reduce the purchasing time line from 12-15 months to 8-12 months, to 3-6 months depending on their value, ROI, economy, and housing market.

We wanted to ask the vast knowledgeable community about any blind spots or pitfalls we could be falling into. Without concrete numbers and other metrics, we understand a perfect answer doesn't exist regardless. Our goal is to continue this journey for the long run and don't necessarily have to leave our W2s right away, but within the next 3-5 years would be great to have my partner out of the W2 world and ideally helping manage/run our investing portfolio. Looking forward to hearing about any oversights and other general things we didn't think about!

Thank you all!

Hello BP Community!

Knowing what you experienced investors know now, given the current housing, and economy situation, how would you attack if you were us? 

My partner and I live north of Boston and we're looking to start our real estate investing portfolio with small multifamily properties within Route 128 (about 10 miles of Boston). We're both 6+ figure W2 employees, 770+ credit scores, and currently are co-living with her parents, so our expenses are very low. We are qualified for 850k at 6.10% and potentially could afford more as our DTI is strong. We are hoping to eventually replace my partner's income with cashflow and have my income continue for a while to make us more financeable. Also, I only work three days a week currently so it gives me a lot of flexibility to invest and work.

We have a few thoughts:

1) Currently, it seems like we would not gain much by house hacking; besides lowering our down payment with an FHA loan and having more capital to use. We could possible both be able to acquire two properties <500k with FHA with the caveats of being in a market further from Boston, being required to live in one of the units (unless we commit mortgage fraud- not recommended I hear), and having lower cash flow since we'd be living in one of the units instead of collecting rent. The upside could be that now we have two income properties appreciating, building equity, depreciation, "easier" to learn on, and leverage to name a few. Cons would be possibly less appreciating market, more challenging tenant class/pool, more properties for management/repairs.

2) Taking FHA out of the picture for example above, would going all in for example on a 850k property within a couple miles outside the city be a better play than going further out and acquiring two <500k properties? A few pros and cons for 850k option that we thought of: pros- higher potential for asset and rent appreciation, higher potential for tenant quality/pool, lower vacancy rates, one location for maintenance/repairs. Cons- using all of the capital, potentially biting off more than we can chew? Pros and cons of the two <500k properties are the same as above in #1.

3) It seems like utilizing all our capital at once and waiting another 12-15 months before being able to purchase again if we are solely relying on our W2s for savings would make scaling a "longer" process. But, at the same time, it isn't about the number of doors that matters necessarily; but more about value of the property(ies). You can argue that the 850k property has a "better" upside in terms of an appreciating asset and market rent, which would possibly make it a lower risk. Where the other properties further our are less expensive but also less appreciating and a different tenant class/pool.

4) With all that being said, it would seem that all in on a 850k property would be a better option financially. We could go all in, potentially cash flow year 1, let property and rents appreciate, cash-out refinance 12-15 months later, and repeat the process. Every year we'd ideally reduce the purchasing time line from 12-15 months to 8-12 months, to 3-6 months depending on their value, ROI, economy, and housing market.

We wanted to ask the vast knowledgeable community about any blind spots or pitfalls we could be falling into. Without concrete numbers and other metrics, we understand a perfect answer doesn't exist regardless. Our goal is to continue this journey for the long run and don't necessarily have to leave our W2s right away, but within the next 3-5 years would be great to have my partner out of the W2 world and ideally helping manage/run our investing portfolio. Looking forward to hearing about any oversights and other general things we didn't think about!

Thank you all!

Could you sell some of the equity in your current residence for cash and use that as a down payment in the second property?

@Joey Isidore to piggyback off @Brayden Hrycko, if you have gained significant equity in your current residence, would it be possible to 1031 into 2 other investment properties? Or at the minimum, cash out refinance and use that as the down payment or to help with the down payment  on the second property.