All Forum Posts by: Al Seward

If you have read my previous post, you know my wife and I are brand-new investors. We are getting ready to buy our first property, which will likely be some type of house hack.  But I am 51, and I know myself. I can't do years of house hacking, not at 51 years old (Lol, maybe in my 30s or even 40s, but not now.) I told my wife I might have a year or so in me of house hacking. 

We were trying to decide between Baltimore and DC. I am leaning more towards DC, though I hear the cash flow in Baltimore is pretty good, but the appreciation is not as good, and that appreciation in Baltimore is a little/a lot more unstable than DC.  My goal is to build equity primarily. The thinking behind this is that a home that appreciates faster will make it easier to buy more properties with equity and use that equity to continue to buy more homes and position us to build future wealth. That's not to say that we don't want a home that cashflows too. That would be great if we could find both, but my focus is more on homes that grow equity at a faster rate to prepare for the future.  

Another thought I had was that after focusing on a few houses in markets that have historically had good equity potential, we could also build a portfolio with homes that have a primary focus on cash flow and get some monthly residual income coming in as well. Ultimately, we hope that we can build a real estate portfolio that will allow us to retire in the next 10-15 years with our real estate investments, which will allow us to be financially free (I'm not sure if that's naive or not.) 

I am currently working and plan to continue to do so while we build our portfolio.  Does this strategy make sense? Are there any insights that you might give? I am especially interested in hearing from those who started investing later in life. (I hope my questions are not too hard to follow). Thanks for your response.

Al

Thanks for all the advice! I appreciate the thoughts and insights.

Al

Hello everyone,

My wife and I are new to investing, and we are considering house hacking. We have been looking at 3 and 4 units in Baltimore and DC. However, I have been thinking that it might be better to buy a home and convert the basement into a rental unit with a separate entrance, a washer/dryer, and a kitchen. 

My reasons for considering this approach are as follows:

1. It is a safer way to get started and mitigate risk.  If we can't find a tenant, we will still be able to pay the mortgage. We won't be in trouble if we have no tenant or if someone stops paying.

2. If we buy a property in an A or B neighborhood, we can still gain equity. (However, from my research, Baltimore City's equity is not that strong, so it looks like more of a cashflow opportunity, but even that can be dicey in the city. From what I am hearing here on BP Baltimore can be very tricky. DC seems to offer good equity, but all the places we can afford (3-4 units) are in THE HOOD. Most of them need work, and many are going for north of $750k-$800k and up. Also, in those zip codes, even Section 8, doesn't seem to pay that well. I am thinking a good idea might be to buy in the suburbs near DC (maybe in Montgomery, Howard, or Prince George's County.)

3. I am also thinking about maintenance. If something goes wrong in a single-family property, it is easier to fix, than a 3 or 4 unit.  I even thought about buying a new build because of all the incentives builders offer and converting the basement into a rental unit. I understand that new builds don't typically have equity, but if they are in appreciating areas, that will change. Plus, the fact that everything is new and a lot of the big-ticket items are under warranty may mitigate significant expenses for costly repairs. Not to mention, new builds may be more attractive to renters.

Final thoughts: I don't mind the temporary discomfort of house hacking (though I very much would like to have my own space; my wife and I have never lived in a single-family by ourselves since we have been married.), but I do not want to live in a neighborhood that is not safe. That is priority number one for me.

Details: We have about $120k in savings, no debt, and our average credit score is 760. Can anyone share their insights or thoughts on this?

Thanks, -Al

Thanks for the comments, everyone. I want to ask a follow-up question based on my first question. Our goal is to stay in the four-unit for only one year. Do you think realistically that staying for a year is possible and then moving out to get a single-family home for just my wife and me?  Or is it possible for us to get stuck in the property for longer than a year? In other words, will buying the multiunit first harm our ability to get into a single-family home after a year?  We have a good amount saved, about 100k, over 760 credit scores (hers is closer 800), and no debt (that includes car notes and credit card debt). I want to get a single-family home and look at different real estate investment options after getting a space we don't have to share. We have always lived with someone on the other side of a wall or above or below us in a very cramped space. However, she wants to house hack first because she thinks it is going to almost be impossible if we buy a single-family home first to break into investing. I get the vision of house hacking and how it can help you break into investing and generate income, and build long-term wealth. But, honestly, I don't know if I have any more than one more year of living in close quarters with others in a tiny space left in me. I told her I could handle it for a year, maybe a year and a half, but not longer. Lol, my house-hacking patience might be better if I was younger, but at 51, I need my own space.

My wife and I want to Househack in Baltimore City Maryland. The plan is to live there a year or so with other tenants. Then rent the property. We are looking for a 4 unit. We have heard both good and bad things about Baltimore. Negatives are the crime and and stagnant appreciation values. Positives are the possible cash flow. We are new to all of this is therr anyone who would share some advice, perhaps some Baltimore city investors?

Thanks

AI