All Forum Posts by: Andrew Freed

@Trevor Davis - Great question. The quickest and easiest way to building wealth in real estate investing for beginners would be house hacking. If you're just getting started, I would recommend purchasing a 3 or 4 flex and house hacking it with low money down via a VA loan, FHA loan or low down payment conventional. If you can get your housing expenses to zero, your ability to build wealth increases exponentially. This is all assuming you are living below your means and saving a majority of your income. I would then leverage the remaining savings into apartment complexes in the mid west. House hack every year while investing in solid cash flowing assets in the mid west. Once you get big enough, start investing in syndications which will create a much more passive revenue stream rather than being an active real estate investor. Sit back, relax and retire in Hawaii :)

@Peter Mckernan - I agree with Colleen, some items are extra but a storm door seems standard for rentals. Maybe you should provide the complete list for us to have a better understanding of what you consider "desired items". At the end of the day, managing rentals is so much easier when you maintain a good relationship with your tenants so definitely keep that in the back of your mind when deciding next steps. 

@Noah McPherson - Good question. I've utilized a HELOC on previous property to purchase more property rather than do a cash out refinance. I personally don't like sitting on cash so I would rather use my equity when I need it rather than have a bunch of cash in the bank. HELOCS are a fantastic tool. Other than a 30 year conventional fixed loan, HELOCS offer very competitive terms, e.g. interest only for first 10 years and variable rate below the federal discount rate. I plan on house hacking each year and prior to leaving the property, open a HELOC to fund more real estate transactions in the future. Just so you are aware, HELOCS (home line of credit) are a lot more competitive than RELOCS (rental line of credit). If possible, aim to set up HELOCS rather than RELOCS due to a higher LTV ratio that you can use.

Sandra Ibrahim - I think long distance investing is a great avenue to build wealth. If you did want to go this route, absolutely read David Greene's book on long distance investing. The guy is simply a genius.

Just keep in mind, there is a ying and yang relationship to cash flow vs. appreciation. Places that have high cash flow most likely have low appreciation likelihood and visa versa. Hence cash flow is great for replacing a W2 job but appreciation is truly what builds wealth. You need to determine what your goals are. Are you in the wealth building phase or need constant income via cash flow? That will help determine the market that works best for your goals. 

Personally, I am a big fan of investing in multi's via house hacking and out of state. Why not increase your unit count by 3 or 4 units each transaction vs. 1 unit with a single family or condo. It is the same amount of work so why not go big. Obviously manage leverage and debt in a responsible manner. Best of luck on your investing journey. 

@Sandra Ibrahim What are your goals? I think once we understand your goals a little more, we are happy to provide some guidance.

Regarding leveraging your profits from California, it might make sense to transition those profits into an out of state property and continue to rent until the market softens a little in your area. David Greene touches upon this concept in his book, out of state investing, but you are much more likely to arbitrage your profits into another state and get a better ROI since California real estate is an appreciation play more than cash flow strategy. Have you considered investing in the midwest? You can probably purchase 2-3 mid west properties vs. one in California.

Feel free to give us more background info which will help in narrowing down our advice. 

@Ross Hendry Yes, get very intentional about your criteria. What market and neighborhoods will you invest in? Does your multi need to have parking (it tends to be more attractive to tenants with off street parking)? What is the minimum bedroom count per unit, e.g. 3 bedrooms take in more rent than 2 bedrooms? What cash on cash return or dollar figure per unit do you expect once you move out? Make sure to run the numbers as a house hack and it being fully rented which is your ultimate goal to get a better idea of the financial implications of this decision long term. 

The more narrow you can get the better, you'd be surprise how easy it is to find a deal once you know what you want. Figure out your criteria and that will help you hone in on the exact houses you want.

@Ross Hendry - Congrats on getting started. I currently house hack in Mass and am happy to share some tips. My first recommendation would be, for your first property, to not take on a project too large. I would recommend sticking with a multi-family that has solid systems and at worst, needs aesthetic upgrades. Old systems breaking can eat into reserves very quickly. Also, aim for multi-families that have 3+ units so your mortgage costs will most likely be completely covered by tenants. Any multis w/ 2 or less units, you usually have to supplement your living costs. Lastly, make sure to have at least 3-6 months of reserves saved. Owning a multi is a great plan, but you don't want to lose it through rough economic times so insulate yourself against those downturns with solid reserves. 

 

@Zoie Holley great question and you’re super smart for wanting to get into real estate at such a young age.

I believe multiple people alluded to this, but I’d say fear is what stops people from getting into Real estate and a never quitting sort of mentality is what creates a successful investor.

I personally have worked a W2 job and have lived a safe life but I am not living the life that I want. I want financial freedom to travel the world and experience what life truly has to offer. Prior to real estate, I was too scared and comfortable to explore outside a 9 to 5. Once I realized fear was ruling my life, I decided to change and take the plunge.

Once started I’ve experienced numerous failures lost thousands of dollars but never quit. After only 10 months investing, I’ll be up to 7 units and aiming for 20 by the end of 2022.

Everything in life has risk, don’t let fear rule your future. And when you are in the trenches experiencing failure after failure use that has fuel and inspiration to keep on pushing to better opportunities. As long as you don’t quit, you never lose.

@Calvin Kwan Here is a good article going over the pros and cons of this type of bathtub. Everything I'm reading seems like this is more of a hassle than a benefit. More cleaning is required, more expensive installation and upkeep, the weight of the item can be hard on old houses, all in all it doesn't seem to be beneficially for a rental. Perhaps your dream home but for investment purposes, I would pass.  

https://www.remodelista.com/po...

@Yuri Kats I hear RE/Max Haven Realty does a great job. https://why.clevelandmanagemen... Best of luck on your search.