All Forum Posts by: Andrew Threet

For your first property yes. As an out of state investor you're going to have to put down 20% on this property. With $20k that means you can buy a $100k property. A $100k property today likely doesn't appreciate very much year to year. So you spend your whole savings to make $300-$400 a month. If you're like me you want to get rich, be wealthy, have freedom. At a bare minimum I need at least $10k/mo in passive income to "retire". At $400/mo per property I would need to buy 25 properties to hit $10k. At $20k down per property that's $500k worth of down payments. I don't know about you but I don't have that kind of cash just chillin'. Now if you were to buy a $400k house in CA and make 4% appreciation that's $16k a year. In 10 years you'll have $300k in equity in that single house. Do the same calculation on a $100k property AND add $50k to account for 10 years of cash flow and you still won't have half that amount in equity.  Use the owner-occupant mortgage gift you've been given. House-hack every 24 months and in 10 years you'll have a net worth around two commas and a heck of a lot of options.

@Andrew Threet

Anytime! Just make sure to vet the provider and make sure they're reputable and reviewed. I'm on SDIRA Wealth's website and am confused on what they provide. Make sure you're confident that your investment will succeed. 

@Andrew Threet

Turnkey is a great option for someone starting out. I got my first property back in June and turnkey was the strategy I used. I got a good, renovated property with a tenant in place. The biggest thing with TK investing is who you choose to partner with. 

@Zach Lemaster at Rent to Retirement is who I used and I've been happy with my experience. 

Andrew, great question!

I'm also in CA. Where in CA are you? There are parts of the state where $25K is enough to get started -- with a househack.

I recommend you househack a home or a duplex where you live. With an FHA or NACA loan, you can get into a property with a single-digit or even no down payment. If you househack a home, you'll be renting out the other bedrooms to friends or qualified tenants. If you househack a duplex, you live in one unit and rent the other. The reason to pursue this strategy is that it lowers your cost of living, allowing you save more money while the property is appreciating and the loan principle is being paid down. These three elements together are really powerful for building equity.

I wouldn't mail out a $25K check for a turnkey in the Midwest. When you buy a turnkey, you're sacrificing equity for convenience. When you buy in the Midwest, you're sacrificing appreciating for cashflow. If you use leverage to buy a $100K turnkey property, you might see $100/month in cashflow at best. In a couple of years, the property will be worth about what you paid for it. Holistically, it's not a great investment.

Going back to the househack example, you won't see any cashflow now, but you'll likely be paying less per month than your current rent. An FHA loan allows you to buy a bigger property, so your principal paydown and appreciation will be outsized, and depending on where in CA you are, your gain from appreciation could be significant. After a few years, you'll have enough equity in the property to sell or refinance and really payroll the next step of your investing career.

So, back to the first question: where in CA are you? Let's explore options around there.

@Andrew Threet Learn everything you can about house hacking. BP has endless info on the strategy. You can comfortably buy a $450k property right now and still have money left over. Always keep some cash on the sidelines. Don't wait forever. Learn by doing. A couple hundred bucks in cash flow every month won't change your life. Owning a bunch of property will.

@Andrew Threet Find someone experienced to partner with. Don't get greedy, your goal is to learn and earn an above-average return with minimal risk of losing your investment.