All Forum Posts by: Benjamin Aaker

First, you should talk to your current landlord. Tell them your situation and they might be willing to terminate the lease agreement. You might suggest paying a few months rent right now in order to reimburse the landlord for the time it takes to find a new tenant. Buying out the landlord might be the thing that convinces them to terminate the contract. Many landlords will want to help you if you make it easy.

Look at your lease. Subletting is usually not, but might be allowed. You can also talk to the landlord to see if they would agree to it. Subletting happens when one tenant leases out their residence to another. Don't do this without permission from the owner first. 

Hopefully you have added some value to your first property by raising the rent or doing improvements. In this case, you could refinance or get a line of credit to help you in getting #2 and #3. I like the line of credit best.

Hi George, welcome to BP and to the States! I don't have an answer to question #1, but for #2 right now is not a great time to become an agent unless you want to do more than just invest for yourself. The market is so hot that deals for investors won't make it to the MLS. In other times of the cycle, having MLS access is really helpful. Disclosure: I have my real estate license.

For #3, I recommend small multifamily. When you get to 5 units and up, you can avoid the value bubble we are in right now and you can still find value. It'll be more difficult to get a loan to be sure, but your financials will help. Do this first deal and you will gain a lot of experience to get larger. Good luck.

Experience landlording is very valuable and will help you in evaluating deals in which you might want to invest. There are a lot of efficiencies in multifamily. I recommend you look for a 2-4 plex to buy and find a property manager. 

There is risk when your mortgage balloons in 5 years. The bank is doing this as they believe that rates will increase in that 5 years. It is likely that will be true. When you get this mortgage you are partnering with the bank. It is unlikely that they will offer terms that will put your property in the red when you refinance in 5 years. They want you to succeed because they want you to keep paying the mortgage. Make sure your deal is a good one going into the purchase, but don't be scared off simply due to a 5 year term on the loan.

Do you have any family members who can cosign a loan with you? Tough to get a mortgage at age 17. After that, I recommend to house hack a 4 plex with an FHA loan.

Partnership Pros:1. Share the work. 2. Share the costs/expenses.

Partnership Cons: 1. Difficult to make decisions, and can become gridlocked. 2. Someone inevitably does more work than others

The only reason you should partner is iIf you can't do the deal alone. Partnerships can wreck friendships/family if you screw up. Your first real estate deal has a higher likelihood of failing, so consider this carefully. That being said, I have a few partnerships. I took the time to detail exactly what each would bring to the table and we signed a written agreement (Operating Agreement for the company). So far, things are working well. 

You don't strictly have to open a separate bank account (check your state laws) but if you are operating a business, you will probably want to do so. This will help with accounting and tax preparation at the end of the year. You will want to know how your investment is fairing and it will be hard to tell if it's money is comingled with your own personal money.

Consider putting your investment properties in an LLC. Getting loans is different and requires more up front cash, but the liability protections make up for it.

Also be sure to inform the owner of the situation. If it is something outside the typical tenant issue, the owner might want to determine how it is handled. In this case, you might have a pet policy that specifically answers the issue. If not, speak with the owner and update the policy.

There are a lot of variables that you haven't told us yet, such as the location (city or country) and property size. House values are through the roof, making a single family home seem great. Building costs are going up, too. But you did say that FIL is a builder. That, along with a low land cost makes me think the SFH is the way to go.
A better recommendation is to start researching the cost to develop the land and build on it, along with the return you'll get. Compare that to the sale price of a parking lot.
You should also consider whether you want to sell the improved lot or rent it out as that will have a huge impact on your decision.
Good luck.