All Forum Posts by: Chelsea Price

How refreshing to read your post @Chelsea Price!   Congrats on living such a modest, debt-free life and for wanting to honor your grandfather by caring for your inheritance. …and how well written!  Perhaps you should be a writer!?  😉. Do you perhaps have a family member or close friend that you can partner with to help you qualify for a loan?  I.e,., someone with a good job and good credit!?   $200K is a substantial down payment that most new investors don’t have.  I would look for a turnkey rental… many condos are sitting longer on the market and there are motivated sellers out there!  While condos have monthly condo fees, those are a write-off and you’ll spend little to no money rehabbing or maintaining the property!  (Speaking from experience!). Im also in the DMV and am happy to chat and/or help you along as you seem like an admirable person!  Wishing you continued success!

@Chelsea Price

I also received such a gift, and ended up here on bigger pockets 5 years ago.  My feelings at the time centered around being a fiduciary to that money.  That it was my responsibility to take care of it, make it grow, put it to good use.  

Everyone’s situation is different… mine involves children’s futures, retirement thoughts (I’m over 50) and generally speaking, for the money to not ‘go away’.

I settled on rentals, myself.  At the time I could buy $100,000 rentals for $25,000 down each.  So I started buying.  We found that C class rentals yielded the best price to income ratio (let our money go the farthest).  We started out buying duplexes because of the safety of knowing if one side went vacant the other side could pay the mortgage… but eventually figured out that was less of a worry because they were easy to fill so vacancy didn’t impact is too much.

Our goal became “income”.  Many would call it passive income… but I feel that’s a bit of an over statement as being a landlord isn’t totally passive, but will give you it is really pretty easy.  You will have to figure out what your goal is.  Being that you are here, real estate in some form seems to be attracting you,

Personally I think the tiny house idea is a bit niche. To that degree people who like it, will like it. I myself would lean more traditional. Your lack of reportable income will likely make it difficult to finance properties, unfortunately. Using financing would let you multiply your money's effectiveness by a factor of 4. I might suggest checking with a commercial lender and seeing if you could use what is called DSCR financing in your situation to stretch the power of your money by using financing. Buy one rental financed, get it up and running, then buy another the same way. If you use the same local lender I could see them getting on board with you even though you may have limited reportable income (as long as you don't blow through the money and show operational income from your rentals).

I would also suggest making your first purchase a good one in the sense of income.  So like a duplex / triplex.   That way if you only get one purchase it can yield better income for you.

5 years later we are at 25 properties with 37 doors and no longer working 8-5 full time jobs. I’m just coming off a 10 day trip taking my teenagers to see NYC and Washington DC for the first time.  Life is good!

Congratulations, and hope it helps!

Randy

You have been given outstanding advice thus far. I know it sounds sexy and very cool to say you have zero debt but as people mention, it can extensively be used to your advantage. I assume you study a lot of Dave Ramsey. I do understand your situation and the notion you may not qualify for a loan, still, people were explaining how carrying the debt on it may be more beneficial. All forms of REI is risky and if you sink 200k into something like that and it goes south, it sucks. Also, by giving up that degree of capital, you have to evaluate the return you get on it. If you drop 200k but you are pulling in maybe 1 percent you would be much better off with a mutual fund. Someone mentioned shady lawyers; that is also another thing you may want to consider. People love to find others with that kind of equity and sue the hell out of them with bogus or loosely liable type ambulance chasing suits. When you have little to no equity many wont bother. As a new investor I feel you are doing the right thing. Keep asking questions and evaluate everything. Take your time and dont just run with something. Currently, the buzz word is STR. Just query this site. Everyone and their Momma wants STRs. Millions of people wake up daily and declare themselves STR operators. It's a great gig but it depends on so much. Because millions of people jump in this asset class all over the place it's over saturated. It's a high failure rate as well. Open yourself up to other approaches, not just one. I do STRs in addition to many other forms of investing. It's a marathon not a sprint so you can take your time. Either way I wish you the best. This is a great place to be because no matter what you ask, someone here has or is doing it! I'm from the DMV as well!

Chelsea, just so you know, most of your hospitality to guests will be through texts, with an occasional phone call. Guests generally prefer not to meet hosts in person. I also recommend joining Facebook groups for STRs, both national Airbnb/VRBO focused, and local groups to your area. You’ll learn a lot about problems and how to handle them.  

Ah, so you mean check in as in drive by? Not do repairs, cleaning, or deal with guests that have issues? But I thought you wanted to interact with guests, no?