All Forum Posts by: Chris Jensen

@Tina Acevedo you're discovering a very important concept in real estate investing.  It doesn't matter how nice the property is or where it's located, the rents absolutely must be supportive.  In this case, it sounds like you have a nice condo in an amazing location, but only getting $1900 a month will never make sense.  If you're in the red each month, and you have no reserves, and you've experienced some appreciation, sell it now.  You're spread way too thin, but you can fix that very quickly and set yourself up for a nice springboard into your next property.  Best of luck!

@Joel Harrison great to hear you're focused on starting down your own REI path. I wish you much success.

First reaction to your post is to urge you to keep enough in the bank for a rainy day.  They always come, and you'll never want to be without some reserves... even if you have a decent job and even if it's just for a few months.

There's certainly no rush. Get your affairs in order (education, finances, knowing the market, a good realtor, a good contractor, etc) then jump in. How you jump in is important (aka buying right). In my opinion, the best way would be to find a fixer-upper plex that will sell well when rehabbed. Local banks will often finance both the purchase price and the rehab. Get it for a discount, update it, live in one unit, rent the other(s). Get it to market value. Then refinance it to get some/most/all your cost out of it. The typical BRRRR strategy, but such a great way to leverage your limited financial resources.

You asked specifically about financing. Certainly the loan scenario you described with your father makes a lot of sense. 10% annual return is certainly WAY more than he'll make with any bank. There may be some on BP or in your local REIA also willing to provide funding. However you come up with the downpayment, you'll just need to focus on the numbers. If the interest you're paying your father or someone else, combined with the interest on the mortgage, combined with the principal paydown, the rent received, the expenses... if everything results in cash flow that meets your goals, then it will all come down to mustering the faith to take that next step.

I would highly recommend connecting with someone locally who has house hacked... pick their brain, learn how they made it work, etc.  Seeing success first hand will be a huge confidence boost until you can experience it yourself.

I hope there's a helpful nugget or two in there.  Best of luck!

@Jason Flint welcome to BP. Your approach to buying SFR properties sounds exactly like ours was up until several months ago. To your question about these 5 homes. I'm getting mixed messages from your comments.

At first, you sounded very leery due to the deferred maintenance.  I would be too.  You know this, but there's a difference in buying at a discount due to value-add opportunities and buying at a discount due to deferred maintenance.  In adding value, we do the things renters are willing to pay for (updated kitchens, egress in the basement for another bedroom, etc).  Deferred maintenance (e.g. roofs) are things renters already expect (table stakes) and are unwilling to pay for.

Then you sound like it's not really a big deal.  The current renters move out, you do some painting, replace floor coverings, tune up HVAC, etc, raise the rents, and new renters move in.  No big deal.

What really is the concern here?

@Alex Gallardo, with no W-2 income and just starting out in life, I'm not sure how you would even be at Refinance.  How did you acquire a property, fund and manage the rehab and have the knowledge to rent it out and manage it?  No matter.  To the broader question of how does someone in your situation get started... I'd invest in some key relationships. A good broker who can help you find deals. Some investors/partners who can provide financing. A good contractor (for obvious reasons). I'd start with a local REIA and go from there. I'd provide the hustle and leverage my network for the rest. Wholesaling or flipping would be the easiest ways to get started.

But here's another thought. And I know some will disagree. I actually would recommend you get a full-time job to build credit and W-2 history. That is so important for when it comes time to ditch the partner and strike out on your own. Banks won't talk to you without good credit and income. But my spin on the W-2 path is to choose a job in the REI industry... at a bank, property management company, construction firm, something to kill both birds with one stone - gain applicable knowledge and experience while also building credit and income.

Food for thought.  Best of luck in whichever direction you go!

@Daniel Walker if I were in your shoes, as quickly as I could I'd scrape together $1k and invest in some key relationships. A good broker who can help you find deals. Some investors who can provide financing. A good contractor (for obvious reasons). I'd start with a local REIA and go from there. I'd provide the hustle and leverage my network for the rest.

While you're scraping that money together, just connecting with someone who's flipped homes in your area would be huge. Offer to help them in some way in exchange for knowledge and experience.  Something to just get started in some way.

Hope that helps.  Best of luck!

@Evan Kaczor with only $1k in my pocket, I'd pursue a 4th option: invest in some key relationships. A good broker who can help you find deals. Some investors who can provide financing. A good contractor (for obvious reasons). I'd start with a local REIA and go from there. I'd provide the hustle and leverage my network for the rest. I'd probably work a few flips just to get some cash coming in. Maybe BRRRR a plex to cut my teeth on property management. As quickly as I could, I'd move into commercial multi-family. That's what I'd do. Best of luck!

@Nathan Rude welcome to BP! As you think about starting down your own REI path, definitely leverage BP and the plethora of podcasts out there. Don't overwhelm yourself though. I'd highly recommend connecting with someone locally that you can glean knowledge and experience from. Online resources are great, but sitting and speaking with someone, even multiple times, was the most helpful for me in getting started. Best of luck as you begin this exciting new adventure!

@Carl Handy, BRRRR is just a creative way to describe the process of buying a fixer-upper, fixing it up to be worth more than before, cash-out refinancing it to get some/most/all your cost back, renting it out, and doing it all over again. It's a brilliant strategy for recycling your hard-earned money over and over to acquire properties. Conversely, buying a nice updated home, where all the value has already been added, you don't have the opportunity to build that sweat equity, and all you're hoping for is for the home to appreciate enough to be able to refi and get some of that cash out. It's just a very long process, generally.

@Joshua D. I hear you with the LOADS of work and living in construction projects.  Awesome that you were able to enjoy the process, that's the hardest part for some people.  I tend to struggle with patience and perfectionism (painting is my NEMESIS).  Did you have kids or W-2 jobs to worry about amidst all the chaos, or was it just the 2 of you attacking it full-time?

Ok fellow BPers, different kind of question for you.

Every reward has a cost to be paid, and every return has an investment to be made (wow, that was NOT intended to sound like a poem!). Much has been shared in these forums about the rewards and returns of real estate investing. Believe me, I’m sold. But I’m curious about the costs you’ve made to get where you’re at. I’m not referring to money, either. I’m talking about time away from friends or family, the pressure of balancing a full-time job, stress of being a single parent, or forgoing dream vacations or shiny sports cars. Maybe you even changed as a person (for better or for worse). Everyone has had to sacrifice to reap the rewards you currently receive from real estate.

So my question to you is this… what did it cost you to get where you are, and was it worth it?  I'm pondering that question personally, and would really appreciate hearing your perspectives.