All Forum Posts by: Corbin Wafford

Hello!

I have run into the following issue and I will do my best to try and keep this predicament as short and as simple as possible. Keep in mind, I am currently looking to house-hack and purchase a MFH with an FHA loan (at the moment).

Succesful and experience investors, if you were presented with the following predicament, which option would you rather pursue, property A or property B? Why?

Property A): 

-Very well maintained MFH in a very good/growing area

-Very low maintenance/repair cost

-Extremely low vacancy rate

-Has the potential to make for a great rental property long term.

-High rents, aka, likely white collar/respectable tenants

-Not many of these opportunities available, so if I miss this, it may be awhile until another one presents itself

-Presents me with more time to save funds, educate myself, etc.

Issues associated with this purchase would be larger down payment, little room to add value to the home, and I would likely (considering all expenses, PMI/MIP, and mortgage) not break even or cash flow while owner occupying.

Property B):

-Older MFH

-Not nearly as expensive

-Requires work (rehab, renovations, repairs/maintenance), etc.

-Will bring on headache/stress/discouragement

-Potential for bad tenants at lower rent rates

-Not in a prime growth area

I am not opposed to this property, so please do not assume that all the negatives associated with property B are me trying to justify that property A is better. There are several pros that are associated with this property that I have come to understand:

-Great learning experience

-Has large potential to add value

-Likely has ability to cash flow (by raising rents with each addition to the home)

Please let me know your thoughts on this if you can. I am currently brainstorming and trying to develop the best cost/benefit analysis I can before making a decision. Would love to hear your (the community) thought's on the current matter!

Thanks!

Corbin

Nice job!

I am in a similar position. 23 years old and attempting to buy my first multi-family home soon. 

Quick question for you (or anyone else reading), what is the difference between the FHA loan and the Freddie Annie first time home buyers loan other than the down payment?

@John R. Yes sir, I have. Which has catapulted me into learning about real estate as fast and as well as I can.

And as you mentioned, it can feel very difficult, but in all honesty, I am super excited to get my first place and not nearly as worried as I was when I first became interested in real estate a few months ago. Educating myself has significantly decreased the anxiety/fear/and potential risk that I initially had!

@Jonathan Greene Got it, great point.

That being said, how can one know or make an assessment on how active they are, other than by just straight up asking them?

I can't imagine a realtor telling their client that they are currently home/investment  property searching on top of them trying to help the client find an investment property.

@John Thedford Easier on paper but I suppose you are right. I just need the grit to do so and not worry about the emotional side of things. Business IS business. Also, good tip, thanks for providing the view on what a good agent should be.

@Chris T. As I mentioned to John, easier on paper but I will have to do it sometime or another. The only stipulation is that some of the agents I have reached out to have been family friends or some of my friend recommendations. So I have to sort of dance around the subject without hurting too many feelings, as I could potentially run into them outside the REI realm.

@Jonathan Greene Great note and approach. I will surely use something along these lines. 

Also, are you suggesting that an agent should have some investing experience? I know I mentioned that it could potentially be a plus but wasn't sure if it was a necessity or highly recommended.

To my understanding, working with multiple agents seems to be frowned upon in the real estate realm. 

With that being said, I have a couple questions regarding the process: 

1. What sort of qualifications should the real estate agent have that deems them a good agent to work with? In other words, during the "screening process", what things should I look for? 

I have heard that finding an agent that also invest on the side is potentially something to look for as well as there timeliness. 

2. If I have already began working with an agent, but come to find one that is better suited for my needs/desires/criteria (etc.), how do I go about letting the current agent I am working with that I no longer wish to work with them (even if they did nothing wrong)?

These are the only questions that come to mind right now, however, I am sure I can think of more as time and the discussion goes on, hah!

Hey man, 

Recent graduate myself of May 2016.

Currently, I do not own any properties, but I set a deadline to have one before I move out of my apartment in Feb-18. That being said, by far the most motivating thing I have done thus far has been purchasing/reading Set For Life by Scott Trench. Why you may ask? 

1. The author often refers to and uses all of his advice to adhere to Average Joe. Average Joe is the new investor with a median job (salary of 50k per year) with no debt, which was perfectly applicable to me. With you being an engineer, the book likely applies to you and you likely can expedite a lot of advice given here, especially if you make more than the median salary.

Side note: If you do have debt, first and foremost, pay that off before making any other sort of investment. You will thank you self in the long run and will be a lot less stressed.

2. Scott uses a ton of real life, applicable, examples in each chapter that give you an idea of what he is adhering to in each piece of advice writes about. For "visual learners", persay, it is very helpful.

3. It gives a great financial run way tips once you hit certain amounts of wealth, so it breaks out like so:

-$1 to $25,000 in wealth

-$25,000 to $100,000 in wealth

-$100,000 to financial freedom

Each part above has several chapters accompanied with it to go into further depth. 

Next step is listening to podcast and while doing it, write down or remember terms you dont know. Google them when you can, take notes. Also, I am a big reader (now hah, never was in college), and I recommend purchasing some books to further educate yourself. I just purchased $100 worth of material that I cannot wait to dive into when they arrive. 

Lastly, network. Pretty self explanatory. Find people in your area. Biggest tip with that is to try and provide some value back to that person that helps you. Offer to help them clean one of their units, do light maintenance work, show some of their houses, etc. Just make them want to "invest" their time into you.

@Brett Snodgrass Nice article. I had a chance to skim it at work and will definitely revisit it when I have some time on my side. 

Out of curiosity, how much would you imagine a average direct mail campaign would run for? 

Also, I just purchased several books by BP, one being "Finding and Funding Great Deals", so I am excited to learn more on ways to find deals. 

Currently, my criteria is not to strict when it comes to finding a house (multi-family). Essentially, it just has to make enough sense to cover most if not all my mortgage and other payments so that I am living rent free. Sure, I would love cash-flow but for now, if I am owner occupying, I would like it to at least cover my expenses (for the most part). Hopefully in a year, once the FHA loan allows me to move out to another property and rent out the additional unit, I will cash flow. But simply put, I just want to eliminate that living expense, for now.

@James Wilcox Great note and tips. 

I will be sure to reference this when the going gets tough or I need a pick me up. Analyzing deals has probably been the toughest part thus far. For a first time buyer, it gets tough understanding everything to include whilst calculating whether a property would be a good investment or not. There are so many variables that go into it, and often gets overwhelming and at times, discouraging. Especially when the numbers are not adding up.

@Chuck B. Appreciate your comment and help. It is great to hear that the approach I am taking is worth while. I will also be sure to check out the HudHomestore site you reference and see if anything catches my eye!

Also, if either of you have any tips on analyzing deals, please feel free to either leave them here or PM me. Anything helps. I am tempted to purchase the BP pro membership for the calculators but would like to eliminate all other free options before spending.

@James Wilcox and @Bob Okenwa

Great notes from both of you. I appreciate the comments. I definitely understand that variable of the equation and have been using it to my advantage. 

Like you said Jim, having that drive helps and I have certainty noticed it. I believe I have received help from experienced REI's just because of it. They see themselves in me (I am currently 23 years old) and want to help me on my path. I will continue to grind and find those deals, I was just curious, other than work ethic, if there was something variable/factor I was missing.