All Forum Posts by: Daniel Haberkost

Would that be 80911? That was the hottest zip code in the country a month or two ago so I can imagine. 

From a long term buy/hold perspective, I would think multi family makes more sense. You could buy a small multi, rent out the other units and rent out the extra room in your unit if you want to get as much out of the asset as possible right now. 

Dan
 

@Chris Abislaiman

Yes I self manage and I run a background check, call their last two landlords and verify their income/call their boss.

I’m also very upfront with my standards as far as keeping the common areas clean, not making noise at night l, etc.

What part of town is your house on?

Hi Chris, I rent my primary residence by the room and intend to duplicate the model here soon with another house. My other rentals are leased traditionally but I've talked to a number of people who are successfully renting by the room (without occupying the home themselves) in Denver so there's no reason it can't be done here. 

In my primary, the key is establishing standards upfront, screening the tenants thoroughly and finding people who are busy. Nobody is home much during the day, it's really just a place for them to sleep. Plus, everyone's schedule is different so there's no conflict with using the common areas (mainly the kitchen) as everyone gets up/gets home at a different time.  

Are you already renting by the room in a primary house hack? Or looking to jump immediately into room by room rentals without occupying the property? 

Dan 

 There have been quite a few good suggestions already and one of the biggest points I'd like to add is focus.

Figure out why you want to invest in real estate, pick a strategy that aligns with that why and don't veer from it until you've been successful! I've wasted a lot of time trying to do too many things at once, don't make the same mistake!

Dan

@Tyler D'Alessandro this is entirely dependent on the specific deal/situation.

A friend of mine just bought several properties as a package from a local investor and it was a great deal. The investor was older, the properties had deferred maintenance and he had plenty of money but not a lot of time so he was happy to sell them off at a discount if he didn’t have to do anything.

Money may be at the top of your list right now but there are plenty of people who have more than they need and value other things (like time) much higher.

Buying a package deal from an investor could be a great option, you’re just going to have to run the numbers.

 Yes, I'm not sure what small multifamily costs in Salt Lake but even if you have to go the route of a single family house hack it's a great way to start. It eases you into being a landlord and has very little downside risk relative to other options. 

Have you looked around at all to see what's on the market?

@Jessica Schenk I have to second @Simon W. in that it's really hard to go wrong starting with a house hack. It increases your savings rate dramatically which helps you get to deal #2 faster and you begin benefiting from the appreciation/amortization that comes from owning RE. 

Have you considered going that route? Also, what market are you in?

Hi Orlando, I purchased my first house hack while I was in my last year of college as well. It's a great way to get started! Have you spoken to any lenders to see if your debt-to-income ratio & credit score allow you to qualify? That is the first step I'd take as it will clarify things. 

If you qualify, step #2 is figuring out how much you're going to need for a down payment, what does that average small multifamily cost in your market? Figure that out and you'll know exactly how much you need for the property itself (and don't forget to add a couple extra thousand for closing costs and such). 

As far as reserves that depends on a number of factors. What is your savings rate like? If your primary source of income allows you several thousand dollars of savings every month you won't necessarily need the same amount of reserves as if you're only saving $500 a month. Additionally, what is the average age of the properties you're looking at? I'm from OH where many of the houses are a century old and are falling apart whereas here in CO they're newer and require far less maintenance. 

Start with your goal and work through the steps to get there.

Dan

Hi Owen, 

I bought my first rental when I was 21 while still in college. With a bit of time/effort there is no reason you can't do the same. Real estate investing is best done from a place of financial strength so I recommend learning to budget and increase your savings rate as much as possible. Additionally, try to get rid of all your debts, are you paying for college as you go?

What are you doing for work? How can you increase your income and get yourself to the point of qualifying for a traditional mortgage so you can start with a house hack?

At the same time you should be reading/learning all you can about real estate investing while also attending local meetups.  

Dan

Hi Stuart, I think you're on track starting with a house hack. It's a great way to get started as it eases you into screening/managing tenants and operating a rental. Additionally, eliminating your monthly housing expense will greatly increase your monthly savings rate and accelerate your ability to get to deal #2! Plus you immediately start benefiting from the appreciation/amortization that comes with owning RE. 

I like your idea of starting with a value add house hack as you'll end up with more equity in the deal and get some experience rehabbing a rental. You mentioned you're having trouble deciding because there are a multitude of ways to get started. This is normal, nearly everyone is overwhelmed with all of the different strategies available when they first get started. 

Don't let this stop you from taking action! Figure out what your goals are, pick the strategy that aligns with them and ignore all else until you've taken action. 

Dan