All Forum Posts by: Dan D.

So what I'm recommending is keep renting your apartment for whatever you are paying.

Buy a duplex (or tri-plex) and rent out both or all three units and keep living in your apartment.

If you buy a duplex, you get two rental incomes.

If you buy a tri-plex, you have three rental incomes.

If the rental incomes are higher than what you are paying in rent, you're coming out ahead on that additional unit.

Say you are paying rent for $500 a month right now.

Maybe you get a duplex you can rent both sides out for $700.

Rather than collect $700 and live in the other half of the duplex, rent both out for $700 and $700 and keep paying your $500 to share your current place with the roommate.  In this scenario you'd then have two units renting out instead of one, and you wouldn't have a large sum of money wrapped up in your own living quarters which is essentially a dead asset.

Or just buy a single family home in good shape within 40 minutes from where you currently live and just rent that out for $1500 a month while you continue to rent your apartment. 

Just food for thought.

Where are you living now?  Apartment?

To get started, here are your two steps.

1.  Buy a property in a desirable neighborhood.

2.  Rent our property.

Everything else is making things too complicated.

Buying a property and learning through that will be your best lesson ever.

Also, buy in state.  If it doesn't cash flow it will probably appreciate.

Thousands of people buy houses everyday, and guess what.  They don't rent them out.  Instead they just sit in them.  Fifteen years later they have a ton of equity and after 30 they usually think it was the best investment they ever made.

So why would you be worse off buying something in a desirable area and renting it out?

Many people go through this progression.

1.  Grow up with their parents.

2.  Go to college, live in dorms or apartments. Graduate. (some skip this step and go to step 3).

3.  Get Job

4.  Move out / find a place to rent / live.

5.  Decide to buy a house and live in it.

Instead of doing step 4, I suggest you keep living at home for a year or two, (or in some other very low cost arrangement renting a room for a few hundred bucks) and do number 4A instead:

4A.  Buy a place you can rent out to someone else for a few years in a nice neighborhood and keep living at home (or with your buddy).

Look at buying your first property from an investment standpoint, and not necessarily from a "will me and my significant other like living here".  If you buy it from an investment standpoint, you might be more likely to buy something that you can create value in versus buying something move in ready for your first home.

Instead, buy something that cashflows a bit and might appreciate a bit over a couple years.  Suddenly, buying your permanent house with one rental under your belt becomes plausible because you have a job, some rental income, and you might have thousands of dollars of equity from that first property.  If you can keep your own living expenses to a minimum for just those first 2-3 years before you have kids and need to move in with the significant other, you're on a far better plan.

Your options to live below your means decrease as you have a friend / fiance / spouse as well as you add kids into the mix.  (a lot more normal for a single guy aged 24-27 to live with his buddy for a couple years or to live at home for a few years, than a 30 year old with a fiance or wife).

@Christopher Krogmeier Some of this comes back to basic market principles.  If there is high demand, and limited supply, prices will go up.  If there is over-supply, prices go down.  That's different than just inflation.

Appreciation is the inflation of value on something in relation to another similar good.

Housing prices are going up compared to the price of lumber and concrete.  Or this land in this suburb was selling as farmland 5 years ago for $4,000 an acre, now it's selling for $25k an acre.

Inflation is a general increase of the cost of prices or goods.

Candybar used to cost $0.35.  Now it cost $1.25.

Acre of farmland in middle of nowhere was $800 an acre, and now it's $2,000 an acre.

Keep in mind what your goal is first, cash flow or appreciation.

Mpls will be a better appreciation bet if you buy in the right areas and the right types of homes, but there's always the risk.

Part of the reason I buy is for appreciation, accumulation of long term debt at low rates as a hedge against inflation.

Appreciation isn't always going to happen, but for the U.S. economy to continue, we'll always have inflation, so having a plan that takes advantage of inflation isn't the worst thing.

I'm an advocate of keep living wherever you are (especially if it's almost free, like with your parents or several friends) and just make your first investment a rental property.

It's not advice I followed, but wish I would have.

After you get the mindset of buying to rent out to others first, you'll probably make a lesser mistake of "overbuying" your first house you live in.

A couple thoughts on this topic.

1.  I think the number of members on the forum is contributing to the variety in quality.  Many more newbies so the ratio is gone.  A few years ago, people had less cash on hand, so the idea of risking it was rarer so there were more die-hards.

2.  After a certain amount of forum reading and contributing, their is a point of diminishing returns for members unless they use BP in a methodical way.  It's like reading books on real estate.  Eventually you aren't going to learn much more by reading books that will be applicable to your investment career.  At some point you just need to dive in and learn from experience.  

3.  I think a VIP section is a bad idea.  It's a turnoff for those who aren't in it and a possible disappointment for those who make it.  I think lessons can be learned from anyone despite their VIP status.  Why limit conversations to those whom you "think" might know the answers.

 Moving from Hawaii to MN???

Why oh why???

Adding it to my calendar. Hoping I can make it!