All Forum Posts by: Scott Dixon

@Jess Barker

Nothing wrong with studying up and laying a solid foundation before you start building your real estate portfolio. The Champaign/Urbana area makes for a good investment market. The taxes in Urbana can be very high which does hurt the cash flow. I prefer to stay on the Champaign side of town. The University and student rental properties are big business and as such very hard to find a property close to campus. I have been able to find a few deals off the MLS but like most places 95% of the properties on the MLS just don't work when you run all the numbers. Student rentals are a bit higher when it comes to management but if you have a well maintained place for a reasonable price your vacancy will be 0% or very close and you will have signed leases 6 months ahead of the current one expiring. Let me know if you have any questions about Champaign/Urbana and I would be happy to share what I know.

Take care and best of luck

Scott Dixon

Hi @Chris Jerome

These are the notes I took from a duplex I bought at the end of last year for around a 100K in Illinois

Closing Costs: $3874.06 which also included $1,111.62 in initial deposit into Escrow and $728.50 for 1 year of homeowners insurance. With these 2 items removed the closing costs were $2033.94.

Good Luck!

Hi @Jess Barker and welcome to BP. Nice to see a fellow UIUC grad on the forum. Looks like you have a long history in real estate and records research which will come in handy when investigating individual investment properties. What location are you favoring to start investing? St Louis?

Hi @Kelly Miller

Similar to you I started off only focusing on education (books, podcasts, studying local market trends), all the while overlooking how important it was to grow my local network. There are most likely plenty of people who are investing in the same market you are and might be able to help you avoid those mistakes with multiple 0’s which @Jenna Stonecipher mentor was talking about.

In addition, a strong local network will most likely be the source of your first deal (agents, investors, or wholesalers). A local network will be able to give you solid references for skilled labor and professional council.

So, keep the motivation and energy you have from your first month of education and use some of that energy and connect with local real estate investors. You might find a good number right here on BP.

Best of Luck!

Hi @Tomasz Strzemecki

Wouldn't consider myself a pro on this subject but when I was starting out I know the lender was always looking for my Schedule E from the last 2 years of tax returns. If you have 2 years of documented history then I believe the lender will consider a certain % of your active lease(s) towards approving you on the next loan.

You had indicated "2 rental properties." So, do you currently have 1 rental and then moving out would be your 2nd rental? If so, how long have you had your first rental?

Best of Luck!

Hey @Charles Bailey

Welcome to BP! Good to see another Champaign/Urbana local on the forum. I live down in Savoy and I primarily focus on a buy and hold strategy (rentals). If you look under the Resources tab of the top toolbar you will find REI Resources which will have a lot of great information for you to start reviewing.

There is a list of the top 35 Blogs (under REI Resources) and there you will find some great Flipping Blogs which might be right up your alley.

Best of Luck!

Hey @Brandon Hall

Welcome to BP! I am a little jealous and wish I took some REI classes in college. I am getting most of my REI knowledge from Bigger Pockets and getting dirty with some rentals.

I can't say much about DC since I am not familiar with the rental market. If you were going to put a rule of thumb to work I would say it is probably going to be hard to make competitive returns on your investment in such a high priced market. With that said the huge advantage of investing close to where you are now is you can leverage FHA financing for a multi-unit (up to a 4-plex) with as little as 3.5% down as long as the property is going to be your primary residence. If you can find a great deal in DC that might be your way to lower the barrier of entry of the down payment in the DC market. Still need to run all of your numbers and ensure any property is a good investment if you are planning on being in this for the long haul.

There are numerous posts on FHA financing and living in a portion of your first rental property. This is how I started and know Brandon Turner is a big fan of this approach of starting out as well.

Also a fan of the college town but being you are so far away you would have to hire a property manager to properly manage. I think there is a lot to be said for starting out managing your own properties. This might not always be the most enjoyable experience when the tenants give you a ring but the amount you will learn will pay big dividends down the road.

Best of Luck!

Welcome to BP @Matthew Koegler

I am a fan of investing in college towns and actually live in a Big Ten University town currently. As you probably remember, when you were going to Penn State, each college town is setup in it's own unique way. For instance in my case the East and West side of the campus are pretty much where most of the students rent. There are properties to the North, which look to be in a fantastic location and really close to campus but because of the neighborhood you are going to be very challenged to find student renters and even more challenged to fine student renters who will pay a premium. Similar to buying any type of rental property it is critical to educate yourself to the area and from my opinion go there and get some "boots on the ground." College rentals often will have significantly higher turnover and depending on your are you might need to furnish. Also you must be on the Leasing cycle, for instance ours runs from Aug to Aug. If your property leases don't start when all the other students are moving in you will have a much tougher time. From our local market if you are in the premium areas where students rent you can command a large premium compared to similar properties just a handful of blocks away

I am not sure if I would confirm that college rentals = easy money but they are a great niche market within real estate investing. Good Luck!

Welcome to BP @Brian Mergen

I used to live in Peoria a couple years back where I started investing in real estate. I still own my first investment (duplex) and keep an eye on the area for any deals that come across the MLS. Before I moved (to Champaign, IL are), I did send out a couple hundred letters looking for motivated sellers in Peoria and the surrounding counties. My response rate was encouraging but I was not able to lock up anything prior to moving. I think Peoria has a lot of potential and would be interested in meeting with you and @Michael Herr next time I am in the area. Good Luck!

Hey @Ryan Rogoszewski

@Ryan RogoszewskiWelcome to BP! I actually was in a very similar situation when I started in real estate investing. I graduated with a graduate degree in engineering and also had some student loans to go along with the degree.

1) In my case, I did pay down my student debt prior to buying my first rental property (which was a duplex where I lived in one side). I would not say this is a MUST but if you are looking to get a traditional Fannie/Freddie loan you will need to get established in your job for at least a little while to build up your documented income.

2) I would not get in a hurry to buy your retirement condo down in Florida when you are just finishing up school . If you start educating yourself, spend wisely, and slowly but surely build a solid portfolio of rental properties over your career then you will have no problem at all buying a place to relax and enjoy your "passive income."

Everyone's situation is different and there is not only one path to get to your final goal. You are already well ahead of the majority of your classmates by thinking about investing (acquiring assets) opposed to which liability you are going to buy first.

Best of Luck!

Scott Dixon