All Forum Posts by: Eric Olsen

Quote from @Benjamin Aaker:

I'm a little hesitant about the profit in year 2. It looks like you are hoping for appreciation, but you don't receive any of that until you sell. Rent appreciation might be what you are mentioning. The risk is that it doesn't appreciate - you have no control over that. Your monthly mortgage will be about 2,000, which won't pay the bills as a long term rental.

I'm all about equity and I think it is OK to not have cash flow, but you need to have a plan to continue paying the mortgage if things get tough. If you have a solid other source of income like a W2 and it is secure, and it can pay the bills, then this might be worth trying. Deals like this one, probably won't scale very well, though. 

Thanks for your reply! I appreciate your insights a lot. If I purchased the home with 20% down instead of 3% the place would be cash flow neutral half of the year and then cash flow roughly $1k a month to begin with the other half of the year. Do you think the deal would be worth pursuing under those circumstances? Thanks for your help! 

Quote from @Jeremy Fleming:

Well, here's a few thoughts from the trenches. I have always been one to invest in 3+ bedroom homes, for resale reasons.
As well, I would not recommend buying a cashflow negative property, or even breakeven for that matter, as there are lots of places to buy at positive cashflow - unless you have endless cash reserves and money is not a concern for you.
Also, what's your plan if the market slows down or stagnates? It happens - I live in a super hot market, that collapsed a little over a decade ago, and it's been a tough climb back to where values should be. 
I'm not trying to be a doom and gloom investor here - just wanted to point out a couple pitfalls you might want to consider. If you have more questions, fire away!
Cheers. 

Thanks for your reply! If I buy with 20% down instead of 3% the property would then be cash neutral half the year and cash flow $1,000 per month the other half. Do you think the deal would be more viable under those circumstances? 

After sitting on the sidelines trying to get into real estate investing for several years, I have the opportunity to purchase a 1 bed, 1.5 bath home in a desirable part of the California desert.

The purchase price is $299,000 with a 7.3% interest rate and 3% down. My plan would be to live in it for a year and then start renting it out. 

The property would rent long-term for $2,500 currently. As a short-term rental, it would make $4,000 a month during the "season" (five months in the winter) and about $2,500–$3,000 in the non-season (the rest of the year). 

During year 2, when I would be able to start renting, I would make about $500 per month in profit during the season and lose roughly the same outside of the season. However, this home is located in a market that has enjoyed significant appreciation over the last 20 years and has seen significant investment in recent years to provide strong additional appreciation potential in the future. 

With current projections, I could expect to start cash flowing every month, and not just during the season, in about 5 years, in addition to the appreciation the property is expected to gain. My plan is to hold the place long-term and use it to help gain a stable income during retirement. 

Do you think this is a good deal, or do you not recommend doing this?

Quote from @Nathan Gesner:

Quote from @Eric Olsen:

A paid mentor is typically referred to as a coach. The problem is, how do you know they're good and will steer you right?

I think you'd be better off joining a local investor group, build relationships, and find someone experienced and trust-worthy to partner with you. That ensures they have skin in the game and will take an active interest in seeing you succeed.

Thanks for your response!

Quote from @Chris Seveney:

Quote from @Eric Olsen:

Hi All,

I have spent the past year studying real estate investing and am looking to acquire my first property and begin to scale up my portfolio over the next decade. 

I know I want to buy an all brick 3 bed/2 bath single family home in Alabama/somewhere in the Southeast to start, but I am struggling with confidence issues and self-doubt. It is a really big leap to take and I believe I would truly benefit from hiring a paid mentor, preferably one who offers one-on-one services at an hourly rate, to help guide me through my first purchase. 

I am aware of the services my local REIA offers, but I am looking for someone who has experience in real estate investing to mentor me one-on-one.

I would appreciate your referrals to any individual or service who could help. 

 I am skeptical of paid mentors if it is very costly. Those that do it for five digit figures typically the situation does not end well. You will never get the value you thought you would get from it.

 Thanks for your insight and response, I appreciate it. 

Quote from @Edgar Gonzalez:

Hey @Eric Olsen,

I had the same fear when getting started. But tbh I would say your prime realtor or secondary realtor can provide you with a lot of knowledge and answer most questions you may have about real estate. 

 Thank you for your input!

Quote from @Nicholas L.:

@Eric Olsen

setting aside your mentor question - here are a few questions for you

do you have an agent?

have you been prequalified for a loan?

do you have money for a down payment, reserves, and a personal emergency fund?

Hey Nicholas—the answer is yes to all of those questions  

Hi All,

I have spent the past year studying real estate investing and am looking to acquire my first property and begin to scale up my portfolio over the next decade. 

I know I want to buy an all brick 3 bed/2 bath single family home in Alabama/somewhere in the Southeast to start, but I am struggling with confidence issues and self-doubt. It is a really big leap to take and I believe I would truly benefit from hiring a paid mentor, preferably one who offers one-on-one services at an hourly rate, to help guide me through my first purchase. 

I am aware of the services my local REIA offers, but I am looking for someone who has experience in real estate investing to mentor me one-on-one.

I would appreciate your referrals to any individual or service who could help. 

Hey Justin--thanks for the reply. I'm referring to the first-time home buyer benefit that allows you to get in at 3.5%-5% down. Does that apply only when you are purchasing a primary residence or do you lose that benefit if your first home is an investment property that you do not live in?

I'm looking to buy my first investment property soon. I want to utilize the benefit of low $ down on your first FHA loan to buy a place locally and house hack. The problem is I live in Washington, DC and the numbers here for any form of real estate investing are horrible. I don't think I can make solid returns even through a house hack.

This has led me to look at other markets to acquire property in, but I worry about wasting my first time home buyer benefit. Do you know if the first time home buyer benefit through FHA only applies to permanent residences that you live in, or would I lose it if I acquired a rental property as my first property and didn't live in it?