All Forum Posts by: Frank Avallone II

Hi @Nicholas Callari, I definitely would recommend using a lender that is familiar with investing and this specific investing strategy as well. Helps if they personally invest in real estate too.

If known of the previous recommendations work out I would love to help answer any questions you may have.

It's always a good idea to talk to a few different lenders before making a decision!

Good luck on your journey!

HI @Mike Schorah, definitely super common in todays market. A few months ago things were even worse. Some properties would have 30 or more offers. 

Hey @Michael Cavitolo, I think @Scott E. does have a few great points in his reply. In my opinion if you are strictly going for the investment strategy and plan to begin your real estate investing journey I would try to be patient with finding the right property, preferably a duplex or larger. As Scott mentioned Single Family homes tend to appreciate better than condos which is a huge factor right there. The HOA fees are another factor that could make renting it out less profitable and a little trickier. To house hack with a single family home would mean you guys renting it out to someone that would essentially be sharing your space with you. If you guys are okay with this, then it can definitely be something that would make sense for now.

Something else to consider is to try to look at the bigger picture when considering the 2-4 family homes. If down payment is the issues then potentially saving while learning the market and more about investing may be great. In the long run though, buying a multi family can have some extreme benefits in comparison to the other options we are discussing. Firstly, everyone gets their own unit which makes finding renters much easier. Typically if you find a good deal and buy smart a 2-4 family house will bring in much more rental income. This could potentially cover your mortgage entirely while also proving a small cash flow on top of that. Then if you guys wanted to move out in the future, you would have a strong rental property in your portfolio. Unfortunately, especially in this market it takes time to find good deals. It takes me usually months if not years of looking every day to find each property I purchase. 

My main question to you though is when you say price point and affordability are you referencing money for down payment and closing cost as the main issue or just not being able to find anything with the current pre-approval cap? 

Hi @Eric Dekker, and welcome to Bigger Pockets! Congratulations on your first project, that is awesome news! 

1. You definitely brought up some interesting points in your options list. If the first project went smooth for you and the financials worked out then maybe trying to replicate what you just previously did again with the new knowledge I am sure you learned from the first project might not be a bad idea. 

2. Depending on what your current living situation is, I think this is always a great option for anyone. Especially if you currently rent and the rent is expensive doing this can help you save much quicker to continue investing while also potentially making you additional money on top of that.

3.I my self have been conflicted with short term rentals as well. You brought up a really great point, if times do get worse this really may make that sort of project much more difficult and throw off the numbers completely. Another thing I worry about is the dynamic of the rental services such as AirBNB. I do not know a ton about short term rentals but I always worried about what would happen if these major companies changed the rules in a way that would make it more difficult or potentially take a bigger cut. Again, truthfully I do not have that much experience with short term rentals so I could be speculating. This is just some things I think about when considering it myself.

4. Also another great point that I again am also considering currently. My view after investing for the past 5 years or so in 7 different properties so far is I always want to now put myself in a position that if a great opportunity does come up I can jump on it. So for me this means maintaining a certain amount of savings while now also having relationships with people who I can borrow money from or invest with if the opportunity does present itself. Another thing to consider with this point is something my mentor always says, unfortunately if the money is in the bank you are losing money anyway, at least if you invest it in a smart safe way with a property that cash flows you are still making money.

Personally in your situation I would make this decision based on your current living situation. If you are renting, than eliminating that overhead while potentially making money on top of that through buying and living in a multi family house seems like a great idea. If the rent is cheap or you currently live rent free, then you can still buy a multi family and that cash flow will be there.

You could also wait but as a lender myself interest rates rising at the same time the houses potentially decrease are still going to make the houses less affordable.

A lot to think about haha. Hope at least something I mentioned helped! 

I sent you a request as well. I would love to connect further!

Hey @Eric Wolf, congratulations on the purchase, that is awesome news! I use smartmove.com for all my background and tenant screening needs. I have heard of others as well but for me this works pretty well. Hope this helps!

Hey @Edwin Baker, if you have a specific property in mind you can always start by calling the town to ask what process looks like for that specific town and house.

Hey @Michael Hartman! While you are partially correct in your thinking, you are missing some keys to the puzzle. Firstly, this does depend on which type of properties you are buying and the finances of the properties in mind. Also, your current living situation is a factor. 

I would like to hear more about the situation you are currently in but first I'll try to answer some of your questions while just speaking generally.

If we are talking about traditional lending for investment properties, then you should also consider that when we look at DTI ratios (debt to income) on an investment property, generally, lenders allow you to count 75% of that expected rental income. So essentially as you build and build your portfolio and as long as the properties produce good rental income, each new transaction should help cover itself from a DTI perspective.

Another thing to consider is ideally if you are cash flowing on these properties that should help offset some of your spending which in turn, should allow you to save up money easier for the next property. 

While there is a ton more to this topic, I want to mention one last thing that most investors take advantage of. Historically houses appreciate at an average of over 3% per year. At the same time year after year your tenants are essentially paying off your mortgage and adding equity to your home. As time goes on, investors usually take advantage of this added equity over the years by cash out refinancing and then using this built up equity to help buy the next property. 

All these things start compounding as your portfolio grows and grows. 

I hope this helped!

Welcome to Bigger Pockets @John Costanza! Loved reading that post just now! I think it is awesome that you came to this new mindset. I really wish more people would try to "break the mold" as some would say. While not claiming to be an expert, I truly think investing your money is a crucial key to a lot of the lower and middle classes people's lives that they are missing out on. Real estate investing for me has really changed everything. Still not close to where I want to be with it but it really has made things a lot easier finically. I am currently a real estate investor and mortgage professional so I have a bit of experience in this area. I am also from northern NJ! I do think that house hacking may be a great first step for you guys as this can reduce one major common burden of almost everyone which is paying for a place to live! I would love to learn more about your situation and offer any advice or answer and questions you may have. I'll send you a connection request so we can talk further!

@Steve Williamitis, glad to hear you are interested in real estate investing and want to get started at a super young age! I would say to keep doing what you are doing as far as immersing yourself into research and understanding about real estate investing. Also, getting your feet wet in the real estate industry is a great idea for this summer. I would call local realtor offices, mortgage offices, property manager company, or even real estate attorney's to see if there is an entry level short term job you can take for the summer. Even just being around to learn some of the back end talk and gain more of understanding all while making money is only going to benefit you.

As far as getting started immediately into the investing, do you have any capital saved up at this point or the ability to use someone's capital that trusts you?

I know you'll likely hear about borrowing every cent from people on YouTube and social media but I do suggest starting with your own money and working a little bit slow to learn more first.

Feel free to reach out to me with any questions at all!

Cheers!

  

 Definitely a good point from @Trace Wilson! House hacking is always a good way to start, especially at your age.

I myself started at a similar age and have been able to scale at a comfortable pace. when I first started it took me a long time to get a good team of people around me. Still something I work on every day. I sent you a connection request. I'd love to jump on a call with you to learn a little bit more about the situation!