All Forum Posts by: Grant Anderson

Hello all! I've been looking to use my FHA loan on a first property and house hack. I have great credit and could probably muster 30-40k for a down-payment. However in my area, pure cash flow projections per unit are below what other people on this forum and Brandon Turner in Multifamily Millionaire Vol1 (great book btw) are saying. This being said, there is high demand to rent in my area and I'm confident in the fundamentals for long term stability here. I've come up with a possible strategy and line of thinking to excuse a less-than-par cashflowing property, especially a first-bat, but I need help spotting any potential reasons this would blow up in my face:

Instead of trying to find maximizing cash flow properties, I should find a property in high demand (low vacancy) and high rents that will cover the expenses. These markets are typically more "appreciation" markets (one I just happen to live in). Although the payments are higher and the fat is slimmer, I have a larger pot of equity to draw from after year one to leverage and get another property via HELOC. For example:

I have a choice between two hypothetical properties...

Property A - 2 units, priced $300k, $3000 gross monthly rent, $1365 P&I, $200 pure cash flow every month. After one year, the equity that was paid down in the property is $16,386. Available leverage at 80% = $13,108

Property B - 4 units, priced $500k, $4800 gross monthly rent, $2276 P&I, $200 pure cash flow every month. After one year, the equity that was paid down in the property is $27,310. Available leverage at 80% = $21,847

Although pure cash flow is the same, leverageable equity is higher. With this higher amount I can go secure another property. Bonus points if I've gained any value-add equity.

Part of me says playing around with debt like this is dangerous, another part says this is "good debt" and all your doing is leveraging equity you've earned in your property. Cash flow is all well and good but if you're trying to put <10% down on a property, I just don't see how cash flow like that'll work in the first couple years. The only thing I could see coming is Debt-To-Income ratios stopping me in my tracks.

What could possibly go wrong here that I'm not seeing? Would love insights of the masters (or other rookies)!

Many thanks,

Your friend Grant

Hey Reagan! A rookie here doing the same, shoot me a DM!

I'm very green to this space but I always evaluate the property for LTR first, albeit keeps me priced out of some areas that are all valued on STR potential. If the local government becomes anti-STR, then I may have lost on the crazy upside but at least I can sustain or get out if need be. I'm clueless about how safe a Long-term STR is (+7 or +30 days in this instance), but it sounds like that could be a great Plan B as well. It seems to me if you truly want the legal protection of your STR property, you'll be paying for it with the higher costs for the property (at least in my corner of Florida) and then STR isn't really worth it at that point from a cashflow perspective :/

Take everything I'm saying with a huge grain of salt, this is just what I've noticed in my area that has STR-friendly districts.

Awesome! How much is it renting for?

There's a general meeting for CFRI tomorrow evening! Shoot me a DM!

Hello my BP friends!
Looking forward to meeting everyone. I'm a 24-yr-old, full-time keyboard monkey making about 67k a year in Florida (born-and-raised) working in construction. I enjoy my job plenty, but it doesn't hold a candle to my dreams of more time with my future family and freedom to pursue entrepreneurship without working for basic living expenses. I have been watching RE junk food for around a year now but I recently picked up a pro membership on BP and looking to take action! However not yet a decisive one...

Fortunately (and unfortunately) I am a dreamer with many interests and skills. Definitely a jack-of-all-master-of-none. There seems to be many directions I'd like to go in real estate, but I know for a best initial success (and for my sanity) I should be picking on one to start. 

One thing I do know is unless there are overwhelming reasons I shouldn't, I'd like to stay in Florida since I'd like to think my connections and ground-understanding gives me a homefield advantage (at least to start).

Interest-wise, my gut is pulling me towards creating unique experiences for tenants/guests (top-notch AirBnB's and RV parks for example). I could try raising capital for this but I'm afraid it's risky and maybe picking up a Small Multifamily would be a good place to start, knock out my housing expense, and then I can leverage the property to go for the former. Am I making any sense here?

It's my hope to meet lots of you here on the forums and hone-in on a path to take for Class 1 Financial Freedom!

Best,

Grant