All Forum Posts by: Jordan Barnes

Investment Info:

Single-family residence buy & hold investment in Lake Stevens.

Purchase price: $357,000
Cash invested: $18,000

This was my first investment, a SFH bought with a 3.5% down FHA loan. I had struggled for almost 2 years to find a duplex and eventually landed on new construction in one of the best school districts north of Seattle, WA. I was 23 at the time and my goal was to buy a home that I could have renters pay my mortgage, I actually was trying to house hack before I had heard the term.

What made you interested in investing in this type of deal?

This investment was born out of frustration more than anything else. In 2015-2017 I found myself in the middle of one of the hottest markets Seattle had ever seen. On every duplex I was competing against cash buyers and seasoned investors, with a measly 3.5% down... But my goal was to buy a house that I could rent rooms out to friends so I could live for free.

How did you find this deal and how did you negotiate it?

My agent and I found this on the MLS (new construction) but when I first started looking in this market this build had just begun so i hadn't noticed it. There was no negotiating, I actually bought the last house available on the whole site!

How did you finance this deal?

FHA loan for first time buyer, 3.5% down plus closing. No closing cost could be rolled in and i actually had to scramble to pull out a loan against my 401k to cover the closing, and my agent gifted $1000 of his commission to help.

How did you add value to the deal?

I built a fence around the yard, and bought a SS fridge and nice W/D set. Knowing it would be best to have those things in order for when I moved out and rented the whole house. I did just this in august of 2019! Now my wife and I collect $6k a year extra, and watch that market appreciate 8-10% year over year.

What was the outcome?

I still own the house now, as it CF $500/month. And in first my year I was able to get my entire down payment back from renting out rooms, giving me infinite ROI! I self manage the property as the tenants are very low maintenance.

Lessons learned? Challenges?

My agent at that time was brand new, and to no fault of his own his experience definitely cost me big time in the long run. So main lesson is get a rock star agent or if you find yourself in my shoes ask your agent-friend to get a Rockstar agent to partner with them to split the commission on your purchase. And save way more cash than you think you'll need!

There are so many paths to chose in REI. After you have educated yourself, listened to so many podcasts, read a ton of books and talked to multiple great investors it can be overwhelming on what direction to go. Which is precisely what my business partner and I are finding right now, which field to dive into. I think you can break it down into three questions that will give you a general direction, namely, what is your goal in REI? What part of REI interests you the most? What is your exit strategy? I am struggling the most with the second question, because are there are SO MANY strategies within REI that I think I would love.

My partner and I are both high income earners and live comfortably but we work a lot to support that lifestyle. Like many here, our goal is to be financially free and build wealth passively while spending more time with our families. We both love the business of real estate and want to grow an empire, leaving something of significance to our families. But we also enjoy working, or rather working for ourselves to build wealth. 

We have the opportunity to buy cash flowing multifamily properties in a highly appreciating area, Washington State, but then struggle to commit to a 4 plex or smaller or if we should just dive into 7+ unit complexes. I have always looked at mobile home parks as the golden goose of REI and we have a great contact that builds them professionally, which makes us hesitate to invest any money in MFHs if we are going to pursue something as big as building a park. Then from a true business point of view we both love the idea of self/RV storage, this seems more likely to be our exit strategy in 10+ years down the road.

Not sure if this is a post for suggestions, or to start open discussions but I feel like I cannot be the first investor in this position to struggle to make a decision like this and am curious if any of them are here with any guidance or advice. Hope everyone is enjoying the start to the new year! 

@Sherief Elbassuoni thank you SO much. This is super helpful. 

1-6 is already completed, which helps a lot in narrowing our focus. I do agree with you on my agent making most of the suggestions, and he has made a lot of great ones, but i am curious as to what a lot of people here do to start building the other members of their team. I do have a list of contractors I am set to contact and interview but I am thinking it might be smart to get with a good PM (the areas we are looking in are too far to self manager efficiently) and get some more insight to the best neighborhoods to invest in or stay away from. 

In your experience have you found more success in consulting a REI specialist CPA to to get books in order prior or is it simple enough to book keep as you go?

Once again thank you so much for your time! 

Hey everyone, 

I have just finalized my first partnership and we are going to be looking for multi family homes. I currently have one SFH that I self manage and haven't needed to give much attention to, so I never built a team (new construction, B+ property and tenants, etc). I have read all the BP books but I am curious as to real life experience of other investors not named than Brandon and David lol.

We will be targeting distressed properties, and our agent (who is a stud) gave some suggestions on where to start but I wanted to get your take as well! 

Who was the first person after your agent you got on your team and why? 

And what is the system you used to find your deal, and get it ready? targeting in on a market, price to rent ratio, rough estimates on scope of work, etc? 

All insight is appreciated and I am so excited for this journey! If anyone in Seattle wants to connect please reach out! 

Hey man, Seattle is obviously booming and pushing people out of the city, especially after COVID.