All Forum Posts by: Josh Young

@Jake Andronico I agree that some of his principles are sound, and are probably a good first step for people to learn, and some people might never graduate out of that first step, and some probably shouldn't, but I personally would have never gotten to where I am today if I did what Dave Ramsey said.  It's important to respect debt and understand the risks involved in using it as leverage, but Dave Ramsey seems to tell people to not use it no matter what, I just think that is ignorant.  There are different levels that people will reach in education and investing and he is at the lower level, he does help a lot of people from going backwards, but to be a good investor you must also have offense and not just defense.

@Mary Ainsworth you need to ask your Realtor for the best strategy for their city, it is their job to be the expert. If you are out of state you also want a Realtor who can manage the property for you too, so they are analyzing the deal for you and know what kind of revenue you can expect. I will let you know that mid-term rentals, STR, and rent by the room are all more of an active business and have much higher management fees, so the net returns aren't necessarily any higher for you as an out of state investor. Small multi-family properties can be good, but with added supply of new apartments coming online rents have started to drop a little, and there is very limited supply of these small multi-family properties, so they tend to be overpriced relative to the rental income. The best deal is if you go north of Tucson into Casa Grande or even Florence, Coolidge, or Maricopa you can buy a new build for just over $300k and will rent for just under $2k per month, you are able to get a lower interest rate on these than you can on anything else because the builders have their own lenders that will buy your rate down, so you can break even on cash flow in year one if you put 30% down. Full Disclosure, I am an investor friendly agent and property manager and I help my out of state clients find, buy, analyze, and manage properties using this exact strategy.

@Hansel Gunawan generally speaking, I have found that townhouses might cash flow better in year one, but they might appreciate less and might get less rent appreciation too. Townhouses sometimes have a high HOA too, so that can really keep them from appreciating as much. I personally prefer SFH if you can afford it, they do usually cost more, so they cash flow a little less in year one, but can cash flow more and become worth more in the long run. I think SFH can be easier to find good tenants for and this usually makes them easier to manage. But if you are talking class A vs B or even C and/or different build decades of properties then it's really hard to compare. My advice either way is, don't buy into a high HOA fee and don't buy in a bad/cheap area.

@Rigoberto Torres Meza have a realtor in your MLS set you up with a "Portal" using your email address and download the FlexMLS for Homebuyers App, it's not going to give you all the private remarks, but it's as close as you can get, it's what I used to do research and also used that realtor to buy properties before I got my license.

That's smart. Your next step is to talk to a lender, so you can create a plan on qualifying for the purchase, your best option might be an FHA loan, the down payment requirements should be much less than a conventional loan on a small multi-family, but a lender will help you with this.

Living in one of the units is a great way to learn how to be a landlord too.  There is pretty limited inventory for these small multi-family units, especially with a vacant unit, which is a must for you to get it as owner occupant financing. But there are some and it's possible to make one of the units vacant if it's on a month to month lease.  

@Felix Ngatunyi not sure how much capital you have, but buying a small multi-family as an investment property will most likely be 25% down, so an $800k 4-unit would be $200k of your cash. If I were you I would consider buying something as a primary residence, so you can put 5% down or even 3.5% if you do FHA, you could still buy a small multi-family if you want and just live in one of the units or buy a single family, either way buying a primary residence will use less of your cash and you will be able to buy another primary residence again in 12 months and do the same thing over again and just keep the previous as a rental. With the same $200k you will be able to buy over $2M worth of real estate over a few years instead of only $800k all at once as an investment property. The fact that it's just you and your cats will make it easy, I had to convince my wife each time I wanted to buy a house and move. Here is a link to a post that I wrote that might help you: https://www.biggerpockets.com/forums/61/topics/1096979-how-i...

This sounds like a pretty good plan, if you lived in your current home for 2 out of the last 5 years then it will be a tax free gain, that is extra helpful. Your biggest savings in this move is that you will be reducing your housing expense by moving into a smaller/less expensive home.  I know you don't like debt, but debt in rental properties can be good debt, I like to calculate the return on equity when I'm trying to figure out what the best decision would be, here is a post I did that might help you: https://www.biggerpockets.com/forums/12/topics/1108744-how-t...

I would be cautious about investing for cash flow in year one unless you can get appreciation as well, as prices appreciate so do rents so your cash flow improves over time. If you invest in a place that has good cash flow in year one, but it never appreciates then you will regret the decision by year 3 or 4, and like @Becca F. said: your returns will be diminished by increasing expenses. To get appreciation you usually need population growth and job growth, you have both of those in a lot of Colorado, not so much in most of the mid-west.  We also have good growth here in Arizona and prices might be a little less than Colorado and taxes a little less too. 

If you sell your primary and move into your rental I would encourage you to take $400k of the money and buy 3 rental houses in an appreciating market (CO or AZ) and put just enough down so they cash flow break even in year one and then hold the other $100k for reserves. And if you buy new builds your cap ex / maintenance & repairs will be minimal for a few years, this will give you time to increase rents. These purchases could be $330k each and 30% down, with builder incentives to buy the rate down you can get them to break even in year one and it will only get better from there, rents will increase over time and refinance in a few years. If you are worried about market volatility then just buy them one at a time with 6 months between each purchase.

I hope this is helpful!

@Mark Smith If you are worried about cash flow and the chance of losing your job then you want to put as little down as possible and save as much cash as you can for reserves, living in the property as your primary residence should help you with this. Don't buy in a shady/high crime area, I know it's a limited inventory for small multi-family properties in good areas that are affordable, but there are a few.  The other option would be to buy a house and rent out the rooms, this should cash flow better and you will have more options to buy in a better location.  Do you currently own a home that you will be keeping as a rental or will this be your first home?

@Jessica Sudyn don't worry about the PMI, you will likely be refinancing in a few years. Put as little down as possible and save your cash so you can have extra reserves and buy another home in a few years. Here are a couple posts I did that might help you: https://www.biggerpockets.com/forums/61/topics/1096979-how-i...

https://www.biggerpockets.com/forums/12/topics/1108744-how-t...

@Antonio Bodley it depends, maybe a few years and the entire state and then try to find similar characteristics such as town size, parcel size, utilities access, zoning use (residential/commercial) etc. Then try to narrow it down from there.