All Forum Posts by: Josh Young

@Anderson Bigate Nogueira

I think you are going to have a hard time finding that cash flow with just 25% down at today's interest rates; after you factor in Vacancy, Maintenance, Repairs, Capital Expenditures, and Property Management you will be lucky to have positive cash flow, but you will be able to refinance in a couple years and they should be cash flowing well at that point. 

If I was you, I wouldn't rent a place to live in, buying a primary residence is the best way to buy real estate, low down payment and lower interest rate than investment property. I would consider taking out a HELOC on current home and then use that money to buy a smaller primary residence at 5% down, rent out the current home ($6k per month if it's worth $1.2M), and then keep using the HELOC to buy a couple other investment properties, next year buy another primary residence at 5% down, rent out the other one, and buy a couple more investment properties. Or I might consider buying shares in an Open Door Capital (Brandon Turner OG BP Podcast) syndication instead of investment properties, but definitely buy a primary residence, don't rent.

The easiest way to buy is on the mls and the easiest way to rent is long term, but only putting 15% down won't cash flow in year 1, but it might in year 3 after you refinance. Right now you can improve cash flow either by how you buy or how you rent it out, you can either buy distressed property and force appreciation, which I wouldn't recommend as a beginner unless you have experience in residential construction. Next option is to buy from a distressed seller, sounds great but these deals are few and far between, you are better off taking action and getting started rather than waiting for an under valued off market deal.  The other way to improve cash flow is how you rent it out, you can furnish the common areas and rent it out by the room, this will be a little more work than a traditional rental, but if you can get 3 bedrooms this might 1.5x your rental rate, or you can fully furnish and rent by the month, this will also be a little more work, but also might 1.5x the rent, or airbnb which is a lot more work and more volatile, but might 2x the rent.  Lots of ways to look at it, but I wouldn't get too stuck on looking at years 1 numbers, if you have reserves and you buy in a good area that's going to appreciate you should be able to refinance into a lower rate in a couple years and you will be glad you got started.  Another option is to buy a new primary residence using a 5% conventional loan (or similar primary residence loan) and rent out your current home using one of these strategies. 

You can put a lease on the condo now and start collecting rent, the lender will count 75% of rent against the PITI on your DTI, tell the lender you want to do the same with your current residence, you are going to buy a primary residence using a 5% down conventional loan (or a similar primary residence loan), once you get the new house under contract you will put a lease on current house (have it start after the closing of new primary, but get it signed asap and the lender might want to see a security deposit in your bank to prove the lease is legit, not all lenders require this, but some do) and they will count 75% of rent, this should totally cancel out the PITI or maybe even give you income to help you qualify for new primary residence. My story is very similar to yours, check it out here: https://www.biggerpockets.com/...

@Eduardo Gonzalez

Get them clean, take great photos, write a detailed description of the property and lease terms for the listing, price comparable properties on Zillow, pick the median price, not the max, if you price it too high you will get unqualified applicants, then list it on Zillow Rental Manager.  Reply to every inquiry, but make people apply through Zillow, so you can view their Credit Report, Background Check, and Income.  The key is to attract a great tenant that is over qualified, I like 700+ credit score, clear background check and income 4x rent.  I use Zillow for payments too, it's easy and free. Good luck!

@Dante Barnes

Great job getting started, but you are missing the best parts of real estate investing, appreciation, loan pay down and tax savings. You have done a great job creating a cash flowing business that is in real estate, now you need to save all of the money you are making so you can buy a property.

@Reynaldo Purvis

Those are not strategies that I would pursue as a beginner, you just listed the hurdles, and they are real.  I always recommend that people start out buying a primary residence every few years, keeping the previous as a rental.  This gets you a relatively low interest rate and a low down payment.  Also, if you need more cash flow you can rent it out by the room.

@Doris Garcia

That is a stiff prepayment penalty, that majorly limits your ability to pivot if you need to change strategies.  Also, the terms and payments don't add up, is there a balloon at 20 years?

@Michael G.

Single family homes and condos almost always sell for less when they are occupied by a tenant.  You want the property to be as marketable as possible, clean and available for showings.  I actually got a great deal on a condo in 2021 because it was occupied by a tenant, it was cluttered, dirty, and had bad photos too, I bought it for $15k under the appraisal when all the other properties available were selling for over asking and waiving contingencies. 

@Michael Naples

That seems really high for most markets with today's rates and prices.  Make sure you are accounting for Vacancy, Maintenance & Repairs, Property Management and Cap Ex. These combine could be 20-25% of rent or more depending on the property.  I think most markets are negative on single-family unless you put 40% or more down.  

@Joe Wall

You should do a HELOC instead of a cash out refi. They will basically give you a line of credit and you won't have to pay anything until you draw against it, and it will be interest only payments for the draw period (usually 10 years, but depends on the lender).