@Ben Sears @William Battistelli @Damaso Bautista
Thank you all for your reply. Apologies in advance for the long post but I'll try to respond to all 3 posts in one.
My wife and I originally set out to house hack a triplex in downtown Chicago. At the time I wasn't a licensed agent but I was on bigger pockets and felt confident in analyzing a deal. We ended up never finding that triplex. The biggest mistake I made was not doing enough research to understand the lending options available. I thought it was FHA 3.5% down or 20% down and that was it. I did not realize you could get a conventional loan without 20% down. We wanted something that needed work and 20% down, although we could swing it, significantly reduced the cash available for renovations. Sellers didn't want to deal with FHA because the next buyer was paying cash. Despite offering more than our competition, we lost a couple deals to buyers with stronger financial positions. We found ourselves in neighborhoods where the numbers worked but it wasn't necessarily a part of town that my wife felt comfortable living in.
From there we started looking just outside the city and were under contract on a fourplex. The seller kept asking for an extension to the closing date and eventually told us she wasn’t going to sell. My agent at the time said that we could sue for breach of contract but I opted to not start my real estate investing by taking a senior citizen to court for the purchase of a home that they had lived in for 40+ years.
When all this happened, we were living in an apartment in Lincoln Park and we had communicated to our landlord that we were under contract and would not be renewing our lease. The landlord put the apartment up for rent and it was leased within a day. The fourplex fell through and we found ourselves in a tough spot. Lesson learned. We then purchased a single family home and around the same time I left my career in public accounting to work in the tax department for a real estate investment management firm. There were two reasons that I decided to change i.) I wanted to be closer to the deals and ii.) the public accounting hours were not conducive to achieving the goals I had outside of work. I also became a licensed real estate agent and have had success assisting family / friends with their real estate transactions.
I find myself struggling with picking a strategy to get into it. I’m not afraid of losing the money because I think I’ll lose more long-term if I don’t start. I’m committed to that. I want my first deal but I’m not going to buy a property for the sake of buying the property. Like William said, thinking about the next step is always part of my plan. How do I go from 1 to 2, etc.
I’m not afraid of losing the money but there is a balance. My son is 10 months old and every decision we make revolves around him, his future and out ability to spend as much time with him as possible. We don’t drive luxury vehicles or spend money like that because the goal of investing in real estate is far more important.
William – congrats on your upcoming closing. I hope that goes smoothly for you and that investment propels you to your next property! What is your plan for the next one?
Damaso – I get what your saying about it being tied to personality. Its an interesting point and something I’ll consider further. You always hear people saying “LA is a hot market and impossible to invest in”. Congrats on proving those people wrong. What types of property does your portfolio consists of and how did you build that portfolio to what it is today?
