All Forum Posts by: Konstantin Ginzburg

I think that you have a good idea to begin real estate investing as early as you can and enter into that realm with a house hack, which is typically one of the safer options for real estate investing entry. It's also great that you are entering into this real at an early age since investing in anything rewards those who stay in the market for the longest length time (time in the market is better than timing the market). 

Having said all that, I would point out a few things that I think will be important for you to consider and weigh in on before you take the full diving with the route you are discussing. While your student loan debt is not giant; it is still a consumer debt that you will owe monthly payments on and will likely take up a noticeable portion of your monthly paycheck. You will be adding on to that by incurring a large mortgage payment due to your financing structure. An FHA is a great option for allowing people to enter into real estate with a federally backed mortgage that has a low upfront cost; keep in mind that the trade off will be a larger monthly payment cost in addition to PMI payments that will be factored into the loan. That will represent a large amount of monthly payments you will be liable for. I am not saying that you have a bad idea, but I do just want to make sure you are mentally prepared to take on this financial obligation.

The next concern I would have is condo's as investment options for real estate. Hopefully there are others in here that have personally invested in condos that can provide more insight into this real estate asset but my personal opinion on condos is that have a lot of downsides as an investment. They add on a potentially large additional monthly cost with HOA fees and these fees are not fixed and will continue to increase yearly in most instances. In addition, what you are able to do with your condo is dictated by what HOAs allow and they are able to regularly change their rules. Will the HOA allow you to sublease a room? Will they allow you to lease the full unit once you move out later? If they allow you lease now, will they change their mind in a few years? Again, this doesn't make a specific condo a bad investment idea, it simply adds an additional layer of due diligence and risk that you will need to be comfortable taking on as an investor.

Finally, when you are beginning a new job (especially a first job right out of college); there will be a huge learning curve that you will need to adjust too. You will need to acclimate to company and office culture, learn your requirements for that specific job, network with those in your field, improve on the skills and training you will need to succeed at that job, ect. At the same time, becoming a first time real estate investor will also have a large learning curve as you learns the ins and outs of managing a property and tenant. You can do both at once, just be prepared mentally for the enormous amount of work you will be putting on yourself by trying to learn and master two things at once. This is also doesn't factor in the unknown: is your new job a good fit or will you be wanting out within a year/what will your employers thoughts be about your fit in the company? 

Again, there is no right or wrong answer regrading your plan. There are just a lot of factors that you should consider before moving forward. Ultimately the choice will come down to what you route will move you towards your goals without causing an overload of anxiety that may negatively affect your overall quality of life. 

It's hard for me to comment to much since I am not familiar with the Anchorage market so I do not know what would be considered a decent cash flow for a property in that city. From my personal experience though, I have had the best luck with targeting the best areas rather than the best houses to invest in. I would rather own the worst house in a nicer neighborhood rather than the best house in a bad neighborhood. If you are able to house hack those properties and you are suggesting that you can increase rent to the point where you are making 100-200 in cash flow (I'll assume you ran all your numbers accurately); then the advantage that house hacking is that it gives you the ability to eliminate your largest monthly expense (housing). Not only that, but you actually turning what is the average person's largest expense into a cash flowing asset. 200 per month is still 2400 at the end of the year that you would not have had otherwise. There is no single property anyone can acquire that would net them financial freedom with one swing. Real estate investing will require a series of small steps and long term planning before financial freedom is achieved. View this as a first step that will allow you to subsidize your living expense, have an introductory course in land lording, and place the money that would have been spent on rent into an account to begin saving for the next property. Also make sure that whatever unit you plan on living in, is one that you will be comfortable living in. I think house hacking does need to strike a balance between financial milestones without causing too detrimental of a life style. 

Have you looked into real estate investor meetups that are in the Baltimore area? That is an excellent place to meet other investors who are more familiar with that market and can answer any questions that you have. I would be happy to answer any questions you have if you want to reach out however, you are 100% correct about someone who is local to you being a better mentor since real estate varies greatly from market to market. It sounds like you are on the right track by securing your financing already. The next step would be to find either a realtor that you trust heavily or a realtor who has experience working with real estate investors. An investor friendly realtor would be ideal but finding a realtor that is synced in and connected with the real estate market in Baltimore will be more beneficial even if they are not knowledgeable about investment real estate since they can still provide you with contacts with contractors and insurers. It will just be up to you to identify your "buy box" and run the numbers on all property yourself. Find a property located in a portion of town that you want to live and then see if the numbers work out for you in terms of cash flow and return on your investment. 

The unit we are using for an STR is all on the ground level. The entire building is a 4 unit. The ground level is a 4 bedroom unit that is used as an STR and has a private patio space that is only accessible by that unit. The 2nd floor is made up of 2 separate units that are being used as an LTR and we live in the 4th unit that is on the 3rd floor. The city's laws regarding STR permits only allow us to use one unit as an STR and that apartment number must be declared beforehand and can not be changed so we chose to use the 4 bedroom to maximize the amount of guests we can host at one time. There is only street parking available. Houses with private driveways in this neighborhood are actually extremely rare. There are a handful but they make up a tiny percentage of all houses. We have a 1 car driveway that we reserve for the STR guests. All houses in this area were built around 1900 and driveways were rare back then.

I do agree with the idea regarding nightstands and I have added those to the list of furniture to prioritize getting as soon as we can. I really appreciate all your insight and advice. Thank you. 

 I think that is a common motif in this city. I honestly never questioned it. The majority of doors on houses have a second metal door. It could be due to the age of the houses in the neighborhood with most of them being built in the early 1900s. The ones that don't have the metal door tend to be gated houses. 

@Sarah Kensinger

Thanks for all that advice and I fully agree with you. We are viewing this as a very active investment hence why we are on here trying to learn new ways to continue being active. This is our first time in the STR market space so there is a learning curve with this market compared with the traditional long term that we have been operating in before. We are very excited about this venture and looking for ways to improve and continue to get better. Luckily all our expenses are being met and we are generating a profit on most months even with our low occupancy rates so we are not in panic mode.

I do really like your theme idea. Our initial plans were too make each bedroom a separate theme with the themes being: Mardi Gras, Bourbon Street, Victorian, and Jazz. Do you think this would be a decent idea or would you suggest having a single theme throughout the entire unit? There are definitely some elements of Mardi Gras themes in a lot of the STRs in our area but it seems like most are going with a "simple elegance" theme in their listings and I agree having a more colorful theme would make us stand out more. We are in the initial phases of planning out how to redecorate the unit. Our city has passed a new that will go into effect July that heavily restricts STR permits so we are waiting to find out whether or not we will be able to secure a new permit before we invest in a large remodel but its absolutely one of the top items on our priority list.

We were thinking about pasting on murals on most of the walls in the common area as well that is New Orleans themed as well. I appreciate all your advice and really hope we wind up in that 90th percentile. :) 

We are actively buying more paintings as we find them around the city to add to the STR. I was also thinking about adding some of our Mardi Gras parade throws to the design too but was worried about it looking more tacky than fun. What do you think about that idea? What kind of decorations have you seen in the past that stood out to you that you think might work in this unit?

 I appreciate that advice a lot! The photos have been brought up a few times so I am already reaching out for referrals to get a professional photographer involved. 

The title also came up. Do you have any advice on what you might highlight in the title instead? The main draws for our area are the safe neighbor, historic buildings around the neighborhood, and a lot restaurants and shops nearby. 

Interior: I do like your idea to update the bedding so I will absolutely take that under advisement. For art, we have been actively picking up art here and there but we can increase the décor a bit more. We are hoping to incorporate more local art into our design with photos and paintings from some of the sites around the city. I was also thinking about hanging some of our Mardi Gras throws around the unit but was worried this might come off as a bit tacky. What are your thoughts about this?  

 1) The pictures were brought up a few times so I will absolutely be looking into hiring a professional photographer to fix that in the near future. 

2) We have a city mandate that will go into effect on July 1st that will cap the maximum number of bedrooms allowed in an STR listing to 3 bedrooms and 6 people in total. So we are going to be converting one of the bedrooms into a common room in the near future that will hopefully create more of a common area. What do you think would be a good type of room to convert the bedroom into? TV room? Den? Sitting room? Other idea? We have a secondary table that we have for guests who need additional space for dinner. Its a foldable table that we keep in the closet but doesn't really fit the decor so we didn't stage it for photos. Do you think this temporary table setup is enough or would you suggest looking into getting a different table completely?

3) Any advice on what you would change the title too or what buzz words might make it stand out a bit more? 

I appreciate your input. The photos have been brought up several times. I'm still fairly new to the STR market to be honest so I hadn't realized the photos were that bad. I do appreciate that advice so will be looking into hiring a professional photographer shortly. As far as design: could you elaborate on that a bit more? What aspects of the design do you think need to be changed?

Also can you elaborate more which part of my views you are referring to from the previous post? If it's for seasonality, then I do agree with you. Late May and onwards is a slow season for New Orleans and that lasts until mid-October. We have already began advertising and taking applications for medium term rentals starting on July 1st. I'm not complaining of course, February was our peak season and we did amazing that month so taking the good with the bad.