All Forum Posts by: Malgorzata Sadowska

Hi All,

I'm Porfirio Ciaccio, 24 years old, and a recent college grad. Right now, I’m renting a studio on Miami Beach for $1,750 a month, and it hit me—what if I just bought the property I’m renting? At least part of the $2,000 or so I’d be spending would go towards myself. That thought led me down the real estate rabbit hole, and after stumbling on the BiggerPockets podcast, I’ve been hooked on the possibilities in real estate investment. It’s been about two months now, and I really want to get started.

The thing is, I don’t have a lot saved for a down payment ($15k) since I’ve only been working for about a year. Therefore, the only way I can get started now is through a homeowner loan that offers the 5% - 3.5% down payment option.

I like the idea of starting local since I know the Miami Beach area well, and buying a studio like the one I'm renting feels like a safe first step, so I've been looking at similar properties to what I currently rent online and running numbers. The problem is that it seems that it will be very difficult to generate even a neutral cash flow given the high HOA fees, taxes, and insurance in Florida.

With an estimated mortgage payment of $1,100, my total monthly expenses would be around $2,200 (approximately $700 for HOA fees and $400 for taxes and insurance). I also estimate that, after accounting for a 10% vacancy, I could rent the property for about $1,800 per month.

Even with that ($400) cash flow, I still feel like I’d be better off than where I am now, between the experience I’d gain, the equity I’d build, and the appreciation and tax benefits. The timing also seems favorable, with many motivated sellers in Florida.

I've read about strategies like house hacking but am not too enthusiastic about what it would take (also not very feasible given the current cash I have), also the ‘BRRR' method, though I wonder if it might be too ambitious for my first property. Or maybe not?

That’s why I’m reaching out to get your feedback. Given my situation, what would you recommend? Does my plan make sense, or should I consider spending a year saving for a larger down payment and a better property? Go outside Florida market? Ditch the Condos? My ultimate goal is to build a real estate portfolio that provides financial freedom, something I can manage passively on the side until it eventually surpasses my 9-to-5 income.

Thanks everyone!

Thank you everyone for your replies! The market that I would like to target for my primary residence would be Miami which is definitely expensive and I have a hard time finding anything like a triplex or fourplex that I could house hack and still have it make financial sense. I would like something where I could realistically cover the mortgage with my W2 income in the worst case scenario of all the other units being vacant. What I have found that may work would be to find a house with an ADU, live in the ADU, and STR the Main House. With prices in Miami, that mortgage would come out to about 40% DTI if the Main House stayed vacant for any reason. A "quick math" AirBNB analysis would have me just under breaking even on the mortgage after accounting for management, AirBNB fees, CapEx, vacancy, routine repairs and about 10% set aside for other STR related supplies. As for the cheaper markets, I would look to do mid term rentals in the Rust Belt near hospitals like the Cleveland clinic to maximize the income to help mitigate the downsides and unexpected expenses associated with those markets. Overall, my plan would be to buy a Primary House hack once per year in an appreciating market, while buying 2-3 mid term rentals in more "cash flow" markets to balance out the composition of the portfolio. Within the next 5 years, I would like to get to about $10,000 per month in cash flow to basically be an insurance policy in case I am unable to fly due to medical reasons or an accident. Given my geographic inability to personally manage the properties and long stretches of not having cell or internet service, I'm calculating 3rd party property management into all my deals. The main reason for considering purchasing solely the higher cash flow properties for the first year or two is that I don't yet know how much of the house hack STR income could be used to reduce my DTI in order to purchase more straight rentals. I'll start shopping around mortgage brokers and get all that info from them so I can make the most informed decision of which to target first to optimize growth without over leveraging myself. I greatly appreciate all of your input and wish you all the best with your RE goals!

 I'll shoot you a PM we have a similar project we are putting together in Miami and starting to go directly to land owners for equity contributions to development deals to bridge the gap and put this together.