All Forum Posts by: Account Closed

@John Casmon - thank you for sharing your story. That's extremely helpful. To be honest, the 100k mark was to be able to "enter the territory" in a low-risk way on a SFR property to generate $300 - $400 extra a month and then get the ball rolling. At least that was my mindset for a little while when figuring out how we could get started without too many hoops to jump through. As far as our equity in our home goes, I've done some basic calculations and it seems that we won't be able to pull out more than 25,000 of our equity on an 80% LTV ratio if we went the home equity loan/HELOC route. Therefore, if I went conventional on a 100,000 - 115,000 home (maybe up to 150k depending on added savings and other monetary factors like closing costs, repairs, etc.), I'd need that 25,000 as a down payment which limits the sales price I think we can get to right now (realistically). Neither of us would have family who would invest with us; we'd need to do what you guys did and get some experience and credibility first with investors. That's why we were trying to stick within the $100k for a SFR property.

The idea of a MFR is seeming more and more appropriate and feasible as an entry point for us by doing a 3% FHA on it. We currently have a conventional loan on our house since we built it ourselves and did a cash-out refinance, so that actually helps since (correct me if I'm wrong) you can't have more than one FHA loan at a time.

@Matt Garboden - I think finding renters in the Portland area is the easy part; finding a property that is a good deal is the bigger challenge. 

Also, I'm curious on this topic: How many of you have bought any properties at an auction or as foreclosures? Does the bank lend on foreclosed properties? It seems like so many of them these days are going to auction.com where the terms are cash only. I have zero experience in this area, other than remembering back to 2011 when my husband and I bought our first house and the year prior we looked extensively at short sales and foreclosures and had an extremely difficult time trying to line up financing for the properties. However, with shows on TV these days highlighting the relative ease (and I'm aware it's all for TV) of buying foreclosed properties or auction properties, I'm curious what the everyday investor's experiences are and not the reality TV investors. 

@Randy E. - great insights, especially regarding your path to investing and what it took to get there. I appreciate your transparency. In some aspects I'm envious that we're not located in the southern region like you are. I have family all over the Carolinas and besides Oregon, that's another location I'm really interested in. I of course would prefer to live close to my properties for a number of reasons, but that may or may not happen. We'll see when we find the right house at the right price, where it's located. :) 

@Brent Coombs thanks for that. I think everyone likely approaches their financial situations different in regards to their equity, investments, loans, cash flow and lifestyle habits. Travel is a personal investment for us. We choose to go without other things so we can travel 2 - 3 weeks a year and that's fundamentally important to us. We rent our house out on Airbnb in the summers and because we have to be gone, we use the income we receive to fund our travels. We have one car payment but we also just spend our money differently. In some respects we're too busy to go out and buy stuff anyway and we live too far away from any shopping centers which is a definite plus on our spending habits. I know once we invest in a property it will continue to shape the way we save and spend, as every major life purchase and investment does. Right now though, we're just continuing to save where we can and invest in other areas. 

@Neal Collins - on your Victorian property, are you doing an owner-occupied loan on that right now or did you just fall in love with it and not want to leave? ;) There are a couple of beautiful properties I've seen (Victorian multifamilies) in the greater Portland area right now, so I'm curious to see how those work with tenants living in them. I only remember going in them in college towns (Corvallis, etc.)-- reminiscent of fraternities. :) Do you have rentals in the other "apartments" within your home? 

As far as the seller-backed loan you received, did you end up refinancing it when you wanted to sell (I'm assuming you sold that first property?) or did you end up paying it off based on steady rental income? I think that you're right in the fact that a good deal with possible seller financing could be a strong route. It's how my grandpa was able to sell his duplex in Forest Grove and got an amazing deal (albeit 20 years later) that transformed his retirement life as well. All things worth considering, for sure. I definitely want to read Brandon's book; I have a couple of books coming in the mail that I'm looking forward to. It took us awhile to settle on our two homes we bought and built and our success with those homes just in terms of equity growth was unplanned, and yet an educated, calculated risk. I've seen this play out throughout my life just growing up in the industry. I have don't really have anyone who is considered a real estate investor in my family so that is the one gap area of learning I have. I'm really appreciative of your time in sharing so many valuable insights. 

@Matt Garboden are you primarily sticking within the Portland-metro area? Are you managing multiple properties or have you sold some of your previous ones? 

@JR T. - we live in Dundee. ;) That was our smart investment! I love our home... built it ourselves last year from the ground up... but darn it if it wouldn't make a fantastic rental property. It was rented out all summer last summer for family vacations to wine country while we traveled to Europe. I grew up moving every 2 or so years with my dad as a builder so I'm used to it. Thanks for the sound advice. I appreciate it. 

@Michael Schmeltzer I've begun to look in Eugene/Corvallis which is the direction I think I'd head if I do stay in Oregon. I 100% agree about preferring to start here just so I can manage it on my own and keep an eye on it. Hiring a property manager would be a worthwhile investment out of state, but of course there are costs associated. One thought I had was to choose a location that had a solid economy, good schools, trackable growth, strong rental market but was in a city (outside of Oregon) where we have family. That way at least someone could keep an eye on it for us or at least speak with confidence to the area. Good luck in your search and I hope you land your first property soon! :) 

@Chris Parrish I really appreciate your response - a boost of confidence as well to know that we're not too far off from the direction and capabilities we would like to go. Thanks for your really helpful input. Now to just find some good starter investment homes here in Oregon... :) 

@Neal Collins Thank you for your input! I'm curious about this-- and maybe it's just the market in the past year-- but I've not been able to find a viable property under $110k anywhere in the area. I think the biggest hurdle for me is the fact that even though there are some great homes out there, most properties that would have a good rental value are going to be somewhere along the lines of starting at $200k or more anywhere in the metro area (all the suburbs outside of Portland). The downside to that is the 20 - 25% down required which I don't have right now. Another route we're open to is owner-occupied loans, but of course those have their pros and cons as well. It would just have to be the right property. It seems to me that if I wanted to start out with a property in the 100k range due to the down payment and equity we have and what we can afford, that I need to look somewhere out of state. (Or do some major rehab first, too, if it was a fixer instead.) I've seen some properties out there that are in foreclosure but of course the auctions require cash-only. I guess to me it seems like trying to buy a rental property in the Portland area is really difficult, but I could be wrong. 

I'm hoping that someone sees this and can dive in with "real talk." I'm going to lay it out there, and as I'm learning through this initial start up process (and I'm a quick learner) that I'll be able to realistically figure out what we can do financially, what we can afford, what our realities might look like, and other pieces of sound advice. I've been reading Bigger Pockets for quite awhile but haven't seen someone ask the exact type of questions I'm wondering about, so I would appreciate the help of those of you who have gone before. 

I'm going to try and organize my questions in numbered order, so commenting on any or all of them would be super helpful. Thank you!

1) My husband and I are both educators. I don't have to say much more for you to understand that our salaries are not those of corporate execs or other similar jobs. We love what we do, but are hungering for more and other ways to maximize our earning potential. Many educators take on side jobs in the summer to supplement their income; we'd rather stay home with our family. I'd like to simply know: Can people making salaries within the 50k range own multiple investment properties, or is it much more challenging and more for those, "you have to have money to make money" types? 

2) We have about 100k in equity in our personal home. We're sitting around a 35% DTI right now. We have about $25,000 in reserves in the bank, though we'd prefer not to use that as a down payment because we're learning that banks are wanting about 6 months of mortgage payments in reserves, correct? My question for those of you who own multiple properties: If you take out conventional mortgages on your subsequent properties, how do you come up with the 20% needed for each down payment? Do you take out HELOCs on your previous properties? Make enough from rental income? Or do you just make enough in your day jobs to save and come up with the 20% required? Investing in our first rental property won't really be a problem for us if we find a property around the 100k mark, but it's trying to figure out how (realistically) we could (and how you all) fund your subsequent properties that I am most interested in.

3) What is the average or common path to financing that you as investors use most often to buy your properties? Have you accumulated a lot of weath so you can buy outright? Do you go the conventional mortgage route? Go for private investors? Work with investment partners? I'm really just wondering whether two teachers who make around 50k a year each can own multiple rental properties. Do banks count your DTI on all of your properties and add them up together? How can so many of you own multiple investment properties?

4) What is the realistic "start up" cost for securing each and every investment property? I'm reading a lot about hiring real estate attorneys, creating LLCs for each property owned, working with real estate agents, making repairs, etc. If you were to take a 100,000 property as a baseline, how much would you expect to bring (out of pocket) to each home at closing based on the consultations you have, etc.?

5) How did each of you get started in investing? Did you have no money? Come into a windfall/inheritance? Save your own money? Have a well-paying job that funded it? I'd love to hear your stories. 

6) And finally... how many of you own properties in other states and how did you decide on those cities and states to invest in? We live on the west coast where property values are astronomical and rental rates are stagnant and soft. Most people won't pay more than $2000 in rent for a prime property in the city, and yet city real estate prices are through the roof. There are virtually ZERO rental properties within 100,000. Because of this, I feel like there is no way we can invest in our state because we do not have the 40,000 - 60,000 needed as a down payment for a 250-300k SFH property that our state is laden with. Incomes are not matching housing prices which is a huge issue, so Oregon is just not a great place for investing right now. We have family in the south and have been looking at South Carolina, Arkansas, Texas, North Carolina and Florida. What are the pros/cons and potential issues (besides having to for sure hire a property management company) to consider when investing in other states? Are there sales taxes assocaited? (we don't have them in Oregon).

Thank you SO much for any help on any of my questions you guys can offer-- transparency and realistic information is appreciated. I have a lot of experience in real estate as I mentioned, but there are some gaps I'm facing information-wise when it comes to getting started and then funding multiple investments on a public salary.