All Forum Posts by: Michael Paling

You might not like my first advice, but I'll say that you should really make sure you have your financial foundation solid before delving too much into REI, especially with a baby on the way (congrats!). This might mean working hard and saving as much as possible for a few years. After I graduated college, I started reading a lot of the FIRE blogs, like Mr. Money Mustache. I sold my truck that I bought 9 months earlier, opened investment accounts, and gave myself a goal of spending $100 max on food per month. You'll look back and thank yourself for the commitment.

Some other advice... start out with house hacking. Find a duplex, tri-plex, or quad-plex and live in one of the units. You could probably find loans that only require 3.5% down through FHA or I've seen 5% down conventional. You could also look into the NACA home buying program. I know very little about it, but episode 261 of the Real Estate Rookie covers this.

I'll second everything Derek said. Make sure you're running numbers as if you weren't living there. If it cashflows well with that scenario, then it may be a good deal. If it's not cashflowing while you live there, but it still reduces your personal housing expenses, then that's great. I'm house hacking a duplex and the other unit covers 100% of PITI. Once I move out, I'll cashflow about $300/month and I only put down $22k. The quality of deals really varies from market to market.

Being on the safe side is definitely realistic in real estate. Yes, there's still risk, but just be conservative in your numbers. This sounds like a good plan, but one suggestion I might add is to ask multiple lenders if they have any conventional low down payment products. I was offered a conventional mortgage with 5% down, which I had no clue was a thing still. It of course requires slightly more of a DP, but might help you avoid some red tape with FHA. Plus the PMI will drop off at 80% with conventional, which I don't think happens with FHA unless you refinance.

like a lot of people, it was Rich Dad Poor Dad that I read in college that started the spark. I was trying out a MLM company at the time and quickly found that wasn't the road I wanted. After graduating, I worked at learning REI, but then got myself suckered into a coaching program and lost $6K. With nothing to my name at the time, I put off REI for about 6 years. In that time, I just focused on building my financial foundation. I read a lot of stuff from Mr. Money Mustache and that whole time, I kept saying "I'm going to buy a duplex to house hack". I finally got myself to take action last year and bought that duplex. Now I'm in the search for property #2.

I think Dion McNeeley does a pretty good job of going through some issues with rent control in this video: 

(11) Proposed Renters’ Bill Of Rights. How rent control makes landlords rich. - YouTube

There will always be renters complaining that prices are too high. In my market, $2k would be units with 4 bed 2 bath and there are a lot that complain here too. 1/1 units would be around $900 to $1k. 

It looks like you've accounted for all the right expenses. I would double check your rent estimates though. I quickly checked the facebook marketplace around this address and there are 1 bed 1 bath units listed at $900+. At $2,600 for 4 units, you're looking at $650 per unit. I wouldn't completely trust zillow or google on the rent estimates. Use them as a starting point and then make your own estimates with data from apartment postings on facebook, craigslist, zillow, or wherever units are advertised locally to see if they make sense. Then run it by another investor in your area. Also remember that a lot of the asking prices listed on the MLS won't make good deals, so run your numbers and only make offers that work for you. If the seller thinks your offer is too low, then they won't accept it and you move to the next deal.

If you're planning on getting into Real Estate, you need to have lenders. $20K is a great starting point for having your down payment along with a small amount for repairs and maintenance, but you'll ultimately need a lot more funds to do anything. If your plans are to purchase a $20K property, you're probably looking at buying a very junk house in need of A LOT of work. While that's a great idea, it may not be the best idea for your first property. Remember that a mortgage is not bad like credit card debt is, so getting into debt (a mortgage) on your first property can be a necessary step to getting started. 

Nice Job Tyrell! even getting the price down $20K is a great bonus. In my market, most houses are still being sold over asking price, so I don't expect getting that kind of deal. Good luck finding the next one!

As you've already stated, you're going to get a lot (if not all) of us just telling you to start. Do something actionable. Go talk to a lender (actually multiple) and get pre-approved for a mortgage. Find a realtor to work with and have them take you to check out some houses. While you're at home in your free time or late at night, jump on Zillow and analyze a couple deals. I'm a huge fan of the free spreadsheets from realestatespreadsheets.com. 

Your "learning path" will constantly change as you progress, so I would focus on learning the next step. If that next step is how to get pre-approved for a loan, then go learn that and talk to a lender. If you haven't found anyone local, I'd suggest making a post on BP that simply introduces you, including where you are investing, what your goals are and "I'd love to meet and chat with other local investors". I'm in a fairly rural area but did exactly this and it was the best thing I could have done for getting my first deal, because simply being around them gave me the confidence I needed to take action.  

I think this is probably going to be a personal preference. What I've done so far is listened to every episode of the Real Estate Rookie and then On The Market. I like to listen to them first to last, because my phone will automatically play the next episode when one is finished with this order. That way I can keep working (painting, flooring, roofing, etc.). I've started doing the same with the OG podcast, but I also keep up on the newer ones, especially On The Market, so that I'm getting info about current times. 

The basic info in the OG podcast sounds the same, but the talk about the economic environment is from back then and not related to current times. It's interesting to look back at how Josh, Brandon, and guests felt about the economy back then.