All Forum Posts by: Nathan Hedrick

I completely agree with what @Cory J Thornton said about evaluating the actual deal based on target cashflow. That's what determines whether the deal works for you, in your situation.

As far as determining "what is considered a good price for a home," a "good price" isn't an absolute thing but instead something that's relative to houses that are as comparable as possible. Poke around in Zillow's recent home sales data and you'll eventually start to see patterns. Houses in Location A sell for more than houses in Location B for the same number of bedrooms or baths, and that sort of thing. You'll also start to get an intuitive sense for how much a fourth bedroom or a third bath is worth, and how much fixed-up condition is worth versus houses that need work.

So the first part of it is getting that intuitive understanding for what fair market prices tend to be in your area. Once you have that understanding, you are equipped to start looking for good or great relative value, where you can exploit opportunities the market pricing gives you. Part of this is relative value in the location or property attributes. Maybe there is an area that is available at a discount now but you believe is up-and-coming. Maybe houses that have four bedrooms aren't that much more expensive than houses with three bedrooms, but for your house-hacking purposes that's another whole bedroom to rent. Those are hypothetical scenarios, but you get the idea.

A final layer to it (if you want to attempt it) is getting a great deal on the particular property -- that is, purchasing the property below its potential value given its location and characteristics. Classic ways to do this are to look for properties that need work or sellers who are motivated.

If this sounds like a lot of work to figure out yourself, you can also start working with somebody who understands your local market like the back of their hand. Usually that person will be a good agent.

@Nathan Hedrick

If I had to start all over again, I'd look to acquire a 2-4 unit property with an FHA low-down payment mortgage.

Getting it under market value would be a bonus.

So, would using an FHA 203k renovation loan, which would allow me to buy something unqualified for a standard mortgage, which would weed out a lot of competition and push the price lower.

Hopefully, I would increase the value of the property in 1-2 years and be able to refi out of the FHA mortgage. I'd also learn a lot about maintenance and managing tenants.

Then, with my hands-on experience, I could decide if I wanted to repeat the process or target 5+ units - which my experience would help with lenders.

Good luck with whatever you decide to do!

@Nathan Hedrick

HOUSE HACK.  There's nothing else that comes close to this as a starting strategy.

And if you don't want to share common spaces, just buy a small multi.

Hi Nathan- 

We are in very similar positions. I have been wanting to jump into REI right after I graduate and have been working for a lender trying to learn as much as possible. I would love to connect with you and talk more if interested!

@Nathan Hedrick like others mentioned house hacking is a huge way to get started. Also get involved in the community. Even if its part time working with a RE company from sales to PM will teach you a lot and also get you into proximity of the folks doing what you are looking to do.

Go get it!

@Nathan Hedrick I'd recommend starting with house hacking. Buy a 1-4 unit property, live in one of the units while renting the others out, collecting cashflows/offsetting your monthly liability, and saving to buy another one. You'll gain valuable experience in the process and it's a good intro to REI.

Keep in mind that building a good portfolio and scaling up is contingent on having a good team backing you. A good team consists of good realtors, investors, mentors, CPAs, attorneys, lenders, contractors etc

@Nathan Hedrick

I recommend working for a real estate company. You will

Learn a ton and understand the software systems and processes that are out there.

House hacking a four-plex is one of the best options.

Consider a job in Property Management. You'll learn a ton quickly, you'll learn far more than most private Landlords ever do, you'll have a solid W-2 job to help you qualify for loans, and you'll rub elbows with investors that may help you find some deals off market.