All Forum Posts by: Nicholas L.

@Joseph Griffith one of the reasons to house hack is because it enables you to buy an investment property with financing only available to owner occupants, like an FHA loan. Cash flow is one consideration, but not the only consideration.

BRRRR is most effective when you're purchasing with all-cash or something cash-like (like hard money.) It is much tougher to do with conventional financing.

@Ashish Acharya congrats.  How did you find your contractor(s)?

@Kris Anthony a few questions for you:

Will this be your first investment property, or do you already own others?

Have you run the numbers to be sure that this one will cash flow?

Do you have a down payment and cash reserves, and you're just trying to figure out how to qualify for a loan for the rest?  Or do you not have the funds for a sizable down payment either?

@Casey Helmick makes sense.  A few thoughts in no order:

-Renting is a great deal in the short-term, so if you're thinking of moving to DC or NY as you stated, continue renting, and then rent when you get there.  Yes, you don't build equity when you rent, but you get tremendous flexibility - no closing or financing costs to start or end a lease!  I just moved out of the DC area so I'm pretty familiar with the market there.  It's expensive, but there are also lots of people making money in it, and there are some tremendous REIAs.  (My condo is in Arlington.)

-Brandon typically says on the webinars that your first deal probably isn't going to be a home run, but as long as you don't buy a bad deal, you'll probably be okay.  I think that, provided you have strong cash reserves, this is probably true.  Say you buy a rental, miscalculate the expenses, and you end up negative cash flowing $34 a month.  Okay - lesson learned.  What levers can you pull - can you switch to self managing to get rid of property management costs?  Can you make some cosmetic improvements to raise the rent?  Can you sell it?  What you wouldn't want to do is buy something that you're negative $1000 a month, since that would burn through any savings you had pretty fast - but if you follow the advice on BP that seems unlikely.

-I think by 'demographic influences' you might mean 'choosing a market to invest in' - but let me know if that's not the case.  If you browse the forums on BP, you'll basically learn what you probably already know, which is that the south and midwest have lower barriers to entry than the northeast, the west, and the expensive big city markets.  But... there are investors making money in every market and every city!  So it just depends on where and how you want to get started.  In Virginia, higher cash flow is going to be found in the outer suburbs and exurbs... but there are also savvy investors making major money on flips and condo conversions in DC.  They tend to be very experienced, though; familiar with the DC permitting and reno processes; and with access to significant capital.

-I agree with others in this thread that house hacking is a great, low risk way to get started.  In DC (to include the Virginia and Maryland suburbs) there are very, very few multifamily properties, but you can still house hack - you'd just be doing it by the room.  Some of the older Virginia suburbs probably have single family houses you could buy, house hack, and reno.

@Danny Webber interesting to own both actual metals and Bitcoin.  I hadn't broken down these numbers before - but after having done so I am currently 56% in RE, 9% in retirement accounts, 6% in stocks, and 29% in cash (which includes proceeds from a recent sale and will be reinvested, so won't stay 29% for long).  I am going to put a fair amount of cash into stocks - I think there are lots of companies that aren't going anywhere that are "cheap" by historical standards, and then the rest into RE.  I bought a small number of shares of the SPY ETF near the bottom and wish I had bought more - it's now back near its pre-covid peak.  Oh well.

@Casey Helmick welcome.  Do you have any more specific questions?  And can you explain what you mean by 'demographic influences'?  Do you own or rent your primary? Is there a specific market you're looking at?  Are there any strategies or niches you're interested in?

I started "investing" when I moved out of a condo - my first primary - and kept it as a rental.  It doesn't cash flow - I break even every month - but I kept it because ( 1 ) it's in an 'A' neighborhood, ( 2 ) it's appreciating in value, and ( 3 ) I don't have any reason to sell it.  I then purchased 2 more mediocre deals.  Then I discovered BiggerPockets.

@Michael Hyun also be sure to be conservative when you run your numbers - as the homeowner you'll be responsible for insurance, repairs, vacancy, etc.  So your "rent" will not exactly be mortgage offset by rental income; it'll be mortgage + all expenses - rental income.

@Michael Hyun option (A) for sure. This will give you more flexibility regardless of what you decide to do. Yes, you'll have to pay PMI, but this way your cash isn't tied up and difficult to access.

With respect to your DTI - yes, possibly. You should ask your lender to run a few scenarios based on your potential future W2 income + rental income, and see how much you'd be able to borrow based on those projections. If the answer is - not much, and you still decide to move forward with your plan, then keep your cash free. After you're successful at this first venture, invest long distance in a market in which you can buy a house in cash and aren't dependent on borrowing.

@Michael Hyun congratulations on your cash position - that is commendable.  One thing to keep in mind is that you'll be carrying an enormous amount of debt if you start off with a house in that price range.  One way to think about it is - the more cash you put down, the less debt you have, but the more of your cash is tied up; the less cash you put down, the more cash you have in hand, but the more debt you have on your personal balance sheet when you go to buy another property.  =)

@Erin Dorsch welcome.  Investors to follow - David Greene, Brie Schmidt, Chad Carson, and Paula Pant come to mind.  Chad and Paula have excellent podcasts.  Brie Schmidt was on the BP podcast twice and has some content on Youtube.