All Forum Posts by: Nicholas L.

@Luke Fruge

Hello - just curious - why not invest where you are located?

@Tom Grieshammer

the best bang for your buck, if your lifestyle permits it, is to house hack.  at 26 - you could build a portfolio just by house hacking every 1-2 years for the next 5-10 years.

@Michael P.

should not the capital of the US be changed to Columbus

@Shaylynn O'Leary

I think I may have posted this in response to you in another thread a while back, but here goes again.

If you pick a random "low cost" market like the ones you named, don't know anyone there, don't set up a network, buy random properties, and turn them over to people you've never met to manage, you will most likely lose money.  I'm not saying that's your plan, but we just see so many examples of this happening in the forums.  Random example from this week:

Sell at a loss or rent at a loss

On the other hand, if you are willing to put some time in by traveling to the market, spending time getting a network set up, screening dozens or even hundreds of properties, and taking the time to get set up right, you increase your chance of success.  I just never see anyone willing to do that.  They get entranced by the supposedly low prices and buy just to buy.

Also, I know this wasn't your question, but it seems like you've ruled out Oregon.  Too expensive?  The upside of the higher priced markets is a higher barrier of entry which keeps a lot of people out. If you want to do MTR, that gives you a shot at increasing your rents and supporting ownership of a higher priced property.  

Conversely, anyone can buy a random house in the midwest, underestimate capex, and... lose money.  Higher rates and tremendous demand for inventory by both owner occupants and investors have resulted in an inventory shortage all over the US - in Oregon and in Ohio.

Hope this gives you some things to think about.  Not trying to be discouraging, just realistic.  Happy to dialogue more.  I invest primarily in Pittsburgh and if you asked me I'd probably try to talk you OUT of investing here unless you're willing to follow the steps I outlined about getting situated.  =)

@Jardin Gwin

start with a house hack first.  this is the best of both worlds.

@Steve T.

i'd house hack first.  'cash flow' on cheap properties in the midwest has been way overstated.  in that, there mostly isn't any for the first several years at an absolute minimum.  or never, if purchased incorrectly.

today's random example of how chasing cash flow can go sideways:

Sell at a loss or rent at a loss

also, you mentioned buying a distressed property and rehabbing it.  that is a perfectly fine strategy - it's just very difficult to do at a distance.

as others have said, house hacking if done right shouldn't close off other strategies.

hope this helps - trying to be realistic not discouraging.

@Nate Williams

the terms of seller finance are whatever you agree to with the seller.  so, it could be ( am throwing out random numbers) a purchase price of $350K with $10K down, and then 30-year amortization at 6.5% with a balloon payment due in 5 years.  or whatever you negotiate.  in what I just laid out, you'd make monthly payments to the seller just like you would to a bank for 5 years, and then the remaining principal balance of the loan would be due, at which time presumably you would refinance the house into a commercial mortgage and use the proceeds to pay off the seller.  if you need assistance setting this up talk to some local professionals.

to your point you, should certainly not take on a payment you can't afford - and only you know what that is.  you would need to make monthly payments to the seller during the rehab, just like to any other lender, and then if it were a rental, you would want the rent to cover the payments plus all other expenses.

you'd also need to figure out how to pay for the rehab - either out of pocket, or finance it somehow.  not recommending anything here.  and - if 35K is everything you've got - savings, emergency fund, money for real estate... that is not a huge cushion.  but, we only know what you posted.

hope this helps

@Treza Edwards

that is a good list, it can also depend on the property or jurisdiction.  you might also have

-local registration fee or business license or similar

-shared utilities that the owner is responsible for

@George Suarez

short answer: no

are you an experienced investor?

@Kyle Lam

hypothetical example with simple numbers - you buy a house for 100K and fix it up for 50K. assuming you use all cash - and setting aside closing and holding costs for now - you're in for 150K. now, if you've boosted the ARV of the house via the rehab to 200K, you can do a cash out refinance, and put a long term mortgage on the property that is paid monthly.

you will get "cash out" (minus closing costs) at closing.  so, if you get 75% of the $200K, that's $150K, minus, say, $5K for closing = you get a check for $145K.

(note that there are seasoning periods with loans - shorter with DSCR loans, and longer with conventional. if you don't know what this is, look it up.)

how it benefits you: you pay yourself back - you pay back the cash you spent with the cash from the brand new loan.

(but... it only works if you significantly boost the ARV of the property. on that hypothetical 100K house - going to 120 or 150 or 180 generally doesn't cut it. and, there are fees and costs at every stage - i didn't include them in my example, but you need to because they're significant. closing costs on the buy and the refi for example will be hefty - thousands of dollars on each. new investors often overlook these. they should not.)

hope this helps