All Forum Posts by: Noah Chappell

@Josh Bugbee not to reiterate what's been said, I'd add a few points to summarize. 

First, forget the "go big or go home", we tend to hear about these ppl who've done a 100 unit syndication their 1st deal, thats extraordinarily uncommon, the reason you hear about that is because its such an anamely, & you're not given the back story of their 10 prior years of high level corporate management, etc. "Easy come easy go" would be more correct, so to build a portfolio that provides you financial independence, I'd say take 5, 7,10 years & build something sustainable that you can get your mind around. 

If you're serious at all, BUDGETING COMES FIRST. Unless you're a very high earner, I'd aim to save not 20%, but 50-75% of your income to dedicate towards RE. Its easy to picture the glory of a huge passive income, but grinding though months of frugality will give you a small window into the sacrifices required to make RE work. 

If you can dedicate yourself to the grind per above, you can scale relatively quickly. I'd start with a house hack duplex for 3.5% down - I'd recommend you look at some off market deals sources so you can get an amazing deal that cash flows after you move out, & can cover the mortgage if 2nd unit becomes vacant or tenant stops paying. Then I'd save up for a 20% DP for a 2nd duplex from the 50-75% you're budgeting. There, in your 1st year you'll have 4 units & will be on your way. You can repeat this & use Brandon's "the stack" idea to increase your rate of acquisition year after year. In 5-7 you'll have 20-30 units and be well on your way. 

I'd start all this by literally reading EVERYTHING you can. What to read? I'd recommend you start with Brandon's 3 books - rental property investing, investing in real estate with no and low money down, & managing rental properties. If you internalize those 3, you'll have a strong foundation to get started. 

Good luck and have faith in the grind. 

Sorry is the "downside" for #1 really a downside? Haha.. 

In all seriousness I'd recommend you do whichever is most sustainable over the longterm. Are you really going to last a year uprooting your life to move 2.5 hrs away to live with 15 college students, or do you think you'll quit after a few months? Also, managing a sorority over the long term seems really management intensive, extremely high turn over, college students fighting, etc, you'd have to find a management company very specialized in this niche. Thats not to mention a sorority doesn't seem like such a great option right about now given it is about the least recession/pandemic resistant investment possible.. 

On the other hand, a 4 plex with 3br/2ba units that's sec 8 in the cities for <400k is a great deal, assuming its in decent shape. Just checked, payment standard for sec 8 in Minneapolis is $1,636 for 3br, even if you rented all 4 at $1,400 once you moved out you'd be at a rent/price ratio of 1.4, amazing. Also, safety wise sec 8 is about as recession proof as you can get. I'd go with #2 all day. 

Hope that helps. 

@Thomas Piersiak everything above is spot on. House hacking is THE way to start if you're in a position to be able to do it. I would think hard about the area, MN prices & demand for inventory vary wildly. You'll have no problem using an FHA loan for example in a rural area, but might have trouble in a red hot area like NE Minneapolis since sellers don't want to deal with the headache of inspections, regulations, etc when they can get asking price in 2d from a conventional buyer. That being said, if you're persistent you'll find a deal. When I started my realtor told me FHA was impossible from the get go, so I didn't try. But later I would write to the seller or seller's agent directly, & quickly found someone willing to do FHA. So.. take-away is if an agent implies house hacking can't be done, go find one who's willing to get on board with your vision!!

@Stephen Brown Brandon's book on rental property investing has a great table breaking down the general lifespan of many cap ex, including cost, and a break down of yearly & mostly savings required to replace. It also goes into the remaining expenses. Highly recommended. 

@Tommy Adeoye hey bro. You really shouldn't have a problem house hacking in the midwest/south/southwest. First, I'd pick a city you like & feel comfortable living in - you may think you're up for it, but if you're miserable you'll abandon the project after like 3 months. I think you're doing the right thing in keeping close eye to the MLS sites, this will really get the market home values in your head, so you instinctually recognize a below market deal when I comes on. You might try working backwards, using your formulas to figure out how much you can pay, so you don't even consider anything way north of this. In a buyers or neutral market most sellers post at least 15% higher than they expect to get, so you can adjust & reach out even if the list price is too high, in a hot market all bets are off unfortunately. As you say if this were simple everyone would do it, & your success in this game comes down to your grit & ingenuity. Stick with it & you'll find the great deal you're looking for.

@Adam Weisenburger hey & welcome. Meetup.com is where you can find multiple great RE investor meetups, several awesome ones, very positive, proactive & supportive community. In terms of BRRRR, Twin Cities is a red hot market & exceedingly difficult to find a BRRRR deal, & I'd say even more so on the MLS. However, I'd be the last to say it's impossible. I would get your criteria including ARV for different neighborhoods & max allowable offer down with precision, then set up searches on the major MLS sites, including a search you've set up with a realtor, & get your pre qual letter ready to make an offer the minute something comes on. You likely won't do a perfect BRRRR the first time, but should have enough cash cushion to leave something in the deal. This is the fun of it, in time you'll ease your way toward that perfect BRRRR & eventually get there, while building wealth all the while.

@Jerry Stevenson awesome, good luck! I've heard it works better with a SFH in an expensive market such as yours.

@Allen Campean explains it well in this podcast: 

@Luke Nelson @Evan Kraljic Luke congrats on getting started. To echo what Evan said generally the higher on the discomfort scale you get, the greater your reward. So, first think about how much you're willing to dive in, given you have a family & w2 job, etc. 

House hacking is when you buy a property up to 4 units with a low down payment loan, such as FHA or Minnesota Housing. The low DP option buys you into a lot of property at low out of pocket cost. You then rent the other unit to mostly cover your mortgage. You can rinse & repeat after 1yr. These is a relatively simple way to grow quickly.

I'm pretty familiar with Minneapolis, not so much with the 'burbs, let me know if I can help with anything else. 

@Jerry Stevenson hey man, congrats in aiming to get started. I'll make a slightly contrary argument in that if you want to be in this for the long term, try to acquire value add assets in nice areas of great cities. For example if you could get 2 duplexes a year (1 house hack, 1 save from your w2 & put 20-25% down) in a decent neighborhood of Chicago you'll be a lot happier in 10-15 years than if you get 3 or 4 cheap duplexes in Lima, OH, etc, etc. Location..., as the saying goes. My point is that if you go at a slower rate & aim more for quality, you'll wake up one day with a portfolio you'll enjoy rather than a headache. 

Really though, I think getting to know your local market well is most important. There are ppl succeeding in RE everywhere in the country. I use to think you never could where I lived in Boston, so I waited to get started, then later a heard of this guy doing condo conversions, etc, making lots of money. 

Where do you live anyways?