All Forum Posts by: Phil Avery

 Yes, agreed. Thank you. 

Hello everyone,

I'm navigating the challenging waters of finding cash-flowing properties in my market and came across a deal that's got me pondering. This property shows a negative cash flow and cash-on-cash ROI from the get-go. However, the future looks bright with a promising pro forma cap rate and the potential for significant equity growth and improved returns down the line. I'm considering this with only a 5% initial investment.

Given the tight market, I'm leaning towards a strategy where I aim to break even (or close to it) for the first year or so, with hopes of refinancing when the market conditions improve. I've heard the golden rule: 'Never invest in a property that starts off losing money.' Yet, I also believe in adapting strategies to fit the current market dynamics.

What's your take on this approach? Is it too risky, or could it be a viable strategy considering the market's state? Would love to hear your insights and any personal experiences you might have with similar situations.

On a side note, I'm currently renting a house for $1425. I could not see an obvious benefit to House hacking this property as opposed to renting both units out? What I am missing here? Seems more like a preference rather than a way to lower expenses. I'd own the property either way, its more inconvenient for me to House hack, and I'm not seeing the primary benefit. If anyone can clear that up for me too it would be appreciated! 

Thanks again! 

 Agreed! It's certainly not talked about enough IMO. Everyone is always talking about ways to decrease/eliminate the upfront costs and never mentions how that negatively impacts your overall position across the board in the long run. Fundamentals are key for me. 

Thanks for sharing your insights. Currently, its very hard to make SFR cash flow in my market and you're right, I do expect it to be a bit challenging finding a lender for this purchase amount, but not nearly as hard as it is to make SFR's cash flow! lol.

I like the idea of switching up the criteria a bit to look into existing builds and a lower price point. That would mitigate some of the associated risks as well. Thanks for chiming in! 

Thanks for chiming in. Unfortunately, this duplex will not immediately cash flow. I believe it will barely break even and in addition to that, I wouldn't be able to afford an extended vacancy period either as that will require more reserves than I have currently available. Perhaps I should broaden my search to include triplexes and quadplexes.I know FHA has additional requirements for 3/4 unit properties, but I pretty sure I can still put down 5% on a conventional loan if the numbers work.

Thanks again! I'll check out some 3/4 unit properties and see if I can make that work

 Great response. 100% agreed. 

Hello, BiggerPockets community,

I'm reaching out to gather your insights on the most prudent investment strategy given the current market conditions. With $20k in savings and an additional $4k monthly saving rate, I'm navigating my next steps carefully, especially since I value starting with a substantial equity position in any deal.

Here are the options I'm contemplating:

1. Invest in a Low Entry Property: With my capacity for a 20% down payment, I'm considering properties in the $100k-$120k range. This approach aligns with my preference for immediate equity and the potential to replicate this strategy with a second property by year's end.
2. House Hack a New Construction Duplex: I've spotted a duplex priced at $405k that's appealing for a live-in investment. Using an FHA loan, I'd put down 3.5%, although this would stretch my budget slightly. The long-term benefits seem promising, but it's a considerable leap.
3. Delay Action and Save More: Alternatively, I could pause any immediate investment, focusing on boosting my savings for a larger down payment on a more significant property next year.

Your experiences, insights, and any advice you can share would be immensely valuable to me. I've always found the BiggerPockets community to be a wealth of knowledge and support. Thank you in advance for your guidance!

 Agreed, and well done. 

Yes, absolutely. I'll message you. 

 Message sent! ;)