All Forum Posts by: Rea Cooper

Hey Rea,

One thing I'm a little confused on with your post is that you mentioned the SFR would be a house hack. I just want to make sure I understand correctly - Would this house hack be getting you out of currently renting or have you just already owned another property for a year so you can now purchase again with a loan for primary residence?

If you're currently renting and purchasing a property would allow you to avoid getting on a lease - I would say you definitely want to make a move now rather than later. Nathan makes a great point about values possibly dropping over the next 6 - 12 months, but depending on how much you're currently putting towards rent it might still be advantageous to secure a SFR to avoid rental costs. If you lose $20,000 in market value on your home in 10 months, that is still better than losing $20,000 in rent over 10 months. At least one of those you have the chance of getting back in a more favorable market!

Tomorrow is never guaranteed, I don’t think Sfr is a bad place to start.

I would start by considering the market. Prices are dropping. They are likely to continue dropping for the next 6-12 months before stabilizing. How would you feel if you bought a house today and in one year it is worth 10% less? If you plan to hold it long-term, it may not matter. A house that cashflows today would still cashflow if it loses equity. The bigger concern is that you may be able to afford more if you wait 6-12 months because you have more time to save/learn and prices will come down. If you wait six months and property values are 10% cheaper, you'll feel smart for having waited. If prices are still the same as today, at least you'll know you didn't make a mistake and you'll have saved more and learned more. I see it as a win-win.

If you don't have any investors in your circle, it's time to get a new circle! Go to NETWORK at the top of your screen and you can search for other investors and investment groups in your area. You can also check meetup.com or search facebook for real estate investment groups, clubs, or meetings in your area.

Hi Rea- I agree with Brandon that getting started sooner rather than later is smart. I'm also from Raleigh and looking to do something similar.

Have you looked into a HomeStyle/203k loan by any chance? Under this type of loan you can put down the same or similar down payment as FHA since you have to live there for a year and it also includes your renovation costs in the loan. It takes some work to find a deal where the numbers work but might be worth looking into as it would allow you to buy a distressed property in Raleigh, have it fixed up then get it appraised at a higher value and pull the equity out to invest in other deals. For that reason it seems to me like an ideal strategy to start investing. I'm also looking for a distressed property but looking a little further out in hopes of finding something that has some cash flow

Hey Rea, some of your strategy will be dependent on whether you are aiming for immediate cash flow or long-term appreciation. I see that you are posting here in Raleigh. I am very optimistic for future appreciation in the area. However, the prices are high, and your immediate month-to-month cashflow might be better elsewhere. 

Another Wake County specific tip. The Raleigh area tends to have far fewer multifamily homes than the average, similar-sized city. You might look at Durham, instead. That will open your options a bit. 

If I were in your shoes, I would probably act sooner rather than later, if the numbers on the house hack make sense (just because I like to take action rather than wait). Of course, I cannot predict what the house market will look like in 12 months, so there might be some advantage in waiting. 

What are the reviews and ratings like for the STRs in the area currently? Are they fair, mixed bag or terrible?

 What's your risk tolerance? If it is moderate-high, then the gentrification play may best align. If you are highly risk adverse, then the more stabilized areas may be best. 

What kind of reviews do you think people will leave--hood, ghetto, gunfire all night long, scary, etc... [OR] gentrifying, pleasant experience, nice area, safe area...etc..

The place might be ok, but if the reviews come up bad, your price per night (and potential renters) might get pretty low on the totem pole.

I own something similar and I'm waiting for a few more properties to REALLY improve next door before I go into STR. I'd suggest doing LTR just a pinch below full market rent to get the hang of things and then pivot down the road. It's a long term play but with patience you and I should each get killer returns a few years from now.

I imagine questions like: 

1. Is this gentrification occurring because of investors and is it backed by the city? If so, it may pay off in 5 years or so. A similar thing is happening in South parts of Houston but residents with financially sensitive incomes have led grass roots opposition causing a significant slow down on improvements. 

2. What would make someone from OOT, who can only gain perspective of the city area by online assumptions of being crime ridden, want to consider the location otherwise? Are there major tourist developments coming down the pipeline? If these improvements are early in development, the rent you can charge won’t be at the market peak and will that still make you cash flow positive?

3. The fact that your perception of the area was of it being a less than ideal location and it took “boots on the ground” to change the perception, hints that this is still in the early stages. Are you able and willing to wait out the long game to reap “possible” equity rewards. It seems like you have enough investment money to consider many options, is this the best payout for your RE plan?