All Forum Posts by: Dustin R.

@Jake Weir unfortunately taking a loan out of my TSP is my only option. Up until the last year I haven't been saving much money because I haven't really earned much and to be honest I wasn't very responsible. My plan is to take out a TSP loan and pay it back within a year for whatever down payment I might need. I will continue to contribute to the TSP while the loan is out because my employer matches a percentage.

I’m new to the site and I haven’t made my first deal yet but I've been working on a plan. I’m very interested in the long term buy and hold strategy, however when I get a few rentals under my belt, I’d like to also branch off into flipping. I feel that my current situation doesn't give me enough time for flipping, and I currently do not have the network in place to manage a flipping business. Due to my work schedule and to share the workload and some of the startup costs, I’ve enlisted the help of a friend who is also interested in real estate as a partner.

About us

I'm 25, not married and currently rent an apartment in Long Island. My job will be very demanding for the next year or so, however once my training is finished I'll have plenty of time off, and a more flexible schedule to pursue real estate investing. I currently am saving as much as I can to put towards investing, and I have about 15K available to loan out of my Thrift Savings Plan (401k) . My partner is 24, single, renting an apartment, and starting a job with the electrical union back in the Pittsburgh area, and has about 5k to pull from in his TSP. Both of us qualify for the VA loan due to our military service. Neither of us have ever owned any real property.

Our Roles

I am working on my PA salespersons license for the sole purpose of gaining legit access to the MLS. I do not plan on pursuing a career in RE sales; however I wouldn't mind doing my own deals to save money. My role will be finding deals, building relationships with private money lenders, and coming up with most of the money for our early deals.

My partner’s role will be on the front end of the business. He will be dealing with some of the repairs, managing contractors, and dealing with tenants. Hopefully his new position in the electrical union will help us build a network of good contractors and property managers.

Our Plan

Our plan us to put down as little money as possible for our first deals. For those who are unfamiliar, VA Loans allow up to 100% financing. First we will use his VA Loan to acquire an owner occupied multifamily home in the Pittsburgh area. I will contribute rehab money from my 401k loan, and he will contribute using his 401k loan. I understand for the first part of the deal I may end up contributing more than he does due to our financial situations. I am ok with that. The goal for the first deal is to find a property where he can live while having tenants pay his rent, and save up enough for the next deal.

Once my current rental lease is up around October of 2014, I will use my VA loan to get an owner occupied multifamily here in Long Island that I will live in. We'd like to try to live rent free in our multifamily homes to let us save up for the next deals.

Once our occupancy requirements are satisfied with the VA loans, we will find 2 more multifamily properties. The idea will be the same: we both find our own multifamily homes that we can live in and have tenants pay our rent. This process will repeat until we are big enough and ready to expand.

Questions

1. Do you think this is a good plan?

2. Does anyone have thoughts on the use of the VA loan in this situation? It seems as though the occupancy requirements are sort of vague, so hopefully someone can clear it up for me.

3.. Should we instead consider the FHA 203k loan for our first purchases? Are we able to use FHA 203k for our first deal, then the VA loan for the second? Does it work the other way around?

4. What sort of business entity would you recommend that we set up for this plan? I'm thinking LLC is the best for now but if we plan on getting into flipping down the road, maybe there is something else that we should consider? Also we plan on splitting everything 50/50.

5. Is unordinary for someone to put up more money up front than a partner when starting a business like this? Should I be more concerned with having a greater share of ownership since I will be putting up more money to start?

6. Any additional thoughts or things to consider?

Anything BP members would like to add would be great. Thank you in advance for the replies!

Dustin

@Andy Ballester that's what I was afraid of. I figured that a trendy place like Lawrenceville or the South Side would be tough to find a good deal but it might still be worth a look. I think I'll eventually end up in one of the other places that I mentioned that are further outside the city. Do you have any advice on finding the right market? I find that using Trulia and Zillow are OK but its hard to find accurate info on recent sales. I'm working on my PA license so hopefully MLS access will give me a better idea of the values of homes in different areas. What do you think?

Clearview FCU is a Pittsburgh credit union that will finance investment properties. I believe single family you need 20% down plus closing costs, and for multi family you will need 30% plus 6 months escrow. It's an option.

Jerry Kisasonak I'm not quite sure just yet. Some of the places that come to mind are the butler or cranberry area because that's where my partner lives. I also like places like Robinson, Kennedy twp, moon, oakmont, or even lawrenceville. Lawrenceville really interests me because it's becoming the hip part of town to live in. I'm open for suggestions.

@Joshua Dorkin Thanks again. I've heard you say you were from New York in a few of the podcasts but I would have never guessed Long Island. Usually the accent is impossible to miss but you seem to hide yours well!

Hey everyone I'm new to BP and new to REI in general. I'm definitely looking forward to attending one of these meet ups. I'll be checking to see when the next one is scheduled.

@Paul Timmins Thank you for compiling all of these resources for me. I definitely have my work cut out for me with all of this reading I have ahead of me but I'm looking forward to it.

@Brandon Turner Thanks for the warm welcome and i'm glad to be here. I didn't mean to leave you out in my first post. You and Josh have the best podcast on iTunes. I specifically like hearing your success stories as well as some of the mistakes you guys have made along the way. It's all great for learning.

Hey everyone! I'm a newbie to BiggerPockets and real estate in general. I'm 25 years old and originally from Pittsburgh, Pa but I now reside on eastern Long Island in a town called Bayport, NY. I moved here almost 2 years ago for my job as an Air Traffic Controller. I work at one of the busiest radar facilities in the world and I'm still currently training so it is a very demanding job at the moment, but I love it. Outside of work, I enjoy playing on an men's league ice hockey team a few nights a week, and flying single engine aircraft. Unfortunately, being a pilot is an expensive hobby and I really haven't had much time or money for it lately. Hopefully down the road I can continue to fly.

Being from Pittsburgh, I grew up in a blue collar, working class neighborhood that was filled with affordable homes. I didn't realize how lucky my parents were when they bought our home: a huge 4 bedroom 2 bathroom house for less than 55k. As a kid, I thought homes were cheap everywhere and I wanted to someday own one myself. It wasn't until I moved to Long Island that I quickly learned that buying a home for myself might not be the best thing to do right away. Homes are so expensive here and property taxes are insane! I'm extremely blessed to be making more money than I ever thought I would in my entire life but it's still not enough to REALLY afford to buy a home in this market. Last summer I began to look for a plan to give myself some financial freedom.

Like most of us, I do not want to get tied down by a mortgage payment and live paycheck to paycheck. I decided that since I don't know the first thing about the stock market, I would learn about real estate investing.

My plan is to partner up with a friend of mine who still lives in Pittsburgh to start a flipping business. We were roommates in college and come to think of it, we were the greatest tenants a landlord could ask for. We would spend our own time and money to improve our rented house (hopefully karma will be good to us). The money that we generate from the flips will be rolled into acquiring multi-family homes to buy and hold. The first 2 buy and hold properties will be ones that we also live in; one in Pittsburgh for him, and one here in New York for me. After that, we will continue to flip to generate cash, then collect as many multi-families as we can.

I'm currently learning everything I can about every aspect of real estate by frequenting the BP forums, and reading every book I can get my hands on. I'm also taking an online course to get my Real Estate salesperson license so I can eventually have MLS access.

I'm really happy to have found BiggerPockets and I want to thank@Joshua Dorkin for creating this community. I found BP through the podcast and I'm a huge fan! Thank you for reading my introduction.

Thank you all for the advice. I spoke to a nice woman at the PA state real estate licensing office over the phone today and she seemed to think it would be as simple as me finishing the course, submitting the paperwork (and fee of course), and finding a PA broker. I'll continue to check this post and give updates on how this works out for me.