All Forum Posts by: Timothy Howdeshell

@Laura Williams

Very informative and thorough. I've been occasionally tempted to branch into MTR or STR for improved cashflows, but seems to be a bit more trouble at the moment to execute.

Hi @Caitlin Bushong, 

Welcome to BP and congrats on getting started on your financial journey. I can certainly understand the desire to want to get ahead quickly and the feeling that you're "behind". You've received some great advice already on the specifics of your situation. 

I want to emphasize to take things at your own pace. Real estate is not a quick cash machine and can be very expensive in the short term, especially as a newbie (mistakes are bound to happen). The worst thing you can do is to put yourself in a bad financial situation that makes you hate real estate or wipes you out financially. 

Be patiently aggressive. Do everything you can to work towards your goals as soon as possible, but be patient with the process and yourself. All you can control is yourself and not the outcomes. 

Wealth compounds which means that, while it will feel slow at first, it builds up very quickly. On one hand this means that you want to get started as soon as you can to reap the benefits. On the other hand you can make massive progress in 10 years, so take things at your own pace. Comparison is the thief of joy. 

Congrats on your new jobs and best of luck!

 Hi Laura, 

Certainly an interesting development in the KC short term rental market. Are you saying to avoid all KC buy and hold? 2200 short term rentals seems fairly small in relation to the 2.4 million metro area residents. Also, in reading your linked article, it seems that the hosts simply need to register with the city in order to continue to operate. Not that all will be able to comply with density and zoning restrictions, but I'm not seeing how this will flood the long term rental market. 

From your post it seems you're either trying to wholesale houses, or just find new agent clients. To do this, you just need to network and market yourself. 

Facebook groups are great. If it is truly a deal, you'll get traction. 

Otherwise google "buy my house fast for cash in Lawrence, MA". Click on the top 15 websites and give them all a call. Those are investors looking for deals. You'll probably find a couple of awesome buyers that way. 

Best of luck! 

Hi Natasha, 

Welcome to the forums and congrats on getting started! 

I looked up median home price in Baltimore and came back at $200k. Therefore a 5% difference is only $10k. I realized that this may be a lot of money, but in real estate investing $10k can go pretty fast.

As this is your first property, out of state, I don't recommend trying to "game" the lending products. Use what is commonly available and accessible (80% LTV loans, no cash-out 30 yr fixed product). You don't need to use a DSCR loan unless you're buying properties that don't conform to standard guidelines or are trying to do cash-out refinances prior to the 12-months seasoning.

It will be safer, and you'll sleep better, if you can: get the additional $10k from working, get a 5% discount on a house, find a property where you can add value through renovations or re-purpose and end up <75% LTV (aka., buy at a discount). Don't put your last $10k into a home as you need reserves and something will go wrong.

It may take more time, but you want to do this right and not hate your life or get wiped out on the first property. Best of luck! 

@Amanda Shilling

I'm investing out of state in Kansas City. I started there prior to moving to California and just have a familiarity with the city now, but I think it is a great choice!

Landlord friendly, large diverse employers, good price to rent ratios.

 Sounds like you're doing things right! It can be a lot of work. One way to avoid this is to do all of the work upfront when you buy the home. Take some of the cash you received and put it towards hiring a GC to knock this out quickly. Now you have a new house to live in for 2 years and can still sell for a profit afterwards. 

Second thing is to realize what are the most disruptive items (drywall mudding, painting come to mind) and try to prioritize these things, even if you have to pay someone else. 

Last thing is to finish one area at a time. This isn't ideal, but perhaps you finish 1 bedroom and bathroom quickly so that you have a stable living space while the rest of the home is under construction. 

 Hi Atul, sounds like you're doing quite well. Just curious, if you have $5m and are only making $10,000/month it sounds like you'd be better off liquidating as you're only at a 3.4% return on equity. Surely you can get a higher return elsewhere. If it is $120,000, and this is a side gig, you should be able to pay this off in like 1.5 years. 

I don't disagree with the math, but there are some large assumptions baked into the original post. 

First, the majority of the return is all appreciation. It assumes an average appreciation rate of 5%/year. We are pushing up against an affordability crises and I don't think assuming higher appreciation consistently is wise when making purchase decisions. If it works out, great. But to me, this just feels like speculation and gambling. What if the property ends up down 10%, or even flat in 5 years? Now you have lost money on cash-flow and value.

For those with Bigger Pockets (see what I did there), playing the speculation game can be safe enough and profitable relative to their overall financial position. But for most starting investors (most of this site), they need cash-flow to continue acquiring or to live on. 

At the end of the day, some markets are better for some things than others. In 2023 flips have been working well, while buy and holds have suffered. The wise investor has many tools in their toolbelt to profit regardless of the overall market. 

@Melissa Yi Congratulations! What time frame did it take from purchase to sale? Hopefully > 2 years to avoid capital gains taxes. 

This is fantastic. I got started with a live-in flip myself! If I could go back in time, I would've kept doing these repeatedly as it is one of the best ways to generate large cash chunks (flips) with more limited risk (you're there every day). A little harder with today's interest rates, but as long as you can afford the monthly mortgage, buyers are still buying!