All Forum Posts by: Wendell Butler

@Spenser Hachey I will definitely have to take a drive around there, I have not really explored there much! Thanks for your input.

@Michael DeLaMarre awesome, thank you so much for that information! I appreciate it, and will definitely keep all that in mind.

@Michael DeLaMarre awesome to know! Do you have any areas in Worcester you would recommend. I won’t be making this move until august (saving up and educating myself ). So I have time to really research and look around which is good.

I am currently living in a condo with a roommate helping me pay my mortgage. I re-did the kitchen, floors (hardwood), bedrooms and finished the basement.

I am looking to use the equity I built in this condo as well as money I am currently saving to jump into real estate investing. My first move would be to use my VA loan (no money down) and either get a Duplex/Triplex, live in one of the units and rent out the rest for a year while invest in other properties. I would fix up my side while living there most likely - touch up the other sides before renting out.

I live in Worcester, MA and the real estate here is very expensive. For a Duplex I feel I have to get no more than a 250k property to break even while living there (been looking around and hard to find). A Triplex would cash flow more, but it would be a big stretch (Maybe future rent would help me get one) and I feel be better long term.

Should I start with a duplex and have not much cash flow if any or try to stretch into a triplex? Any areas around worcester that people are currently investing in that has been working well and a little cheaper?

@Michael Hohrath awesome, yeah the house hacking is what i plan to do with the duplex’s. I will definitely keep in touch. I’ll send you a connection as well.

@Michael Hohrath how were you able to only do 5% down for an investment property? Or are you living in it as well?

I was initially thinking 3-4 plex’s, but for my investments I am going to make most of my profit initially off of the single family lease-to-own plan. Buy them at a discount, the lease-to-own eliminates property manager costs as well as me being a hands on manager, and once sold after 2-3 years (that’s what I am shooting for) you get appreciation profit, the discount profit back and while they are leasing you get cash flow from rent. Hopefully I can get 2-3 properties at one time doing this.

The duplex is just icing on the cake using the VA loan to start adding long term rental properties to my portfolio. Live a year at one, move out and repeat process with VA loan. Not looking to do this long term, but maybe for a few years to get around 3 of them going. That can create additional small cash flow and build equity. Once they are in place long enough I can sell them at the right time and use that profit to upgrade to a 3-4 plex and continue that snowball effect until I can get a commercial property.

Obviously just my plan, and plans change, but I think it’s a sound one. It’ll take patience, dedication and discipline though.

@Felix Rodriguez I like that idea. Very cool way to get yourself into commercial which can be very profitable!

My Condo is in Worcester, MA (Grafton Hill Area) - as in short term rental it's more as referring to as I live here renting to my roommate, I am looking to definitely sell it to free up the equity I have in the condo to jumpstart my investing and move into a duplex with a VA loan.

And that is definitely true, about the shark invested investor area here. With my price range that's another reason I am exploring all over MA as well, not only Worcester to Boston, until i build more equity (Of course I feel Worcester has a lot of potential though, so getting properties here for a good price would be beneficial). I am open to Western, MA as well, mostly for the Single Family home Lease-to-Own idea. 

For the Duplex I will look around Worcester and close by here for my work, will definitely be hard to find something in my price range - but maybe in a few months when all the foreclosures/pre-foreclosures due to COVID go back on market I can find a good deal.

Hello! My name is Wendell, I am 26 years old and I am brand new to BiggerPockets, already love all the support and information in the community.

I just wanted to layout where I am at in my investment journey as well as my initial game plan for really jumping straight into real estate investing. I would love feedback with any insights, constructive criticism, things I should look out for and tips!:

Current Job: Loan Officer Assistant - Currently in courses/classes to obtain my license to become a license Loan Officer. I switched to this job in July 2020 knowing I wanted to invest in real estate. I felt learning everything I can regarding loans, the market I am in and real estate processes was a great opportunity especially during the crazy market right now. Currently make ~$50k salary.

My First investment: I purchased my first investment property (I live in it currently) back in May 2020 for $142k. I purchased this from my sister below the appraisal value of $146k (benefit of no realtors so she gave me a deal), but they also did not take into account the re-done basement and $10k hardwood floors my sister put in because they did a desk appraisal. I already re-did the kitchen for around $7k as well as added new rugs/carpet in the bedrooms and repainted. Condos in the same place as me are selling for upwards of $180-200k and look very similar to what I did with mine. I currently pay $865 mortgage (PITI) and $300 for HOA fees = $1165. I have a roommate I found to live with me that pays me $700 a month and splits electricity/utilities with me.

Game Plan: 

1.) I want to treat my first investment property above as a short term rental/flip. I feel I will be able to sell this condo for around $180-185k depending on the market (even if it drops a little bit from what it is now). I am planning on selling in August 2021 once my roommates lease is up. I would like to come out of selling this property with $30k net. I think that will be possible with the new kitchen, new hardwood floors, basement re-done, touch ups and appreciation. Let me know your thoughts!

2.) I am an Army veteran so I have the amazing VA loan at my disposal (I did not use it on my first property, I used the MA Housing zero money down). As I sell my first property for the hopeful $30k net I will be searching for a duplex to buy immediately with a zero down VA loan. Yes you can get a duplex/tri-plex with a VA loan as long as you plan to live there for a year, which I will. Looking at around $200k-$250k duplex in MA (obviously the cheaper the better). Nothing special, but definitely a move in ready property that I can immediately touch up a little and rent out the other unit to cover my mortgage and create positive cashflow. Break even at the least, best case scenario is get 1.25x the PITI so I totally cancel out my debt-income ratio and it allows me to do my next step. I will also make touch-ups and additions as I live there to increase its value.

3.) With the money I am currently saving as well as the ~$30K Net I get from my Condo sale, I want to immediately look to purchase a single family home investment property. Aiming to have around $50k liquid money for investing. I want to get something around $150k - I will look and get a sale for 15% under market value (I know this is hard, but that is my goal and I will do it - it will allow me to have a cushion and not lose as much money if the market goes down). Once I secure that property I will look to do a lease-to-own agreement. Obviously if I can do a sale-by-owner immediately I will so I can cash in on that 15% discount I got - then repeat the process. Worst case if i cannot get a lease-to-own or sale-by-owner I will short term rent until I find lease-to-own/sale-by-owner. Lease-to-own with this will get my a down payment from the lessee, 15% profit from the initial discount I bought for, create cashflow from the rent, plus I won't have to be their property manager if they want to purchase the house and sign an agreement. Will aim to sell property lease-to-own within 2-3 years (Faster the better).

I want to create a snowball effect of lease-to-own single family homes using that strategy and bring in other investors to work with me. My duplex I'll live in I will look to refinance, move out and rent out both units. Then repeat buying another duplex with the VA loan again to repeat the process.

I know that plan sounds great for me, but obviously a ton of things can go wrong. I am in the Massachusetts market near Worcester/Boston so the prices of homes here are obviously much higher than other parts of the USA. I appreciate any thoughts, insights, tips, things to look out for, just ANTHING! I am very open minded and new to investing, but I feel I have a good game plan. Thank you in advance!!!