All Forum Posts by: Yu Liu

Do you want to stay in your home or would you not mind converting it into a rental and buy another house to live in and repeating it again every year? That is one of the quickest and easiest way to own X homes over X amount of years. 

But if you are in your dream house or the house of "this season" then ignore what I said.

It sounds like you want to buy a home that needs work, put some of your (or other's) sweat equity into it and then have it be worth more which is always a good strategy. Look into BRRRR but even if you can't pull out all your equity, it's not the end of the world.

If it was me, I would do STRs (will warn you that it is a lot more initial leg work than a LTR) but the cash flow is worth it. 

Welcome @Claudia Frank! This is a great community, like JD mentioned, peruse the blogs and forums to get an idea of what people are discussing and see if that interests you.

I would also recommend attending local real estate networking meetups, reaching out to local investors, connecting with investors online, send them messages, ask to jump on a quick 15 minute call. BP, FB groups, Meetup App are all good places for that. You have a lot of options with technology but I would start with local meetups if you can find one. 

If you want to invest out of state, connect with investors that do the same thing and learn how they do it and which markets and why. As you talk to a couple of people, you will get a better sense and recognize the pattern to it all which is find a good trusted team on the ground (agent, loan officer, handyman, property manager). 

The agent will ideally help you learn the neighborhood, the good and less desirable parts of the city that you are looking into and help you find the home you are looking towards. You can do that in Oklahoma if you wish. 

You will also recognize that there are a ton of strategies in real estate (fix and flip, LTR, STR, MTR, room rentals, etc). Take your time and learn a couple of them so you can add them to your tool belt of how to best invest for YOU.

Hope that was a good brief overview of what's to come! Excited for you and congrats on already having 3 rental units!

Hi, yes that's what I do and deduct!

Hey! I lived in San Jose and had this exact issue.

I was going to do Option 2 and find a house I could house hack, convert it from a 3 bedroom to maybe a 5 bedroom or do an ADU play to increase the cash flow. I still recommend doing something like this if you were to go with option 2 as this will build you the most equity and help you break even or even cash flow a little bit. This option does require a healthy amount of capital which seems like you have.

Unfortunately, when I was considering this was right before the pandemic broke out so I actually ended up doing Option 3. I bought a house hack in FL for about $250K and then moved out and converted it into an STR (Airbnb). It cash flows me $2K-$3K a month which I liked and then I bought again doing the same method. I cash flow about $5-8K a month now and will continue to buy out of state and then build that extra income to fund a deal in CA one day down the line.

Looking back, either option works. I think had I done option 2, I would have build probably more equity overall because the Bay Area appreciation is just crazy but I am very happy with my option 3. 

So if you read this far, my question to you would be, do you want to prioritize cash flow, appreciation, having a place in the bay, or do you not mind and want to go out of state? Hope that helps clear it up but regardless make a decision as doing nothing will always hold you back! At the minimum, you will gain knowledge and experience!

As others have mentioned, it depends on your time and 

I self manage and rarely have issues and I have had experiences where it has been a headache, as long as you know what you're getting yourself into, it is totally doable!

Main thing on how well your experience will be is obviously the tenant so make sure to screen well. Make sure they make min 3X the rent, have a good credit, and seem like someone that will stay for the next 3-10 years, usually family. 

My 2 headache tenants were because one had a 600 credit score and another made 2.8X the income and then COVID hit and it got rough. 

I think it's worth trying and I believe that you'll find that it works very well. A lot more cash flow for little headache (YMMV) but I think just vetting chill people (through conversation, you can get an overall good sense)

One thing I did a while back was rent a 3 bedroom for $3200 for just me and a friend. The 2 bedrooms there were $2800. The third bedroom, I put it on airbnb, fb marketplace and craigslist. I ended up finding a roommate on FB for about $1200 a month so my buddy and I just split $1K a piece for our sides and saved $400 a month. The new guy actually became a good friend of ours so from my experience it worked well.

I would say if we put it on airbnb, we could have made $1500-$1800 a month easy. Try it and let us know how it goes if you do! Good luck!

I don't personally invest in the following but I've heard great things about Indianapolis and Cincinnati. I know some people crushing it with STRs in indy and a friend who is looking for multifamily in Cinci

Personally, I like the Florida market because I'm familiar with it

Any update with this? Did you proceed?

I was learning the VA Loan Entitlement process and wanted to verify if this is correct or if there's gaps in my research that someone can address and add onto:

From my understanding, if a VA wanted to get a second loan without selling their first home, this is the process:

And if my research is correct, I hope this helps out some of you :)

1. 1. You find out what the existing purchase was and multiply by 25% (has to be over $144K)
   1. Example: Home bought 2 years ago for $325K
   2. Entitlement used/ Entitlement Gurantee = $325K * 25% = $81250
      
      
2. 2. Find their leftover entitlement and see what county they are purchasing
   1. Most county loan limit: $726K (conforming loan limit)
   2. multiple that by 25% = 726K * 25% = $181,500
   3. you subtract that from the entitlement used:
      1. $181,500 - $81,250 = $100,250
         
         
3. 3. You can get the rest of their entitlement by multiplying it by 4
   1. $100,250 * 4 = $401,000
   2. They can buy a house up to $401K and still use 100% of VA entitlements
      
      
4. Bonus: If they want to buy a more expensive home, they have to put 25% down on the difference of the home and the entitlement
   1. Example: Seller wants to buy a $601,000 house
   2. $601,000 - $401,000 = $200,000 (difference)
   3. Down payment = $200,000 * 25% = $50K
   4. % down on home = $50K/ $600K = 8.3% down payment

Mine are in Tallahassee, FL and Fall is our high season due to Football season. Not doing crazy gross yearly amounts as some of you but for Fall, netting over $2-$3K for each of my STRs during the "airbnbust year" is pretty good!