Many of my close friends and family know I love real estate and love interior design. Truth be told, if I had been brave enough earlier on (and more self-aware), I would have gone to school to become an interior designer because I was definitely a kid who was raised on #TradingSpaces and #HGTV. While, I can't go back in time and change things, I can branch out now and pursue that passion.
A few years ago I purchased my first investment property. It was a cute little bungalow in upstate, NY that was originally a Sears kit home. If you don't know what a Sear's kit home is, believe it or not they used to sell entire houses in Sears catalogues. Many people ordered them and then had them assembled them themselves. They sound more rickety than they actually are. In fact, in many cities all over the country you will find a significant number of homes that were built from 1908 to 1939 that are actually the end products of Sears kits. So after the inspection revealed it was a solid little home, and that it carried with it that fun little piece of history, I decided to take the jump.
Closing Day
(See the "What the hell have we done?!?" Look in our eyes?)
Many people's first question for me is why would I purchase a house in a town I don't live in and have never lived in? Well here was my thinking behind where to buy:
1) I looked up the 3 fastest growing job markets in my state. This was the closest one to where I lived, and only a 2 hour drive from my home. With strong job growth, I could tell that the economy was on the upswing.
2) I wanted a town that had favorable tenant rules for landlords. In NYC a tenant can live up to 6 months in an apartment without paying their rent before you could legally evict them! I've read a lot of horror stories. As a new investor, with limited capital, I wasn't sure I could stomach that sort of a situation.
3) I needed buy in prices were a lot less than buying in the city. If I were to invest in the city right now, it would take me a lot longer to save up enough for the 25% down. And, as you know, real estate prices tend to rise, rather than drop. The sooner you get in, the better.
4) There was a growing cultural scene popping up there. Lots of young professionals were moving in, starting cute businesses and moving there to escape the city. Several articles dubbed it "the next Brooklyn."
5) There was a shortage in long term rentals. Due to the booming Airbnb scene, most investors were buying homes for vacation rental. I saw a need for more long term, affordable housing, for sure.
The next question I get most often is, what do you look for in a possible investment property? Now, I recognize this varies widely from person to person. But as a young, fairly cash-strapped, working class woman, here's what I tend to look for when selecting my next investment property:
1) Location: It needs to be convenient to everything. Working class neighborhoods are fine for me (hell, I'm the product of one), but there needs to be pride of ownership.
2) Off street parking: Everyone wants it and in a city, it is clutch.
3) A solid, single family class C house: One that is clean, quaint, but hasn't been terribly recently updated. (I can always do that work later myself. Right now I just want to get it rented out as soon as possible).
4) Storage. Storage. Storage: It must have an attic, basement, garage or in best case scenario, all three!
5) A motivated seller: The seller needs to want to get out of there and move on to their next chapter of life. It makes for a much smoother deal.
6) Some compromise: Something that works for a rental, but not if you were to buy to live there yourself. For example, our first place is near a cemetery and train. Renters don't tend to mind this because the train isn't super close or loud, but it probably wouldn't be ideal for someone who is buying their first home to live in for themselves.
7) Cash flow: I like to do 15 year mortgages, personally. After all is said and done, between the mortgage, insurance, taxes, property management and water and sewer it must cash flow each month to be worth my time.
Before a lick of paint
Hitting the paint game hard.
After. Wowza what a difference!
Boom! The living room. Nailed it.
Now these deals don't come quick. I wish they did. But they require lots of prep work, research, networking and educating myself. I'll do another blog post on that soon about what I did to get myself in the game but in the meantime, if you are a real estate investor, what do you look for in a home and/or town in order to invest in it? Any tips would be super helpful cause you know I'm always down to learn more!
Lots of love,
Mack