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HOT TOPIC Peeps that manage properties, would it be a good idea to finish university and get this degree

holmzee

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What's everyone's opinion on looking out of state and the best way to do this? Is it possible to hire a property inspector and close on a place without ever having visited the property? I don't like the sound of it but I'm sure it's been done. It just makes the deal more risky.
 

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biophase

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What is the meaning of "extremely leveraged"? Not enough cash reserves? Or something related to the value of the mortgage/property?
Basically leverage is when you have $50k and use it as 20% down on a $250k home. You've used $50k to control a $250k asset. When you pay cash, you spent $250k for a $250k asset, meaning you didn't leverage your money.

When you put down $5k to buy a $250k house, you are extremely leveraged. Your $5k is controlling a $250k asset. But with that comes larger payments and lower cash flow.

Usually the people who are highly leveraged are doing so because they have no money.

So let's say I have $250k in the bank, and buy a home for $250k. It's going to cashflow alot. Let's just assume it's $10k a year.

Scenario 2 is I only have $5k in the bank to buy this $250k home. Now, because of my mortgage it will cashflow less. Let's just assume it's now $500 a year.

What happens when I don't have a renter? Basically means I'm -$1500/mo
Scenario 1 - I only have to pay property taxes each month.
Scenario 2 - I have to pay property taxes each month and my mortgage.

Well the guy who paid cash for the home probably has some reserves and he was making $10k a year cashflow so he can easily handle 1-6 months of no tenant.

The guy who put down $10k, probably did it because he only has $10k. He can probably only go 1-2 months before missing payments. If this guy has 2-3 properties, it just becomes a domino effect.
 

DustinH

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Hi guys it's me again, my brain is all over the place this week as you can see.

Goal: Buy multifamily home to live in/collect rent. Build up on that: manage portfolio of properties, make a humble living from rent income to free time.

Question: Did you just wing all this (buying process, knowing what to pick, what's gonna give you cashflow etc.), self taught yourself everything? What do you think of this degree's courses? (Check the sample courses). Even the sustainable development, urban economics thing I find interesting for future ventures I'd like to start (very interested in sustainable solution projects for homeless people, self-sustainable communities/housing, etc).

Please note:
  • I've already completed my associates out of pocket, it's just the other half not the whole degree.
  • My GPA is 3.9, I'm hispanic, woman, bla bla I might get a few chances at scholarships or aid, maybe (hopefully)
  • I WOULDN'T DO THIS BEFORE FALL 2020 OR BEFORE I BUY MY FIRST PROPERTY -- I want to be debt free (which I am) at time of applying for first mortgage.
What are your thoughts? I google courses but it's all for broker, being a real estate agent, this encompasses more of making and running a business of real estate and manage leasing/assets etc. Haven't checked Udemy yet I just thought of that.

Thanks~
Real Estate Broker here. I'm probably saying something that has already been said but I can be the next to validate the same opinion.

You won't learn anything at a college that you can't just read in a $30 book on real estate investing or just buying the textbook and reading it. These business professors probably only teach. They're not into investing in multi-family. So, you might not learn anything credible.

If it were me, I would finish out with a degree that is more marketable for a job when I get out of school (i.e. finance or business management). That way, I can work and do the investing on the side until I'm ready to shift into it full time.

Plus, you could probably get ahead your real estate license if that is something you were interested in.
 

Shanice

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I agree with @biophase , There isn't anything schooling is really going to do for you besides suck time and create more debt which will hinder your ability to get a loan. It's fairly basic math and a good bit of research.

@SteveO used to recommend the book how to buy and sell apartment buildings (can't remember the author) I would be that has the additional info you are missing and probably costs less than $50.

Have you researched small multifamily properties in your area already? what have you found thus far?
I second that book recommendation. However, if you're trying to get a personal loan/ house hack, usually banks only let you get a building that is 4 units or less. Lisa Phillips has great youtube videos and a book for finding affordable real estate investments. (Just youtube lisa phillips affordable real estate investments). I've found her method to be the best advice. Her book also talks about choosing tenants (VERY important), figuring out how much you can charge in rent and breaking down the numbers to make sure you will be profitable (EXTREMELY important), and estimating repairs (also very important). There's NO need to get a degree for this. Through my own experience buying and renting out homes, I've learned a lot. After reading Lisa's book, I wished that I read it when I was first starting out.
 

Shanice

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I've been here for almost 6 years permanently now and it's just... I love Chicago, it's my kind of town! HAHA SEE WHAT I DID THERE-- no but for real, I really like it here, except well, obviously the weather. I just feel like I fit here. :blank: Not like I know other places thoroughly but I've been happy here so far, city-related speaking.

I haven't looked at that, I will pay attention when I go look at listings. I'm a total newb. No experience or knowledge in RE. All I know is that I wanna be a landlady to reduce my rent, and hopefully build it from there. But unless I understand what I'm getting into I'm going to try not to take uncalculated/stupid risks which is why I think I should get all the knowledge now while I save.

That said I'm not looking for anything fancy, probably an up and coming neighborhood that is safe enough, close to CTA, not too much rehab work to do (which I've found). So far what I've seen that looks "good" at first sight is somewhere between 280-350k (usually less than 350k, that's my limit and it's pushing it, too)
I don't know about your employment situation (or credit) but you might want to go to a bank to get a pre-approval for a mortgage loan to see what you qualify for before looking at homes. No debt is great, but banks want to also see how much you make per year and will loan based on your yearly salary and debt. Some banks (if the house you're looking at already has tenants in and it's cash flowing) can lend more based on if the house is already generating income.

Since you're starting without knowledge or buying a home before, NACA is a great program that will answer all of your questions, slowly walk you through the process, and also helps a lot with down payment assistance and closing costs and low interest rates. That is another resource that you can look into along with Lisa's book
 
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BellaPippin

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Real Estate Broker here. I'm probably saying something that has already been said but I can be the next to validate the same opinion.

You won't learn anything at a college that you can't just read in a $30 book on real estate investing or just buying the textbook and reading it. These business professors probably only teach. They're not into investing in multi-family. So, you might not learn anything credible.

If it were me, I would finish out with a degree that is more marketable for a job when I get out of school (i.e. finance or business management). That way, I can work and do the investing on the side until I'm ready to shift into it full time.

Plus, you could probably get ahead your real estate license if that is something you were interested in.
Thanks, yeah no I stopped at Associates. I don't see the point of a degree I guess I was looking for confirmation. Is the real estate license necessary for buying/selling? Or what exactly is it for?


I second that book recommendation. However, if you're trying to get a personal loan/ house hack, usually banks only let you get a building that is 4 units or less. Lisa Phillips has great youtube videos and a book for finding affordable real estate investments. (Just youtube lisa phillips affordable real estate investments). I've found her method to be the best advice. Her book also talks about choosing tenants (VERY important), figuring out how much you can charge in rent and breaking down the numbers to make sure you will be profitable (EXTREMELY important), and estimating repairs (also very important). There's NO need to get a degree for this. Through my own experience buying and renting out homes, I've learned a lot. After reading Lisa's book, I wished that I read it when I was first starting out.
Thanks a lot for the resource, I'll check it out!! My plan is to get 2-3 units and live in one, no more than that to start. I thought about going to get a pre-approval but I figured there was no point until I have a reasonable amount saved up-- which I still don't.
 

Shanice

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Thanks, yeah no I stopped at Associates. I don't see the point of a degree I guess I was looking for confirmation. Is the real estate license necessary for buying/selling? Or what exactly is it for?




Thanks a lot for the resource, I'll check it out!! My plan is to get 2-3 units and live in one, no more than that to start. I thought about going to get a pre-approval but I figured there was no point until I have a reasonable amount saved up-- which I still don't.
There are 100% financing loans and other programs that help with the costs. Some people think you need an enormous amount saved up, but sometimes you don't. I purchased one house before without having to pay anything. Everything was rolled into the loan. Another property I purchased already had a tenant that had been living in the property for 3 years and wanted to stay so I was cash flowing immediately.
 
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BellaPippin

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There are 100% financing loans and other programs that help with the costs. Some people think you need an enormous amount saved up, but sometimes you don't. I purchased one house before without having to pay anything. Everything was rolled into the loan. Another property I purchased already had a tenant that had been living in the property for 3 years and wanted to stay so I was cash flowing immediately.
Sounds so easy I'm wary lmao... time to check the resources Vigilante gave me a while ago. That would be great, was it an investment property and/or maybe related to income? My credit is excellent my salary not so much lol
 

JScott

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I was hoping @JScott would jump in with his 2 cents.
Thanks for the tag!

Here are some resources that I think will help (and if you start an execution thread, I'm happy to jump in with my thoughts and advice, as this topic is pretty much right down my alley)...

First, BiggerPockets is a great place to start for anything real estate related:

www.biggerpockets.com

Sounds like you want to do a House Hack (buy a small multi-unit, rent out part and live rent-free or close to it). BiggerPockets has a book devoted on the subject ("The House Hacking Strategy") coming out in October. I just finished an advanced copy of it, and it's probably exactly what you're looking for. You can pre-order here:


The author of the book (Craig Curelop) is an awesome guy, and recently did a great podcast episode about House Hacking here:


The House Hacking book goes into good detail on how to analyze deals, but if you want to dig into the topic even more, I highly recommend Brandon Turner's rental property investing book (this thing has literally been in the Top 1000 books on Amazon for the past several years):


And if you want to dig into the analysis math really deep, I have a book coming out early next year on the topic... ;)

Happy to answer any specific questions if I can!

EDIT: Someone mentioned the Vollucci book, "How to Buy and Sell Apartment Buildings" earlier in this thread. Just wanted to point out that @SteveO turned me on to this book over a decade ago, and it pretty much got me started down the path of real estate (forever grateful to Steve for his help when I was starting!). It was a decade before I started doing large value-add apartments, but this book was instrumental in helping me get my head around the power of capitalizing income to make lots of money in real estate.
 
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BellaPippin

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Thanks for the tag!

Here are some resources that I think will help (and if you start an execution thread, I'm happy to jump in with my thoughts and advice, as this topic is pretty much right down my alley)...

First, BiggerPockets is a great place to start for anything real estate related:

www.biggerpockets.com

Sounds like you want to do a House Hack (buy a small multi-unit, rent out part and live rent-free or close to it). BiggerPockets has a book devoted on the subject ("The House Hacking Strategy") coming out in October. I just finished an advanced copy of it, and it's probably exactly what you're looking for. You can pre-order here:


The author of the book (Craig Curelop) is an awesome guy, and recently did a great podcast episode about House Hacking here:


The House Hacking book goes into good detail on how to analyze deals, but if you want to dig into the topic even more, I highly recommend Brandon Turner's rental property investing book (this thing has literally been in the Top 1000 books on Amazon for the past several years):


And if you want to dig into the analysis math really deep, I have a book coming out early next year on the topic... ;)

Happy to answer any specific questions if I can!

EDIT: Someone mentioned the Vollucci book, "How to Buy and Sell Apartment Buildings" earlier in this thread. Just wanted to point out that @SteveO turned me on to this book over a decade ago, and it pretty much got me started down the path of real estate (forever grateful to Steve for his help when I was starting!). It was a decade before I started doing large value-add apartments, but this book was instrumental in helping me get my head around the power of capitalizing income to make lots of money in real estate.
Thank you 3000! Yes that is exactly what I want, at least for the first property. I’ll start reading, basically I’m just trying to learn as much as I can while I’m saving money. Much appreciated.
 

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DustinH

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Thanks, yeah no I stopped at Associates. I don't see the point of a degree I guess I was looking for confirmation. Is the real estate license necessary for buying/selling? Or what exactly is it for?
You don't need a license to sell any real estate that you personally own or to buy anything personally. You need a license to help any other person buy or sell real estate. Though, the advantages for investors to have their license is:

a) make a commission when you buy yourself a property off the multiple listing service
b) save a commission when you sell your own property on the multiple listing service
c) have the opportunity for more deals to come across your desk
 

JScott

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Though, the advantages for investors to have their license is:

a) make a commission when you buy yourself a property off the multiple listing service
b) save a commission when you sell your own property on the multiple listing service
c) have the opportunity for more deals to come across your desk
Lots more advantages:

Access to the MLS

When you have your license, you get access to the local MLS and agent tools. Access to the MLS provides a number of benefits, including the ability to pull your own comps and notification of new properties hitting the market. In addition to the MLS, agents have access to a wide array of other data tools that are beneficial when farming a new area or when looking for potential sellers.

Finally, agents have the ability to list their own properties on the MLS, giving them full control of their sales/marketing without having to work through another agent.


Control Your Deals

Being your own agent for your purchases and sales provides a tremendous amount of control. You can submit offers to and negotiate directly with listing agents. You can deal directly with the lenders, the appraisers, the inspectors, the closing attorneys, and all other parties involved in the closing of your transactions, both on the buy and sell side. You control your marketing, your sales, and the showing of your properties to prospective buyers and can work with the agents on the other side to garner feedback and information to help you get your properties bought and sold more quickly and efficiently.


Easy Access to Properties

As a licensed agent, you have the ability to schedule appointments to see MLS-listed properties -- and once those appointments are set, you can use your electronic key ("Supra Key") to gain access to those properties. No longer will you have to work around the schedule of another agent to show you properties, and no longer will you have to feel bad asking an agent to show you a property that you have no intention of purchasing -- you can view properties on your timeline.

Imagine driving down the street, seeing a FOR SALE sign on an MLS-listed property, and having the ability to call the listing agent and immediately arrange a time for you to let yourself into the property.


Earn Referral Fees

Investors often come across properties that aren't going to end up being good deals, but the potential seller might be happy to list the property with a licensed Realtor. As a licensed agent, you have the ability to refer those sellers over to another licensed agent, who can then legally pay you a referral fee for passing on the client.

It is illegal for a licensed Realtor to pay an unlicensed person a referral fees, so the only way to legally get compensated in these situations is to be licensed.


Earn Extra Commissions by Representing Clients

Many investor-agents will take advantage of their license by acting on behalf of other clients. Perhaps you want to help other investors buy and sell deals or perhaps you want to represent friends and family who are looking to buy or sell their home. Being licensed means you can legally represent others in the purchase/sale of real estate, and collect a commission for doing so.

Many investors make side income (or even primary income) doing traditional real estate sales. You can do the same!
 
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BellaPippin

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Lots more advantages:

Access to the MLS

When you have your license, you get access to the local MLS and agent tools. Access to the MLS provides a number of benefits, including the ability to pull your own comps and notification of new properties hitting the market. In addition to the MLS, agents have access to a wide array of other data tools that are beneficial when farming a new area or when looking for potential sellers.

Finally, agents have the ability to list their own properties on the MLS, giving them full control of their sales/marketing without having to work through another agent.


Control Your Deals

Being your own agent for your purchases and sales provides a tremendous amount of control. You can submit offers to and negotiate directly with listing agents. You can deal directly with the lenders, the appraisers, the inspectors, the closing attorneys, and all other parties involved in the closing of your transactions, both on the buy and sell side. You control your marketing, your sales, and the showing of your properties to prospective buyers and can work with the agents on the other side to garner feedback and information to help you get your properties bought and sold more quickly and efficiently.


Easy Access to Properties

As a licensed agent, you have the ability to schedule appointments to see MLS-listed properties -- and once those appointments are set, you can use your electronic key ("Supra Key") to gain access to those properties. No longer will you have to work around the schedule of another agent to show you properties, and no longer will you have to feel bad asking an agent to show you a property that you have no intention of purchasing -- you can view properties on your timeline.

Imagine driving down the street, seeing a FOR SALE sign on an MLS-listed property, and having the ability to call the listing agent and immediately arrange a time for you to let yourself into the property.


Earn Referral Fees

Investors often come across properties that aren't going to end up being good deals, but the potential seller might be happy to list the property with a licensed Realtor. As a licensed agent, you have the ability to refer those sellers over to another licensed agent, who can then legally pay you a referral fee for passing on the client.

It is illegal for a licensed Realtor to pay an unlicensed person a referral fees, so the only way to legally get compensated in these situations is to be licensed.


Earn Extra Commissions by Representing Clients

Many investor-agents will take advantage of their license by acting on behalf of other clients. Perhaps you want to help other investors buy and sell deals or perhaps you want to represent friends and family who are looking to buy or sell their home. Being licensed means you can legally represent others in the purchase/sale of real estate, and collect a commission for doing so.

Many investors make side income (or even primary income) doing traditional real estate sales. You can do the same!
I see there's broker and managing broker, which you need to manage your own properties. Is that right? Also says I need a managing broker mentor for a year before being able to apply for managing broker?
 

JScott

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I see there's broker and managing broker, which you need to manage your own properties. Is that right? Also says I need a managing broker mentor for a year before being able to apply for managing broker?
Brokers and Agents both represent people who buy and sell real estate.

Agents work for brokers. Either employees or 1099 contractors, but you can't be an agent unless you are working under a broker.

Brokers are basically the ones in charge, and the ones who are ultimately responsible for the actions of their agents. If an agent does something unethical or illegal, they can get in trouble; typically, their broker will get in trouble as well, as the job of the broker is to oversee the agents and make sure they are doing things correctly.

Many brokers are simply managers (they oversee the brokerage office and the agents). But, many brokers also actively represent clients as well. If you're a client, you probably wouldn't know the difference between your agent being an agent or broker -- from the client standpoint, it generally looks the same.

In many states, you need to be an agent for 2-3 years before you can become a broker -- you also have to pass some additional courses/tests to get a broker's license.

Also, agents don't technically get paid commission for buying/selling real estate. The broker gets paid, and then shares that commission with the agent. An agent is never allowed to collect money from anyone other than their broker, and all commissions must go through the broker.

The difference between a broker and a managing broker is that while a brokerage can have lots of brokers, there is generally one person (the managing broker) who is ultimately responsible for the entire brokerage. They're responsible for managing the office, overseeing operations, handling the cash, making sure the agents are in compliance with rules/laws, etc.

If you were to walk into a big Keller Williams office, for example, you might find 500 agents and a dozen brokers. But, you'd only find one managing broker for that office.

As for managing properties, you do NOT need an agent or broker to manage your properties. You're always allowed to manage your own properties. But, in many states, if you want to manage OTHER people's properties, you need to have a broker's license (or be an agent that works under the broker who is ultimately responsible). In some states, you can manage up to a certain number of other people's units before you need a license. It will vary from state to state.
 
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BellaPippin

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Thanks for the tag!

Here are some resources that I think will help (and if you start an execution thread, I'm happy to jump in with my thoughts and advice, as this topic is pretty much right down my alley)...

First, BiggerPockets is a great place to start for anything real estate related:

www.biggerpockets.com

Sounds like you want to do a House Hack (buy a small multi-unit, rent out part and live rent-free or close to it). BiggerPockets has a book devoted on the subject ("The House Hacking Strategy") coming out in October. I just finished an advanced copy of it, and it's probably exactly what you're looking for. You can pre-order here:


The author of the book (Craig Curelop) is an awesome guy, and recently did a great podcast episode about House Hacking here:


The House Hacking book goes into good detail on how to analyze deals, but if you want to dig into the topic even more, I highly recommend Brandon Turner's rental property investing book (this thing has literally been in the Top 1000 books on Amazon for the past several years):


And if you want to dig into the analysis math really deep, I have a book coming out early next year on the topic... ;)

Happy to answer any specific questions if I can!

EDIT: Someone mentioned the Vollucci book, "How to Buy and Sell Apartment Buildings" earlier in this thread. Just wanted to point out that @SteveO turned me on to this book over a decade ago, and it pretty much got me started down the path of real estate (forever grateful to Steve for his help when I was starting!). It was a decade before I started doing large value-add apartments, but this book was instrumental in helping me get my head around the power of capitalizing income to make lots of money in real estate.
Sounds right up my alley, I’ve pre-ordered it and might check the other one in the mean time or after I finish the upcoming one, thank you so much!
 

Strategery

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Sounds right up my alley, I’ve pre-ordered it and might check the other one in the mean time or after I finish the upcoming one, thank you so much!
I listened to The Book on Rental Property Investing, it was dope. I really want the house hacking strategy book to come out lol
 

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@JScott and @biophase are dropping straight gems for you!

I got my start listening to bigger pockets and reading Brandon Turner's book and J.Scott's book on estimating rehab costs. These are a great place to start.

My recommendation is thread those and then start evaluating properties in the neighborhoods that you're interested in - even if you think you can't buy them right now! It's important to get to know the areas, rents, and pricing - the books can't teach you that unfortunately.

Getting your real estate license could be great for the reasons laid out by @JScott. If you do decide to represent others - become a badass real estate agent! There are a lot of not so great agents out there and if you become great at it you can make great money to use to help you purchase rental properties.

Buying your first duplex is only level one - there are more levels to get to and achievements to be had!
 

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I just wanted to jump in and say that there is no way that I'd ever run a property management company. The reason is that your income stream is so small and limited and doesn't really scale that well.

I pay my PM $100/mo. So they make $1200/yr gross from me. They manage 400 homes. So they gross $480,000 if every home they managed was $1000/mo rent. Now they do charge around $400 for a new lease up, so add another $80k to their bottom line.

While some of you may think that that's alot, I look at that gross number and think of how much work that $560k takes to manage.

If you assume that each tenant signs a 2 year lease, you have 200 new leases a year. 17 leases a month, 17 move outs and in. Not to mention the number of maintenance calls they must get each day. How big would your staff have to be to manage 400 units? At least 10 I'm guessing. So 10 salaries at $40k, and you aren't making alot of money.

Maybe my PM does too much. They pay my HOAs, water, sewer, electric bills, they get bids for repairs, manage all the repairs, pre-pay for them and then subtract them from my rent. I mean all of this for $100/mo? I am gladly paying them that.
 

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And property management companies are usually in a "no win" situation. Expenses and surprises are the name of the game. Extra costs, damage, move- outs, etc happen. Who delivers the bad news? Who gets all the extra work associated? Or the blame for the problems?

All of this while working at low rates that don't support what you really need to do the job.
 
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BellaPippin

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That's not my goal at all, to be clear. I just wanna cover my expenses and then some maybe thru rental income, to have the freedom to pursue other ideas.
 

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BellaPippin

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Sounds like you want to do a House Hack (buy a small multi-unit, rent out part and live rent-free or close to it). BiggerPockets has a book devoted on the subject ("The House Hacking Strategy") coming out in October. I just finished an advanced copy of it, and it's probably exactly what you're looking for. You can pre-order here:


The author of the book (Craig Curelop) is an awesome guy, and recently did a great podcast episode about House Hacking here:


The House Hacking book goes into good detail on how to analyze deals, but if you want to dig into the topic even more, I highly recommend Brandon Turner's rental property investing book (this thing has literally been in the Top 1000 books on Amazon for the past several years):

I need it to be Wednesday today so I can download this, ugh


Also I thought I'd give you guys some good news... I got a new job offer and I'm gonna be making an extra $1000 a month. LOL. Guess who's gonna be saving like crazy for the duplex AND going to the summit! woohooooo~ :p
 

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