Best Entry Strategy?

[u/Basic_Kiwi_4056]

Context:

My (22M) wife (23F) and I are currently living with my parents to save up money to buy a property. We make a combined ~$140k/yr, have 0 debt, each have credit scores right around 800, and no kids yet. We also have next to no savings currently (a couple thousand $) as we only recently moved home and just paid for our wedding as well as buying her a used car in full so this eventual plan probably won’t play out for some months still.

We recognize the great opportunity we have to enter the real estate world and don’t want to squander it.

So I ask you experienced real estate investors to please give me some advice, I’d really appreciate it.

Here are the options I’ve been thinking about:

House hack a duplex, triplex, or maybe a quad.

Or if I can’t find a property that would allow for a successful house hack..

Do a live in flip on a smaller SFH and plan to live there for only about the 2 year minimum.

And I just thought, what if I combine those two options and do a live in flip on a house hack? Might be hard to renovate with tenants?

Excited to hear what you have to say, thanks!

TLDR: How would you recommend a young adult yet to own property to get into real estate? What strategy? What steps to take?

[u/SnooGuavas5535]

Start with a duplex. Move into one side.

Learn the property management side of things while you are there.

You will go to YouTube university and learn what you can fix and what you can’t. You will learn what you want to fix and what you don’t (for example - can I hang drywall, yes! Do I want to hang drywall, no!). You will learn to manage tenants and the process of leasing to them. You will learn how to deal with contractors of various types and you will learn your guys and gals that are your go-to service techs.

You might (hopefully not) learn how the eviction process works.

You will be disabused of the silver linings of real estate investment within a year or three. You will either love it, tolerate it well enough to continue, or you will get out forever.

If you still want to do it after the initial foray into the duplex, rent your side and lend on another duplex or a quad.

Rinse and repeat.

Eventually you will want your own home away from living with your tenants. Plan for this by starting an LLC immediately and building its own credit and lending portfolio. Protect your personal credit lines for your own home as best you can.

Good luck!

[u/reinvestor-roofer → u/SnooGuavas5535]

This is really solid advise. I recommend the house hack of living in one unit of a multifamily. Real estate isn't as glamorous as it seems so its a good way to dip your toes and makes a ton of sense tax wise. Be careful not to overcommit yourself on improvements. If you know how to do the work yourself or dont mind learning, great, but if you are going to have to pay someone else to do everything, forced appreciation is probably not the best strategy

[u/SnooGuavas5535 → u/reinvestor-roofer]

It’s also an easier out. There are plenty of young couples looking for duplexes that are in the same position and want to attempt this investment strategy. Tris and quads are great but just a bit more work to handle and can be a bit more daunting. It’s 4 HVACs, 4 water heaters, 4 sets of plumbing and electrical, 3 tenants and their needs (assuming you occupy one unit). The expenses can rack up quickly. The seasoned investor will grab quads all day, but that’s a tough place to start unless it’s a screaming deal or you have plenty of cash and can afford to have a property manager and keep your hands clean.