Investment as Primary Residence? How would you start?

Good Afternoon.

I currently work as a appraiser trainee in St. Louis, MO.

How would you suggest I get started in investment properties giving my current situation?

Very little debt, about 8k.
Pay rent at parents home.
Starting to make decent.

I need a place to live, and would like to make money on wherever I live.

My plan. Find a pre-foreclosure or property in distress. Move in a couple friends that are willing to pay rent and rehab the property. Then continue to rent, or flip the property and move to another.


Find an older large sized home close to a local college that could be converted to a multi-family. If I set the rent right, I think I could get enough renters to fill property like this. This would also provide me a place to live.

Would you agree that this would be the best plan?

Thanks for your time! ;D

Whatever plan you choose, it needs to be one that YOU can do. Everything you get here will just be opinions based on what THEY would do in your position.

Just some questions to ask yourself: Can you do a rehab? Do you have the knowledge and know-how to get it done right? Can your renter/friends rehab if you plan on them helping? Can you manage people to do a rehab? As to rental: can you be a good landlord? Do you want to mess with the hassle of collecting rent (especially for college students)? Can you evict if you need to do so?

I ALWAYS tell any of my students that do not already own their own home to make that their first investment deal. Now, some markets and some situations don’t make that possible, but for the most part it works. Here’s why.
First, profit is NOT the primary reason for getting the property. Yes, you are looking for it (ie, paying LESS than FMV). However, since you’ll be making it your home, you have more ‘play’ in your numbers. In other words, if you screw up and pay too much, then it’s not as bad if it’s your primary as it would be if you HAD to sell the property.
Two, if you do screw up the numbers, then you’ve got a way to still make a profit off of the thing. Simply stay in the property until appreciation catches up to your figure, then sell.
Three, with current tax law, if you own and live in the property for two years, then you can sell and any profit is tax-free up to $250K ($500K if married). If you bought right, fixed up right, and appreciation is good, making a $100-$200K per deal like this is very possible and it’s tax FREE!
Four, buy it right and you’ll have money forever! It is MUCH easier to get an equity line of credit against a primary residence compared to an investment (even a partial investment/primary). So for example, if you pay $50K for a junker, investment $25K to fix up, and it reappraises after fixup for $150K, you’ve got $75K of equity that you should be able to borrow to buy another investment.
And finally, FIVE. The vast majority of potential RE investors NEVER buy a property. Of those that do, most NEVER buy another. That being the case, if you’re going to do it, at least make it a house that you want to live in.


Roger thank you for the response.

I am very serious on doing this and to answer a few of your questions:

Many of my close friends and contacts are very familiar with rehab work. I already know of one renter that would be wiling to move in and rehab. He of course would want to live there for next to nothing if doing the work. Managing and landlording will be no issue.

It is understandable that I should make a home my first deal. But I want to do whatever is best to make me money and be able to move to other propertys.

Just want to get experienced investors opinions on what they would do in my position.
My goal is to get heavily involved in investment properties and want to get off to a good start with something that will give me a place to stay, even if it is for a short period of time. I do not mind jumping from place to place ;D

Thanks again!

I’m with Roger that you need to start with your own home. In addition, it builds creditability in many repsects.

Your plan of “get my buddies to move, live for free and do work for me” is pretty sketchy (IMHO). Are you prepared to evict your friends who fail to do the work? What if its not done right? This is not a criticism of your friends; just a statement of human nature. Your house/rehab project will amazingly drop down in priority once your friends get moved in and comfortable. At best the work will be slow as molass.

Don’t get in a hurry; take time to build a good foundations of skills and finances.

You are correct. Depending on friends for anything is not the best way to get things done.

Maybe I should just focus on getting my “own” place and just have paying roomates. Then focus/save for a project property.


I will be back ;D

Find a pre-foreclosure or property in distress

where does one find pre-foreclosure properties?

And also finance/take out a mortage on a pre-foreclosure property?

where does one find pre-foreclosure properties?

Marketing, birddogs, driving for dollars, newspaper, re agents, …

And also finance/take out a mortage on a pre-foreclosure property?

Conventional loans, hard money lenders (HML’s), private money lenders (PML’s), friends, family, savings accounts, retirement accounts, …


Sorry for the random questions. There are alot of terms thrown around on here which don’t ring a clear bell. It would be good if there was a tacked thread with all the commonly used terms and abbreviations.

Gee, you mean like these (look to the left-side of the page):

I’m surprised no one thopught of that before…




what can i say ?

Keith…you are amazing! :beer:

<<what can i say ?>>

What needs said…?

<<Keith…you are amazing! >>

Yes, by near-unanimous consensus, this appears to be the case…



What needs said...?

nothing needs said…

it was just supposed to imply that I goofed and missed the abbreviation and glossary guide


As we hear the sound of oxygen being sucked from the atmosphere as Keith’s head swells! ;D

Thanks Roger! This is a great post. Exactly what I am trying to do.

you said, “Find an older large sized home close to a local college that could be converted to a multi-family.”

That would require a zoning change to multi-family, a long, possibly expensive process.


That was a rhetorical question, Phat…and not at all a serious one either.