Stop Paying Someone Else’s Mortgage: Beginner Steps to Buy Your FIRST Home

In This Article Are you tired of paying someone else’s mortgage? Then you’re in the right place. In today’s show, we’re sharing how to buy a home in 2024, even as a complete beginner, as we walk through a rookie’s step-by-step journey to purchasing his first primary residence, which could also become a rental! If you feel like you’re in the same position and want to be the receiver, not the sender, of monthly rent checks, tune in as we walk through how today’s rookie is gearing up to become a first-time homebuyer! Aaron Mann was tired of renting. After being around real estate investors at his day job, he started to feel like he was missing out. Meanwhile, his wife was reading a slew of BiggerPockets books and told Aaron it was time to look into buying—he agreed! This couple is now beginning their house-hunting journey and has already zeroed in on their strategy, investing area, and what they want to buy. With the help of our own Ashley Kehr in the BiggerPockets Real Estate Rookie Bootcamp, Aaron is set to close on his first home in the near future. Want to get YOUR first rental property or primary residence this year? Tune in and start taking these beginner steps! Sign up for a BiggerPockets Bootcamp today to get on the path to buying your FIRST or next rental property!  Click here to listen on Apple Podcasts. Listen to the Podcast Here Read the Transcript Here Ashley:This is Real Estate Rookie episode 407. My name is Ashley Care and I’m here with Tony j Robinson. Tony:And welcome to the Real Estate Rookie podcast where every week, three times a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And our guest today, Aaron Mann is tired of paying for someone else’s dream and wants to invest in his own. Now, he and his wife both have W twos, but they’ve never owned property. So together they joined one of our Ricky Bootcamps through BiggerPockets to invest in their own future, and they’re doubling down on their side hustles as they’re saving for their first multifamily, which they’re preparing to buy next year. So Aaron, welcome to the show, brother. Aaron :What’s going on, gang? It’s good to be on here. It’s good to see you two, huge fan. Yeah, Ashley:We’re so happy to have you. I think this is going to be a great episode just for the mere fact that you are probably in the same exact position where a lot of other rookie investors are. They want to take action. They’re getting started, and I can’t wait to talk about the things you are doing today to actually prep for your investing journey. Absolutely. So Erin, why did you actually decide to start a real estate investing journey? Aaron :Well, I’ve been to a lot of the bp, strictly a helping capacity for the most part, but hearing the different people speak and being a part of so many different conversations where I felt like I was the odd man out all the time, I just needed that knowledge in order to participate. Whenever I feel left out of a conversation, that’s never a good feeling. So with no knowledge, I needed to figure out a way, the best way to get that knowledge, and I figured rookie bootcamp was the way to go with that. Tony:Aaron, so it sounds like you were drinking the Kool-Aid a little bit, like you were the one who was maybe excited, I guess. Was your wife also as excited about real estate investing or was there maybe some convincing that needed to happen? I guess what was that dialogue like between the two of you to come into this decision? Aaron :A thousand percent. She actually really started the excitement portion of it, I guess so to speak. After getting a couple of BiggerPockets books and going through them, she came to me and said, Erin, we could really do this. We could actually take the time and put the work in with not just our W twos, but also our side hustles and really get ahold of what we want to be financially free, and this is the perfect place to start. So yeah, that’s kind of where it all began. And then I said, you know what? You’re right. Let’s do it. We have all of us at our disposal. Ashley:Erin, what was the biggest challenge that you faced that when you decided, okay, we’re going to invest in real estate, that you just didn’t go out and buy a house right then and there? Aaron :The knowledge. Knowledge is what stopped me right there. I had zero clue what I was doing jumping into this. She was the one with the books, and she would hand them to me from time to time, and I would try to go through them and make sense of everything that I was reading. And it was like I had a bunch of different puzzle pieces for different pictures that I could not put together fully. So I needed somebody with experience to come in and kind of funnel all of that together to put it into one picture for me, which is where a lot of the bootcamp came in for sure, a lot of the community. Ashley:What was the difference that you saw between yourself and somebody else that was already started in real estate besides the knowledge piece? Aaron :All of the mistakes was definitely the most surprising portion of that. Whenever I start something new that I have zero knowledge in, I want to make sure that I know what other people have done and the hurdles that they have gone through before taking the risk. I want to know what bad deals you’ve made, what bad contractors you’ve spoken to, what were the situations that you went through? I know a couple times there have been different properties that my friends have worked on or worked with rather where there just wasn’t something up to code and they didn’t figure it out until a year later. And I don’t want to go through that. So I want to try to solidify my base first and learn from those who have made those mistakes, which they’re more than happy to share about at all times. So that’s always a huge bonus in the rookie community, Ashley:And that’s why we do the horror stories too. We’ve done several Ricky episodes highlighting these things that have gone wrong for these investors so that everyone can learn from the mistakes that they made. And I think that was such a good example of something that set you apart from investors that already got started, is you wanted to have a better footing and a strong foundation before actually implementing the steps so that you knew here are the worst case scenarios, the things that could happen. And I’m learning from my community, my network of ways that I can be proactive to preventing these things from happening. Or if they do happen, I know some steps that I can take. When I first started, I had a really big fear that all these horrible things were going to happen. And as time has gone on, okay, if I have fear of a deal or fear of partnership, what’s the worst thing that can happen? And try to find a solution now so that I can move forward and I know what to do if that situation actually does come to fruition. Aaron :Absolutely. Having those backups is definitely probably one of the most important things to me when thinking about the future of investing. Tony:We’re talking about some of the fears, Erin, that maybe motivated you to want to jump into this whole world of real estate investing, but maybe if you can paint the picture for us here, what was that exact moment when you realized I need to become a real estate investor and I need some help to get it done? Aaron :I wouldn’t say so much fear as it was just being kind of sick of this situation. Obviously there’s the fear of missing out that I mentioned already, but there’s also my wife telling me we could do this. We have the tools necessary to make it happen. Let’s try it. And at the time, just to break it down a little bit, I was a little on the fence just because of the way our financials work and how all of our jobs work together, et cetera. But I remember going to the bank again to get a cashier’s check for my landlord again, and I was like, this is 2024. Why isn’t my landlord using some sort of digital payment? I have to come here every single month to pay a fee to get a stupid cashier’s check that I need to then mail to my, this is insane. I’m sick of this. This is the final straw. I want to start thinking about real estate investing and learning everything I can to get out of this situation. And kudos to my landlord. Very nice, very nice person. But it’s just one of those things where why am I paying this other person’s mortgage when I could be paying my own and not with a cashier’s check? Tony:Yeah. So word of caution to all of our rookies that are listening, stop making your attendance pay with cashier’s checks or else you might lose a good tenant. So get with the times. Aaron :Seriously. Rent ready is a dollar. It’s just a dollar. Tony:I know Ashley:You should sign your landlord up for their email list, give a newsletter. Aaron :I actually sent them an email. I said, listen, they have this sick deal going on. You should try it out just for six months. See how you feel. Never responded. It’s like, okay, cool. This is great. Ashley:Well, we’re going to take a quick break and when we come back, I want to talk about what strategy you have decided on, because that’s a big part of the bootcamp too, is there’s so many shiny objects over there as to where you can actually go with real estate investing. So we’re going to take this break and when we come back, we’ll find out where Aaron decided to place his first investment, what his journey is going to be. Okay. Welcome back from our short break. Thank you so much for taking the time to check out our show sponsors. They make the show happen along with you guys, the rookie community. So we’re here with Aaron, and Aaron was a member of the Rookie Bootcamp. He’s getting started in real estate investing, and we’re going to find out the action steps and the plan he’s making now to actually make that first investment. So Aaron, what strategy did you decide on? Aaron :So we set ourself a goal first of within the next year trying to find a house hack or a multifamily within Chicago, Illinois, which is where I live. And if you’ve ever been to Chicago, Illinois, it is just lined with multi-unit, multifamily house hack options that you can go through on a day-to-day basis, driving for dollars probably. It’s very huge here. So whenever I take my wife to work or I pick her up from something, well take some time, drive around Chicago, look at some signs and deals and whatnot, and see just how the market is. And obviously we’ll go online and take a look there as well. But the goal is the house hack or multifamily next year, and we kind of have a vision of, I’ve worked a lot in some of the nonprofit side here in Chicago for the theater industry. We kind of have a vision renting it out to other performers in the area of Rogers Park or Andersonville because it’s a really hot commodity for the storefront theater scene out here, which is a huge flow of different tenants and things like that. So that’s kind of our goal in the future in artistic housing, so to speak. But yeah, to go about it, we’re looking into different options. We actually heard this on the Money podcast recently, home Path by Fannie Mae. That is one of the options that we’re looking into for finding a place and also helping to get it funded while living in the property for a year or so. That’s where we’re thinking about starting. That’s the main plan, but a lot of things shift and change over time. Tony:Aaron, I haven’t heard of the home path, and I’m assuming maybe of our rookies haven’t either. What is that and why is that maybe an attractive option for you? Aaron :So from what I’ve been looking at Home Path by Fannie Mae is a place where it’s a lot of properties that have been foreclosed on where you can go in and sometimes they’re a part of an HOA or they’ve just been abandoned or what have you, where you can go in, put in a claim for the property, and then they help you try to finance it. And then once you move in, you have to live in the property for a year. And then after that Bob’s your uncle. You can do whatever you want with it. But yeah, Ashley:I’ve looked at a couple of those properties and they do a window of time where you have to be somebody who will live in it as your primary residence. And then after so long, if nobody takes it or wants it, then they open it up to investors later on. But yeah, it’s a really interesting program. There’s not a ton of properties in my market at least that come up through this program though. Are you finding that there’s a good selection in variety, Aaron? Aaron :I would say so, yeah, absolutely. Especially in the area up north here. But yeah, you throw in your zip code and it brings up a list of as many properties as they have under their umbrella. Tony:So Aaron, like I said, man, I’ve never heard of this home path loan option, but I guess is the benefit that you are getting a discount on these properties in comparisons to like an MLS listing or I guess what’s the actual benefit of going down this path? Aaron :That’s correct, because they were either abandoned or they’re distressed or what have you. Now the majority of them, I would say are single units, but from time to time, a lot of multiunit or homes in general just pop up on home path as well. So I mean, obviously we’re aiming for a house hack here, but if worst case scenario we needed to buy a single unit and then move out of there and rent it out or something like that, that is also a plan that we have on the table. But looking at it from multiple different angles and perspectives, just like we learned. Tony:Yeah, it’s super interesting because there’s so many different options out there. And even for us as experienced real estate investors, we haven’t heard of them all. And I pulled up Home Path from my local area, and yeah, there’s fixer uppers on this website that are pretty reasonably priced in comparison to other properties in my market. So there’s so many different ways to go about it. So I appreciate you sharing that, Aaron, because I’m sure there’s a lot of rookies who are listening that have maybe never heard of Home Path as well. And then I guess the last question I have for you, Aaron, on this loan product, what’s the down payment percentage? Typically, if I believe Aaron :It is 3.5%, I could be wrong about that, but just to do some other digging, like you mentioned, Tony, a hundred percent to all the other rookies out there, always dig as much as you can into those state loans or programs or whatever because there is always something there that even if it doesn’t work for you, it’s always good to have that knowledge. We had to do some deep digging for home path. So yeah, highly recommend it. Ashley:And with the home path, is there an inspection on the property? There would be with an FHA. Tony said he looked at the website and their fixer uppers, and that’s kind of what I’ve seen in my market too. So is there no kind of inspection that an FHA would have? Aaron :From what I’ve seen, they don’t make mention of an inspection, but I could be wrong about that. It might be somewhere else on the website. But from the digging I’ve done and from the properties I’ve looked at, no, it does not look like there is an inspection. Ashley:So Erin, I’m interested, are there any other ways that you’re going to be sourcing deals or is right now looking on home path going to be your main source of bringing leads into you? Aaron :Home path and Redfin have been some of our biggest hits for sure. Obviously we’ve looked at all of the general website, Zillow and all that good stuff, but Redfin has really been a huge benefit for us as well. It’s actually where we met the person who has been, while we were testing the waters, showing us different properties and homes, not necessarily one of the BP friendly real estate agents, but it’s just someone that we met and really liked and they gave us the nitty gritty of each property without that bias that you don’t want to run into for each individual person. But yeah, it’s, it’s definitely been a bonus for Redfin. Tony:Well, that’s what I was going to say. There’s two types of people in the world. There’s the Zillow real estate investors, and there’s a Redfin. I’m very much a Zillow guy. Ash, which one are you Ashley:Zillow, Redfin. I have the Zillow app, yeah. Aaron :Okay, fine. I’ll switch. All right. If you make the recommendation. Ashley:And you know what? Honestly, I don’t know why. I have no reason to. It’s just, yeah, Tony:Whichever one you landed on first. Yeah. Ashley:So Aaron, what are the steps that you are taking now besides watching deals, seeing what’s on the market, what’s available, what are some other things you’re doing to prepare for your first investment? Aaron :Well, obviously it is mentioned in the bootcamp, kind of dipping your toes in the water and shopping around and dating homes and things like that. We just wanted to get a feel for it before making any huge decisions. And we knew we were leaps bounds far away from ever actually making the decision to do it. But for now, the biggest thing is really doubling down on my side hustles. And same thing goes for my wife Ally as well. I do a lot of not just my W2, but I’m also a performer as well as she’s also a performer with her master’s degree. She’s a opera singer, color Torah for those of you who are singers out there. But I also do voiceover work and different shows up north that is all contract work, and we’re really digging for that down payment. That is the first step for us and having a very comfortable lump sum of money that we can just throw at our first property that we really love. Tony:So Aaron, I appreciate you talking about the side hustle because I think it’s an important part for a lot of people to be financially ready to pull the trigger on that first deal. And I guess I just want to pause there because it’s like you’re leveraging things that you’ve already done in the past, I’m assuming, right? I mean, it sounds like you have some kind of theater background or entertainment background and you didn’t go out and try and even develop a new skill. You just took what you already had and you said, Hey, let me turn this into something that I can get paid for. Say Ashley wanted to create a side hustle, maybe it would drive her crazy, right? But Ashley went to school to be an accountant, so maybe she could open up a bookkeeping side hustle on the side where she’s doing books for the real estate investors. So that could be Ashley’s side hustle. I just doing the bookkeeping. I thought you were Ashley:Going to say body building, like bodybuilder coach. Tony:I could do Ashley:That. I could try out bookkeeping. Tony:That’ll suit you better. I be the bodybuilding coach. But my point to all the rookies is that when you think about saving money for that first down payment, think about the things you’re already good at that you can already do, and what are some of those things you can sub out to someone else? And there’s sites like Upwork, there’s Fiverr, there’s task wrap. There’s so many different places where people are willing to pay someone else to do something on their behalf. And it’s like you do that a few hours a week and you can probably make a decent little side hustle. So all that to say, Aaron, I know you’ve got a full-time job, but how much time do you feel like you’re spending in the side hustle? Aaron :I mean, this goes without saying, but having a side hustle, dedicate as much time as you can or want to. It really depends on the structure of what you’re willing to dedicate to, right? For me personally, I take my side hustle incredibly seriously. I look at it as another full-time job. So doing a lot of that voiceover and theater work, I’m probably putting in at least another 35 to 40 hours on that a week. And that’s after my W2 is out. I switch right to that and I dedicate a lot of time to that. And I’m not saying that everybody should have to dedicate that much time to your side hustle, but if you really want to drive in a down payment for a home, that dedication is, I would say necessary. And a lot of times it’s a huge conversation topic in the theater industry as well. If you come out of college, a theater major, you need a backup plan to survive. You need that secondary job to survive. For me, that was sound editing and engineering as well as voiceover production and things of that nature. So that is something that I can pivot to in order to create that side hustle. But it’s a huge topic in the theater industry that I love talking about just side hustles in general. Ashley:Erin, along those lines, are you doing any kind of tracking? Do you have a cool Excel spreadsheet? Are you budgeting every month and tracking what your expenses are too along with your income? Aaron :Oh yeah, a thousand percent, absolutely. In and out a hundred percent with our Excel spreadsheets. Every week my wife and I sit down, we have a meeting, talk about what expenses we have this month, what’s the income we’re getting this month, where can we set money aside, where can we pinch pennies or get rid of a subscription here or there depending on our situation. But yeah, being very tight with finances as we go along while still living a fairly comfortable life and having fun with our friends and going to, for example, a halfway to Halloween party that I’m having later this week, Ashley:Halfway to Halloween party. That sounds fun. Is it Tony:An actual Halloween party in the summer? Aaron :It is an actual Halloween party, yes. Ashley:People do Christmas in July. Exactly, Aaron :Exactly. Ashley:Erin, what advice would you give to someone who maybe wants to start budgeting, wants to save for their down payment, but they just don’t even know where to start? I mean, looking at their credit card statement even sounds scary to them. What are some things that someone could do to take action today to really start budgeting to save Aaron :It is scary. There are a lot of different budgeting apps that I would highly recommend. Monarch Money is one of them. It’s a great budgeting app. Or if you wanted to just do it yourself, fire up an Excel spreadsheet, see what you’re spending month to month, see what your expenses are. And then once you have a good idea of what your finances look like, really decide for yourself. Okay, do I need to be making more money? How can I do that? How can I set aside more money if I’m already in a comfortable spot? Those are the hard questions that you need to ask yourself that seem overwhelming, but at the end of the day, you’re going to be living a much better, easier life or harder in the long term, but once you pass that threshold, it does get easier. And also having an accountability buddy is very helpful as well. My wife and I, we used to be overwhelmed with how our finances were going in and out and fluctuating, but once we sat down and finally got down to literal brass tacks of what was happening in our lives, we were able to come up with a game plan. And now I want to say at least six months later, we’re in a place where we’re not scared of opening any of our finance apps and realizing like, okay, we’re good. This is a good safe place to be. We’re on our way. Tony:And I want to share a personal story because especially when I was still working my W2 job, Sarah and I, my wife, we were very diligent about our budgeting as well. And most people, I read the Dave Ramsey books and I liked the idea of the envelope system, and I tried it when I was in my early twenties, but it was such a pain in the butt to go to the bank, pull out cash, you had 12 different envelopes you had to carry. It wasn’t a practical solution. So I said, there’s got to be a better way to do this. So what I did at the time was we were banking with Ally Bank, and I still use ’em, and I love Ally. I don’t know if they allow you to do this anymore, but we had 24 separate checking accounts and I set up my direct deposit from my employer so that instead of it all going into one account, I had a direct deposit for every single one of those 24 checking accounts.So one of them was for our mortgage, another one was for our insurance costs, another one was for utilities, another one was for gas, for groceries, for vacations, for household, whatever it may be. But every single time I got paid, I didn’t have to think about it. I just saw my money get refilled into these digital envelopes. So I knew exactly how much to spend every single month. Now there’s a software solution out there. It’s called Cube Money, QUBE, cube Money, and it operates in a similar way, but basically you’re given one debit card and you have these different buckets that your money gets dropped into, and before you spend, you have to activate which bucket you’re spending from. Interesting. So it forces you to make a conscious decision before you make that transaction about where you’re actually pulling this money from. And it really is the envelope system, but in a digitized form. So that’s QUBE Cube money. It’s a tool that we used in the past and one that I like. Aaron :Yeah, I’m definitely going to take a look at that because we have something fairly similar. It doesn’t have a card attached to it from Wise Money where you can have multiple different accounts. And I actually don’t know because I had it a while back, so I don’t know if they actually let you set up a bunch of different American accounts anymore. But yeah, this looks way easier setting up those individualized accounts for a singular card. That’s awesome. Ashley:The one thing that helped me when I was really trying to pay off debt is I did the Dave Ramsey method, so I wasn’t necessarily trying to save money. I was budgeting so that I could pay off debt. So I wasn’t tracking my expenses. I would literally look at something that I had to spend money on and I’d be like, okay, I can update my Excel spreadsheet, get that satisfaction of my debt snowball, or I can go and buy this item. And it was so motivating for me to say no to spending money on things like I would get my paycheck and I would immediately just pay as much as I could without just keeping enough for my fixed expenses that I had. But I think there’s many different ways to budget. And Aaron, like you said, it can be scary to start and to actually see what it is, but once you start doing it, it can become very rewarding and satisfying and exciting to open up your bank account and see the money in there.So I think if you are struggling with your finances, struggling to save a down payment or even to have your reserves in place, the best way to start is literally holding yourself accountable and going through your bank statements, going through your credit card statements and seeing where is your money going. And you might really be surprised at areas where you can cut costs. Even today, I was looking at my Apple ID charges and I’ve been paying $10 or $10 a week for this app splice. I love it. My kids use it for make YouTube videos, but it’s like, okay, do I really need to spend $10 a week for my kids to make YouTube videos? So I canceled it today, and we’re going to see how long it takes them to notice. But there’s lots of different things that you may not realize you’re spending money on over time and it can quickly, quickly add up. So we’re going to take another ad break right now, but when we come back, Tony and I are going to give some advice to Aaron. So anyone listening who’s in the same position or wants to be in Aaron’s position, hopefully you’ll be some advice that you can consider too to buy your first investment property.So welcome back from our short break. Thank you again for checking out our show sponsors. We are here with Aaron who told us about his plan to house hack or buy a single family residence to start his real estate investing journey. So Aaron, you kind of mentioned a couple things to us as to where you are in your journey now and where you are headed. So you’re budgeting your saving, you’re looking at properties. Are you analyzing deals, actually sitting down and writing out the numbers on them? Aaron :Yeah, it’s a little nerdy. We know that we’re not going to take the leap for a while, but just having that knowledge ready to go and doing the homework, just being able to know that we can do that ahead of time is just a very comforting feeling of breaking it down deal by deal and knowing, okay, so this is how we’d set up the dates. This is how we’d break it down numbers wise and financially while utilizing all the calculators that we went through during the rookie bootcamp. Very helpful. Tony:I think there’s a lot of value in doing that too, right? It’s like I think back to my very first real estate deal and Sam, I analyzed so many deals before I bought that one that as soon as that one hit, I knew it was a great deal because I was like, man, I’ve analyzed a thousand other, not that many. I’ve analyzed a lot of other deals in this city and none are at that price point, and that’s a pretty decent condition for that house. So I feel like it’s going to be a solid deal. So even if you’re not ready to pull the trigger yet, just running that analysis really builds that confidence so that when you are in the position, as soon as that deal pops, you’re confident in your ability to pull the trigger on it Aaron :A thousand percent. I think the biggest thing that my wife and I, Allie once is just being comfortable in the knowledge, not having that fear to take the leap and do it. And there will always be that tinge of fear of jumping into that pool, but as long as you’re comfortable with it and you have the knowledge, it makes things 10 times easier every time we go through it. Even during just the make-believe homework. It just is so satisfying, Ashley:And that really was the goal of the bootcamp, was to make you feel comfortable and confident in making offers. And maybe those first couple offers don’t get accepted right away, but knowing that you’re ready. So when that offer does hit and is accepted, you’re not like, oh shoot, I don’t know what to do next is you can. So Erin, let’s talk a little bit about your market. Are you set on this market? Have you looked at any other markets and is there anything we can do to try to help you with your actual market analysis? Aaron :We’re pretty dead set on the Chicago market just because there’s so many options that we can pick from just because of how large the city is in general. Now, is it the best market to invest in? Probably not. A lot of experts would probably tell me, you’re crazy. Don’t do that. Start here or there or whatever. But because we have such a foundation here, we made the joint decision that Chicago would probably be the first place we invested in a backup to that would be my old hometown, just an hour up north Kenosha, Wisconsin, which is having a lot of booming shipping industry happening there. So a lot of properties up there are relatively the same price or cheaper for multifamily options. Ashley:So would that be strictly an investment property then, or would you actually move there? Aaron :We thought about moving there for a short time just to live there a year, hang out, do the multifamily thing, and then maybe come back to Chicago. But in the meantime, it’s only an hour away for all the things that we love doing or an hour and a half depending on the time day. But yeah, that would be another plan that we definitely have on the table as well for a different place to invest. Ashley:What a great option to have and to be willing to be that flexible to move your financial journey forward is to say, you know what? That’s not that bad. Moving for one year. It’s worth it to be able to own a home and to start our investing journey sooner. And like you said, you actually gave all the, you’re very optimistic of it. It’s only an hour away instead of, it’d be an hour away from our friends though. So I think that’s really incredible that you’re willing to make some sacrifices to actually further your investing journey. Aaron :And it doesn’t really bug me that it’s an hour away either My entire life I’ve driven to college eight hours away. I’ve driven to visit family 12 hours away. So that has been a huge part of my life and my wife’s life as well, just like the driving, traveling. So churns like that, I don’t phase us, but it is I guess at the end of the day kind of a sacrifice. But if you’re willing to do it, do it. Absolutely. Ashley:So Erin, you have your market down, you have your strategy down, you are saving for your down payment, you have a piece of your funding strategized, and what about the loan portion? Have you taken the steps yet to go and get pre-approved? Aaron :Not yet, but we were very surprised during the rookie bootcamp. That was probably the most surprising thing, was learning how many different types of loans that we could go after and the fact that you can, this was the most surprising mix and match those loans together depending on the property that you’re hunting down. But yeah, we definitely want to keep our options open and keep an eye out for what loan options we have, but we haven’t really taken that step yet. Ashley:That would be my recommendation to you as to get feelers out there as to even if you go and you go on some loan officers websites, some banks will have this as an option on there where you can actually just do a quick quote or pre-approval without them actually even contacting you, where you’re going and you’re putting in what your current monthly income is, what your current monthly debt service is, how much monthly debt payments you have, what the ideal purchase price is for you, for home, the percentage of your down payment, the property taxes on the new property, the insurance on the new property, and then any HOA. Then also if you own any other as existing property, what those monthly expenses are, and it’ll actually calculate for you as to this is how much income you need per month in order to be pre-approved for this $500,000 house that you want to buy.So it’s pretty incredible to check out some of these free tools and calculators that a lot of lenders offer to you to just play around in to get an idea, because I think it’s very easy to say, well, geez, I know that I have this amount of money every month that I could spend towards this, but a bank may not see it that way, or you may not realize all these other expenses that kind of come into play too as to what it may actually look like. So just to get an idea to play around with some of those calculators too, to really set yourself a budget as to, okay, now I know what my price point is, where without even going and getting pre-approved. So you can start analyzing and focusing on deals that are more in that range and really narrow down your search so that when you are ready to take the leap, you can go get pre-approved. You already should know that you definitely will be approved and then move on from there and start making offers Aaron :A thousand percent. I think that’s definitely the next step for us. So yeah, that’s great. Do you have a list of maybe possible different banking websites? Ashley:I’m going to show you one that I, let me find it right now. Tony, you got to talk. I’m going to find the calculator Tony:While Ash is finding that I’ll recommend one loan product, Aaron, and it’s naca, NACA, the Neighborhood Assistance Corporation of America, I think is what it stands for. But NACA is a, I want to say they’re a nonprofit that has a really good relationship with Bank of America, so I’m pretty sure all their loans or the majority of their loans are actually underwritten carried by Bank of America. However, it’s a zero down payment program that you can use up to four units. It is open to anyone. So it’s not like a low income loan product. It’s open for any one of any income level, and you can use that loan to purchase and renovate properties. So it’s a very, very intense loan process. It very much feels like you’re being interrogated by the FBI. Like they get all into the weeds of your personal financial situation. But the reason they do that, Aaron, is because they don’t, most lenders will qualify you on a purchase price to say, Hey, here’s the purchase price that you are approved for. NACA does it the other way around where they approve you for a monthly payment amount,And that’s why they have to get so deep into the weeds of your income, your expenses, and how much money you actually have left over every month. But once you get approved for this loan product, it really does give you the ability to potentially take down a deal with no money out of pocket. And I know two investors who have purchased multifamily properties using the naone and both got refunds at closing because they got credits or something else that allowed them to get money back. So they were buying into properties, multiple units and then getting a check at closing for buying that property, which is crazy Aaron :Phenomenal. Yeah, I’ll definitely look into the AC loan for sure. This is great. Ashley:So the website is buy Q as in queen, C as in city funding.com, so my qc funding.com, and you can go to their tools and it has mortgage calculator. So there’s a whole bunch of different ones like standard calculator, biweekly calculator, mortgage affordability calculator, amortization calculator, and a refinance calculator. So you getting all free to use, Aaron :That’s nifty stuff. Thanksgiving, can’t wait for Allie to get back from her. W2 go over all this stuff. Ashley:Yeah. Aaron, thank you so much for joining us on this week’s podcast. We really appreciate it and we can’t wait to have you back on the show when you have purchased your first investment property. Aaron :Absolutely no pressure. Ashley:And you know what? Thank you also for having the confidence and coming onto the show today without actually having done a deal. I think that’s actually something kind of difficult to do when you’re coming onto a show where almost every other guest has had some experience. But you today sharing what you’re going through right now is going to be so incredibly useful, but really relatable to the rookie community. So thank you so much for willing to share what you have done, because oftentimes, even if someone has one or two deals, they’ll say to Tony like, oh, no, no, not yet. I want to have a couple more deals before I come on the show. It’s like, no, we want the young, fresh, new investor where it’s fresh in your mind. So thank you very much, Aaron. Of Aaron :Course, one thing I will say to all the people who come on with all that experience and even the inexperienced people, my favorite thing about the Rookie Bootcamp is all of the up-to-date knowledge. So even if you’re an experienced investor or inexperienced is heck like me, I know nothing. I know that. I know nothing. So come on to the Rookie Bootcamp. Highly recommend it. Can’t recommend it enough to get all of that up-to-date information. Ashley is a phenomenal speaker and teacher, but yeah, highly recommend 10 out of 10. Ashley:Well, I 100% agree with Erin that if you want to learn more about real estate, you can come and hang out with Tyler Madden and myself at the Real Estate Rookie Bootcamp. You can go to biggerpockets.com/bootcamps, and if you want to learn more about Aaron, we will link his information in the show notes or in the description if you’re watching on YouTube. I’m Ashley, and he’s Tony. Thank you so much for watching and we’ll see you next time. Watch the Episode Here ????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Help Us Out! Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here. Thanks! We really appreciate it! In This Episode We Cover: How to buy your first home or rental property within the next year! The “house hacking” strategy that allows you to significantly save on your mortgage payment How to save for a down payment and the basics of budgeting for first-time homebuyers The one program that helps you to find discounted properties in your area Getting a mortgage and the steps to take to see how much you can afford The one zero-percent-down loan that most homebuyers have no idea about And So Much More! Links from the Show Connect with Aaron: Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected]. Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

This story was originally published at BiggerPockets.com

Are you tired of paying someone else’s mortgage? Then you’re in the right place. In today’s show, we’re sharing how to buy a home in 2024, even as a complete beginner, as we walk through a rookie’s step-by-step journey to purchasing his first primary residence, which could also become a rental! If you feel like you’re in the same position and want to be the receiver, not the sender, of monthly rent checks, tune in as we walk through how today’s rookie is gearing up to become a first-time homebuyer!

Aaron Mann was tired of renting. After being around real estate investors at his day job, he started to feel like he was missing out. Meanwhile, his wife was reading a slew of BiggerPockets books and told Aaron it was time to look into buying—he agreed! This couple is now beginning their house-hunting journey and has already zeroed in on their strategy, investing area, and what they want to buy. With the help of our own Ashley Kehr in the BiggerPockets Real Estate Rookie Bootcamp, Aaron is set to close on his first home in the near future. Want to get YOUR first rental property or primary residence this year? Tune in and start taking these beginner steps!

Sign up for a BiggerPockets Bootcamp today to get on the path to buying your FIRST or next rental property! 

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Ashley:
This is Real Estate Rookie episode 407. My name is Ashley Care and I’m here with Tony j Robinson.

Tony:
And welcome to the Real Estate Rookie podcast where every week, three times a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And our guest today, Aaron Mann is tired of paying for someone else’s dream and wants to invest in his own. Now, he and his wife both have W twos, but they’ve never owned property. So together they joined one of our Ricky Bootcamps through BiggerPockets to invest in their own future, and they’re doubling down on their side hustles as they’re saving for their first multifamily, which they’re preparing to buy next year. So Aaron, welcome to the show, brother.

Aaron :
What’s going on, gang? It’s good to be on here. It’s good to see you two, huge fan. Yeah,

Ashley:
We’re so happy to have you. I think this is going to be a great episode just for the mere fact that you are probably in the same exact position where a lot of other rookie investors are. They want to take action. They’re getting started, and I can’t wait to talk about the things you are doing today to actually prep for your investing journey. Absolutely. So Erin, why did you actually decide to start a real estate investing journey?

Aaron :
Well, I’ve been to a lot of the bp, strictly a helping capacity for the most part, but hearing the different people speak and being a part of so many different conversations where I felt like I was the odd man out all the time, I just needed that knowledge in order to participate. Whenever I feel left out of a conversation, that’s never a good feeling. So with no knowledge, I needed to figure out a way, the best way to get that knowledge, and I figured rookie bootcamp was the way to go with that.

Tony:
Aaron, so it sounds like you were drinking the Kool-Aid a little bit, like you were the one who was maybe excited, I guess. Was your wife also as excited about real estate investing or was there maybe some convincing that needed to happen? I guess what was that dialogue like between the two of you to come into this decision?

Aaron :
A thousand percent. She actually really started the excitement portion of it, I guess so to speak. After getting a couple of BiggerPockets books and going through them, she came to me and said, Erin, we could really do this. We could actually take the time and put the work in with not just our W twos, but also our side hustles and really get ahold of what we want to be financially free, and this is the perfect place to start. So yeah, that’s kind of where it all began. And then I said, you know what? You’re right. Let’s do it. We have all of us at our disposal.

Ashley:
Erin, what was the biggest challenge that you faced that when you decided, okay, we’re going to invest in real estate, that you just didn’t go out and buy a house right then and there?

Aaron :
The knowledge. Knowledge is what stopped me right there. I had zero clue what I was doing jumping into this. She was the one with the books, and she would hand them to me from time to time, and I would try to go through them and make sense of everything that I was reading. And it was like I had a bunch of different puzzle pieces for different pictures that I could not put together fully. So I needed somebody with experience to come in and kind of funnel all of that together to put it into one picture for me, which is where a lot of the bootcamp came in for sure, a lot of the community.

Ashley:
What was the difference that you saw between yourself and somebody else that was already started in real estate besides the knowledge piece?

Aaron :
All of the mistakes was definitely the most surprising portion of that. Whenever I start something new that I have zero knowledge in, I want to make sure that I know what other people have done and the hurdles that they have gone through before taking the risk. I want to know what bad deals you’ve made, what bad contractors you’ve spoken to, what were the situations that you went through? I know a couple times there have been different properties that my friends have worked on or worked with rather where there just wasn’t something up to code and they didn’t figure it out until a year later. And I don’t want to go through that. So I want to try to solidify my base first and learn from those who have made those mistakes, which they’re more than happy to share about at all times. So that’s always a huge bonus in the rookie community,

Ashley:
And that’s why we do the horror stories too. We’ve done several Ricky episodes highlighting these things that have gone wrong for these investors so that everyone can learn from the mistakes that they made. And I think that was such a good example of something that set you apart from investors that already got started, is you wanted to have a better footing and a strong foundation before actually implementing the steps so that you knew here are the worst case scenarios, the things that could happen. And I’m learning from my community, my network of ways that I can be proactive to preventing these things from happening. Or if they do happen, I know some steps that I can take. When I first started, I had a really big fear that all these horrible things were going to happen. And as time has gone on, okay, if I have fear of a deal or fear of partnership, what’s the worst thing that can happen? And try to find a solution now so that I can move forward and I know what to do if that situation actually does come to fruition.

Aaron :
Absolutely. Having those backups is definitely probably one of the most important things to me when thinking about the future of investing.

Tony:
We’re talking about some of the fears, Erin, that maybe motivated you to want to jump into this whole world of real estate investing, but maybe if you can paint the picture for us here, what was that exact moment when you realized I need to become a real estate investor and I need some help to get it done?

Aaron :
I wouldn’t say so much fear as it was just being kind of sick of this situation. Obviously there’s the fear of missing out that I mentioned already, but there’s also my wife telling me we could do this. We have the tools necessary to make it happen. Let’s try it. And at the time, just to break it down a little bit, I was a little on the fence just because of the way our financials work and how all of our jobs work together, et cetera. But I remember going to the bank again to get a cashier’s check for my landlord again, and I was like, this is 2024. Why isn’t my landlord using some sort of digital payment? I have to come here every single month to pay a fee to get a stupid cashier’s check that I need to then mail to my, this is insane. I’m sick of this. This is the final straw. I want to start thinking about real estate investing and learning everything I can to get out of this situation. And kudos to my landlord. Very nice, very nice person. But it’s just one of those things where why am I paying this other person’s mortgage when I could be paying my own and not with a cashier’s check?

Tony:
Yeah. So word of caution to all of our rookies that are listening, stop making your attendance pay with cashier’s checks or else you might lose a good tenant. So get with the times.

Aaron :
Seriously. Rent ready is a dollar. It’s just a dollar.

Tony:
I know

Ashley:
You should sign your landlord up for their email list, give a newsletter.

Aaron :
I actually sent them an email. I said, listen, they have this sick deal going on. You should try it out just for six months. See how you feel. Never responded. It’s like, okay, cool. This is great.

Ashley:
Well, we’re going to take a quick break and when we come back, I want to talk about what strategy you have decided on, because that’s a big part of the bootcamp too, is there’s so many shiny objects over there as to where you can actually go with real estate investing. So we’re going to take this break and when we come back, we’ll find out where Aaron decided to place his first investment, what his journey is going to be. Okay. Welcome back from our short break. Thank you so much for taking the time to check out our show sponsors. They make the show happen along with you guys, the rookie community. So we’re here with Aaron, and Aaron was a member of the Rookie Bootcamp. He’s getting started in real estate investing, and we’re going to find out the action steps and the plan he’s making now to actually make that first investment. So Aaron, what strategy did you decide on?

Aaron :
So we set ourself a goal first of within the next year trying to find a house hack or a multifamily within Chicago, Illinois, which is where I live. And if you’ve ever been to Chicago, Illinois, it is just lined with multi-unit, multifamily house hack options that you can go through on a day-to-day basis, driving for dollars probably. It’s very huge here. So whenever I take my wife to work or I pick her up from something, well take some time, drive around Chicago, look at some signs and deals and whatnot, and see just how the market is. And obviously we’ll go online and take a look there as well. But the goal is the house hack or multifamily next year, and we kind of have a vision of, I’ve worked a lot in some of the nonprofit side here in Chicago for the theater industry. We kind of have a vision renting it out to other performers in the area of Rogers Park or Andersonville because it’s a really hot commodity for the storefront theater scene out here, which is a huge flow of different tenants and things like that. So that’s kind of our goal in the future in artistic housing, so to speak. But yeah, to go about it, we’re looking into different options. We actually heard this on the Money podcast recently, home Path by Fannie Mae. That is one of the options that we’re looking into for finding a place and also helping to get it funded while living in the property for a year or so. That’s where we’re thinking about starting. That’s the main plan, but a lot of things shift and change over time.

Tony:
Aaron, I haven’t heard of the home path, and I’m assuming maybe of our rookies haven’t either. What is that and why is that maybe an attractive option for you?

Aaron :
So from what I’ve been looking at Home Path by Fannie Mae is a place where it’s a lot of properties that have been foreclosed on where you can go in and sometimes they’re a part of an HOA or they’ve just been abandoned or what have you, where you can go in, put in a claim for the property, and then they help you try to finance it. And then once you move in, you have to live in the property for a year. And then after that Bob’s your uncle. You can do whatever you want with it. But yeah,

Ashley:
I’ve looked at a couple of those properties and they do a window of time where you have to be somebody who will live in it as your primary residence. And then after so long, if nobody takes it or wants it, then they open it up to investors later on. But yeah, it’s a really interesting program. There’s not a ton of properties in my market at least that come up through this program though. Are you finding that there’s a good selection in variety, Aaron?

Aaron :
I would say so, yeah, absolutely. Especially in the area up north here. But yeah, you throw in your zip code and it brings up a list of as many properties as they have under their umbrella.

Tony:
So Aaron, like I said, man, I’ve never heard of this home path loan option, but I guess is the benefit that you are getting a discount on these properties in comparisons to like an MLS listing or I guess what’s the actual benefit of going down this path?

Aaron :
That’s correct, because they were either abandoned or they’re distressed or what have you. Now the majority of them, I would say are single units, but from time to time, a lot of multiunit or homes in general just pop up on home path as well. So I mean, obviously we’re aiming for a house hack here, but if worst case scenario we needed to buy a single unit and then move out of there and rent it out or something like that, that is also a plan that we have on the table. But looking at it from multiple different angles and perspectives, just like we learned.

Tony:
Yeah, it’s super interesting because there’s so many different options out there. And even for us as experienced real estate investors, we haven’t heard of them all. And I pulled up Home Path from my local area, and yeah, there’s fixer uppers on this website that are pretty reasonably priced in comparison to other properties in my market. So there’s so many different ways to go about it. So I appreciate you sharing that, Aaron, because I’m sure there’s a lot of rookies who are listening that have maybe never heard of Home Path as well. And then I guess the last question I have for you, Aaron, on this loan product, what’s the down payment percentage? Typically, if I believe

Aaron :
It is 3.5%, I could be wrong about that, but just to do some other digging, like you mentioned, Tony, a hundred percent to all the other rookies out there, always dig as much as you can into those state loans or programs or whatever because there is always something there that even if it doesn’t work for you, it’s always good to have that knowledge. We had to do some deep digging for home path. So yeah, highly recommend it.

Ashley:
And with the home path, is there an inspection on the property? There would be with an FHA. Tony said he looked at the website and their fixer uppers, and that’s kind of what I’ve seen in my market too. So is there no kind of inspection that an FHA would have?

Aaron :
From what I’ve seen, they don’t make mention of an inspection, but I could be wrong about that. It might be somewhere else on the website. But from the digging I’ve done and from the properties I’ve looked at, no, it does not look like there is an inspection.

Ashley:
So Erin, I’m interested, are there any other ways that you’re going to be sourcing deals or is right now looking on home path going to be your main source of bringing leads into you?

Aaron :
Home path and Redfin have been some of our biggest hits for sure. Obviously we’ve looked at all of the general website, Zillow and all that good stuff, but Redfin has really been a huge benefit for us as well. It’s actually where we met the person who has been, while we were testing the waters, showing us different properties and homes, not necessarily one of the BP friendly real estate agents, but it’s just someone that we met and really liked and they gave us the nitty gritty of each property without that bias that you don’t want to run into for each individual person. But yeah, it’s, it’s definitely been a bonus for Redfin.

Tony:
Well, that’s what I was going to say. There’s two types of people in the world. There’s the Zillow real estate investors, and there’s a Redfin. I’m very much a Zillow guy. Ash, which one are you

Ashley:
Zillow, Redfin. I have the Zillow app, yeah.

Aaron :
Okay, fine. I’ll switch. All right. If you make the recommendation.

Ashley:
And you know what? Honestly, I don’t know why. I have no reason to. It’s just, yeah,

Tony:
Whichever one you landed on first. Yeah.

Ashley:
So Aaron, what are the steps that you are taking now besides watching deals, seeing what’s on the market, what’s available, what are some other things you’re doing to prepare for your first investment?

Aaron :
Well, obviously it is mentioned in the bootcamp, kind of dipping your toes in the water and shopping around and dating homes and things like that. We just wanted to get a feel for it before making any huge decisions. And we knew we were leaps bounds far away from ever actually making the decision to do it. But for now, the biggest thing is really doubling down on my side hustles. And same thing goes for my wife Ally as well. I do a lot of not just my W2, but I’m also a performer as well as she’s also a performer with her master’s degree. She’s a opera singer, color Torah for those of you who are singers out there. But I also do voiceover work and different shows up north that is all contract work, and we’re really digging for that down payment. That is the first step for us and having a very comfortable lump sum of money that we can just throw at our first property that we really love.

Tony:
So Aaron, I appreciate you talking about the side hustle because I think it’s an important part for a lot of people to be financially ready to pull the trigger on that first deal. And I guess I just want to pause there because it’s like you’re leveraging things that you’ve already done in the past, I’m assuming, right? I mean, it sounds like you have some kind of theater background or entertainment background and you didn’t go out and try and even develop a new skill. You just took what you already had and you said, Hey, let me turn this into something that I can get paid for. Say Ashley wanted to create a side hustle, maybe it would drive her crazy, right? But Ashley went to school to be an accountant, so maybe she could open up a bookkeeping side hustle on the side where she’s doing books for the real estate investors. So that could be Ashley’s side hustle. I just doing the bookkeeping. I thought you were

Ashley:
Going to say body building, like bodybuilder coach.

Tony:
I could do

Ashley:
That. I could try out bookkeeping.

Tony:
That’ll suit you better. I be the bodybuilding coach. But my point to all the rookies is that when you think about saving money for that first down payment, think about the things you’re already good at that you can already do, and what are some of those things you can sub out to someone else? And there’s sites like Upwork, there’s Fiverr, there’s task wrap. There’s so many different places where people are willing to pay someone else to do something on their behalf. And it’s like you do that a few hours a week and you can probably make a decent little side hustle. So all that to say, Aaron, I know you’ve got a full-time job, but how much time do you feel like you’re spending in the side hustle?

Aaron :
I mean, this goes without saying, but having a side hustle, dedicate as much time as you can or want to. It really depends on the structure of what you’re willing to dedicate to, right? For me personally, I take my side hustle incredibly seriously. I look at it as another full-time job. So doing a lot of that voiceover and theater work, I’m probably putting in at least another 35 to 40 hours on that a week. And that’s after my W2 is out. I switch right to that and I dedicate a lot of time to that. And I’m not saying that everybody should have to dedicate that much time to your side hustle, but if you really want to drive in a down payment for a home, that dedication is, I would say necessary. And a lot of times it’s a huge conversation topic in the theater industry as well. If you come out of college, a theater major, you need a backup plan to survive. You need that secondary job to survive. For me, that was sound editing and engineering as well as voiceover production and things of that nature. So that is something that I can pivot to in order to create that side hustle. But it’s a huge topic in the theater industry that I love talking about just side hustles in general.

Ashley:
Erin, along those lines, are you doing any kind of tracking? Do you have a cool Excel spreadsheet? Are you budgeting every month and tracking what your expenses are too along with your income?

Aaron :
Oh yeah, a thousand percent, absolutely. In and out a hundred percent with our Excel spreadsheets. Every week my wife and I sit down, we have a meeting, talk about what expenses we have this month, what’s the income we’re getting this month, where can we set money aside, where can we pinch pennies or get rid of a subscription here or there depending on our situation. But yeah, being very tight with finances as we go along while still living a fairly comfortable life and having fun with our friends and going to, for example, a halfway to Halloween party that I’m having later this week,

Ashley:
Halfway to Halloween party. That sounds fun. Is it

Tony:
An actual Halloween party in the summer?

Aaron :
It is an actual Halloween party, yes.

Ashley:
People do Christmas in July. Exactly,

Aaron :
Exactly.

Ashley:
Erin, what advice would you give to someone who maybe wants to start budgeting, wants to save for their down payment, but they just don’t even know where to start? I mean, looking at their credit card statement even sounds scary to them. What are some things that someone could do to take action today to really start budgeting to save

Aaron :
It is scary. There are a lot of different budgeting apps that I would highly recommend. Monarch Money is one of them. It’s a great budgeting app. Or if you wanted to just do it yourself, fire up an Excel spreadsheet, see what you’re spending month to month, see what your expenses are. And then once you have a good idea of what your finances look like, really decide for yourself. Okay, do I need to be making more money? How can I do that? How can I set aside more money if I’m already in a comfortable spot? Those are the hard questions that you need to ask yourself that seem overwhelming, but at the end of the day, you’re going to be living a much better, easier life or harder in the long term, but once you pass that threshold, it does get easier. And also having an accountability buddy is very helpful as well. My wife and I, we used to be overwhelmed with how our finances were going in and out and fluctuating, but once we sat down and finally got down to literal brass tacks of what was happening in our lives, we were able to come up with a game plan. And now I want to say at least six months later, we’re in a place where we’re not scared of opening any of our finance apps and realizing like, okay, we’re good. This is a good safe place to be. We’re on our way.

Tony:
And I want to share a personal story because especially when I was still working my W2 job, Sarah and I, my wife, we were very diligent about our budgeting as well. And most people, I read the Dave Ramsey books and I liked the idea of the envelope system, and I tried it when I was in my early twenties, but it was such a pain in the butt to go to the bank, pull out cash, you had 12 different envelopes you had to carry. It wasn’t a practical solution. So I said, there’s got to be a better way to do this. So what I did at the time was we were banking with Ally Bank, and I still use ’em, and I love Ally. I don’t know if they allow you to do this anymore, but we had 24 separate checking accounts and I set up my direct deposit from my employer so that instead of it all going into one account, I had a direct deposit for every single one of those 24 checking accounts.
So one of them was for our mortgage, another one was for our insurance costs, another one was for utilities, another one was for gas, for groceries, for vacations, for household, whatever it may be. But every single time I got paid, I didn’t have to think about it. I just saw my money get refilled into these digital envelopes. So I knew exactly how much to spend every single month. Now there’s a software solution out there. It’s called Cube Money, QUBE, cube Money, and it operates in a similar way, but basically you’re given one debit card and you have these different buckets that your money gets dropped into, and before you spend, you have to activate which bucket you’re spending from. Interesting. So it forces you to make a conscious decision before you make that transaction about where you’re actually pulling this money from. And it really is the envelope system, but in a digitized form. So that’s QUBE Cube money. It’s a tool that we used in the past and one that I like.

Aaron :
Yeah, I’m definitely going to take a look at that because we have something fairly similar. It doesn’t have a card attached to it from Wise Money where you can have multiple different accounts. And I actually don’t know because I had it a while back, so I don’t know if they actually let you set up a bunch of different American accounts anymore. But yeah, this looks way easier setting up those individualized accounts for a singular card. That’s awesome.

Ashley:
The one thing that helped me when I was really trying to pay off debt is I did the Dave Ramsey method, so I wasn’t necessarily trying to save money. I was budgeting so that I could pay off debt. So I wasn’t tracking my expenses. I would literally look at something that I had to spend money on and I’d be like, okay, I can update my Excel spreadsheet, get that satisfaction of my debt snowball, or I can go and buy this item. And it was so motivating for me to say no to spending money on things like I would get my paycheck and I would immediately just pay as much as I could without just keeping enough for my fixed expenses that I had. But I think there’s many different ways to budget. And Aaron, like you said, it can be scary to start and to actually see what it is, but once you start doing it, it can become very rewarding and satisfying and exciting to open up your bank account and see the money in there.
So I think if you are struggling with your finances, struggling to save a down payment or even to have your reserves in place, the best way to start is literally holding yourself accountable and going through your bank statements, going through your credit card statements and seeing where is your money going. And you might really be surprised at areas where you can cut costs. Even today, I was looking at my Apple ID charges and I’ve been paying $10 or $10 a week for this app splice. I love it. My kids use it for make YouTube videos, but it’s like, okay, do I really need to spend $10 a week for my kids to make YouTube videos? So I canceled it today, and we’re going to see how long it takes them to notice. But there’s lots of different things that you may not realize you’re spending money on over time and it can quickly, quickly add up. So we’re going to take another ad break right now, but when we come back, Tony and I are going to give some advice to Aaron. So anyone listening who’s in the same position or wants to be in Aaron’s position, hopefully you’ll be some advice that you can consider too to buy your first investment property.
So welcome back from our short break. Thank you again for checking out our show sponsors. We are here with Aaron who told us about his plan to house hack or buy a single family residence to start his real estate investing journey. So Aaron, you kind of mentioned a couple things to us as to where you are in your journey now and where you are headed. So you’re budgeting your saving, you’re looking at properties. Are you analyzing deals, actually sitting down and writing out the numbers on them?

Aaron :
Yeah, it’s a little nerdy. We know that we’re not going to take the leap for a while, but just having that knowledge ready to go and doing the homework, just being able to know that we can do that ahead of time is just a very comforting feeling of breaking it down deal by deal and knowing, okay, so this is how we’d set up the dates. This is how we’d break it down numbers wise and financially while utilizing all the calculators that we went through during the rookie bootcamp. Very helpful.

Tony:
I think there’s a lot of value in doing that too, right? It’s like I think back to my very first real estate deal and Sam, I analyzed so many deals before I bought that one that as soon as that one hit, I knew it was a great deal because I was like, man, I’ve analyzed a thousand other, not that many. I’ve analyzed a lot of other deals in this city and none are at that price point, and that’s a pretty decent condition for that house. So I feel like it’s going to be a solid deal. So even if you’re not ready to pull the trigger yet, just running that analysis really builds that confidence so that when you are in the position, as soon as that deal pops, you’re confident in your ability to pull the trigger on it

Aaron :
A thousand percent. I think the biggest thing that my wife and I, Allie once is just being comfortable in the knowledge, not having that fear to take the leap and do it. And there will always be that tinge of fear of jumping into that pool, but as long as you’re comfortable with it and you have the knowledge, it makes things 10 times easier every time we go through it. Even during just the make-believe homework. It just is so satisfying,

Ashley:
And that really was the goal of the bootcamp, was to make you feel comfortable and confident in making offers. And maybe those first couple offers don’t get accepted right away, but knowing that you’re ready. So when that offer does hit and is accepted, you’re not like, oh shoot, I don’t know what to do next is you can. So Erin, let’s talk a little bit about your market. Are you set on this market? Have you looked at any other markets and is there anything we can do to try to help you with your actual market analysis?

Aaron :
We’re pretty dead set on the Chicago market just because there’s so many options that we can pick from just because of how large the city is in general. Now, is it the best market to invest in? Probably not. A lot of experts would probably tell me, you’re crazy. Don’t do that. Start here or there or whatever. But because we have such a foundation here, we made the joint decision that Chicago would probably be the first place we invested in a backup to that would be my old hometown, just an hour up north Kenosha, Wisconsin, which is having a lot of booming shipping industry happening there. So a lot of properties up there are relatively the same price or cheaper for multifamily options.

Ashley:
So would that be strictly an investment property then, or would you actually move there?

Aaron :
We thought about moving there for a short time just to live there a year, hang out, do the multifamily thing, and then maybe come back to Chicago. But in the meantime, it’s only an hour away for all the things that we love doing or an hour and a half depending on the time day. But yeah, that would be another plan that we definitely have on the table as well for a different place to invest.

Ashley:
What a great option to have and to be willing to be that flexible to move your financial journey forward is to say, you know what? That’s not that bad. Moving for one year. It’s worth it to be able to own a home and to start our investing journey sooner. And like you said, you actually gave all the, you’re very optimistic of it. It’s only an hour away instead of, it’d be an hour away from our friends though. So I think that’s really incredible that you’re willing to make some sacrifices to actually further your investing journey.

Aaron :
And it doesn’t really bug me that it’s an hour away either My entire life I’ve driven to college eight hours away. I’ve driven to visit family 12 hours away. So that has been a huge part of my life and my wife’s life as well, just like the driving, traveling. So churns like that, I don’t phase us, but it is I guess at the end of the day kind of a sacrifice. But if you’re willing to do it, do it. Absolutely.

Ashley:
So Erin, you have your market down, you have your strategy down, you are saving for your down payment, you have a piece of your funding strategized, and what about the loan portion? Have you taken the steps yet to go and get pre-approved?

Aaron :
Not yet, but we were very surprised during the rookie bootcamp. That was probably the most surprising thing, was learning how many different types of loans that we could go after and the fact that you can, this was the most surprising mix and match those loans together depending on the property that you’re hunting down. But yeah, we definitely want to keep our options open and keep an eye out for what loan options we have, but we haven’t really taken that step yet.

Ashley:
That would be my recommendation to you as to get feelers out there as to even if you go and you go on some loan officers websites, some banks will have this as an option on there where you can actually just do a quick quote or pre-approval without them actually even contacting you, where you’re going and you’re putting in what your current monthly income is, what your current monthly debt service is, how much monthly debt payments you have, what the ideal purchase price is for you, for home, the percentage of your down payment, the property taxes on the new property, the insurance on the new property, and then any HOA. Then also if you own any other as existing property, what those monthly expenses are, and it’ll actually calculate for you as to this is how much income you need per month in order to be pre-approved for this $500,000 house that you want to buy.
So it’s pretty incredible to check out some of these free tools and calculators that a lot of lenders offer to you to just play around in to get an idea, because I think it’s very easy to say, well, geez, I know that I have this amount of money every month that I could spend towards this, but a bank may not see it that way, or you may not realize all these other expenses that kind of come into play too as to what it may actually look like. So just to get an idea to play around with some of those calculators too, to really set yourself a budget as to, okay, now I know what my price point is, where without even going and getting pre-approved. So you can start analyzing and focusing on deals that are more in that range and really narrow down your search so that when you are ready to take the leap, you can go get pre-approved. You already should know that you definitely will be approved and then move on from there and start making offers

Aaron :
A thousand percent. I think that’s definitely the next step for us. So yeah, that’s great. Do you have a list of maybe possible different banking websites?

Ashley:
I’m going to show you one that I, let me find it right now. Tony, you got to talk. I’m going to find the calculator

Tony:
While Ash is finding that I’ll recommend one loan product, Aaron, and it’s naca, NACA, the Neighborhood Assistance Corporation of America, I think is what it stands for. But NACA is a, I want to say they’re a nonprofit that has a really good relationship with Bank of America, so I’m pretty sure all their loans or the majority of their loans are actually underwritten carried by Bank of America. However, it’s a zero down payment program that you can use up to four units. It is open to anyone. So it’s not like a low income loan product. It’s open for any one of any income level, and you can use that loan to purchase and renovate properties. So it’s a very, very intense loan process. It very much feels like you’re being interrogated by the FBI. Like they get all into the weeds of your personal financial situation. But the reason they do that, Aaron, is because they don’t, most lenders will qualify you on a purchase price to say, Hey, here’s the purchase price that you are approved for. NACA does it the other way around where they approve you for a monthly payment amount,
And that’s why they have to get so deep into the weeds of your income, your expenses, and how much money you actually have left over every month. But once you get approved for this loan product, it really does give you the ability to potentially take down a deal with no money out of pocket. And I know two investors who have purchased multifamily properties using the naone and both got refunds at closing because they got credits or something else that allowed them to get money back. So they were buying into properties, multiple units and then getting a check at closing for buying that property, which is crazy

Aaron :
Phenomenal. Yeah, I’ll definitely look into the AC loan for sure. This is great.

Ashley:
So the website is buy Q as in queen, C as in city funding.com, so my qc funding.com, and you can go to their tools and it has mortgage calculator. So there’s a whole bunch of different ones like standard calculator, biweekly calculator, mortgage affordability calculator, amortization calculator, and a refinance calculator. So you getting all free to use,

Aaron :
That’s nifty stuff. Thanksgiving, can’t wait for Allie to get back from her. W2 go over all this stuff.

Ashley:
Yeah. Aaron, thank you so much for joining us on this week’s podcast. We really appreciate it and we can’t wait to have you back on the show when you have purchased your first investment property.

Aaron :
Absolutely no pressure.

Ashley:
And you know what? Thank you also for having the confidence and coming onto the show today without actually having done a deal. I think that’s actually something kind of difficult to do when you’re coming onto a show where almost every other guest has had some experience. But you today sharing what you’re going through right now is going to be so incredibly useful, but really relatable to the rookie community. So thank you so much for willing to share what you have done, because oftentimes, even if someone has one or two deals, they’ll say to Tony like, oh, no, no, not yet. I want to have a couple more deals before I come on the show. It’s like, no, we want the young, fresh, new investor where it’s fresh in your mind. So thank you very much, Aaron. Of

Aaron :
Course, one thing I will say to all the people who come on with all that experience and even the inexperienced people, my favorite thing about the Rookie Bootcamp is all of the up-to-date knowledge. So even if you’re an experienced investor or inexperienced is heck like me, I know nothing. I know that. I know nothing. So come on to the Rookie Bootcamp. Highly recommend it. Can’t recommend it enough to get all of that up-to-date information. Ashley is a phenomenal speaker and teacher, but yeah, highly recommend 10 out of 10.

Ashley:
Well, I 100% agree with Erin that if you want to learn more about real estate, you can come and hang out with Tyler Madden and myself at the Real Estate Rookie Bootcamp. You can go to biggerpockets.com/bootcamps, and if you want to learn more about Aaron, we will link his information in the show notes or in the description if you’re watching on YouTube. I’m Ashley, and he’s Tony. Thank you so much for watching and we’ll see you next time.

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In This Episode We Cover:

  • How to buy your first home or rental property within the next year!
  • The house hacking” strategy that allows you to significantly save on your mortgage payment
  • How to save for a down payment and the basics of budgeting for first-time homebuyers
  • The one program that helps you to find discounted properties in your area
  • Getting a mortgage and the steps to take to see how much you can afford
  • The one zero-percent-down loan that most homebuyers have no idea about
  • And So Much More!

Links from the Show

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

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