Advice on Where to Go from Here

[Rusty Thompson]

Some of you know me, some of you don't. I've been on BP for 3 years & went to the summit. I'm not as active on BP as I would like to be, but life conspires. That being said. It has been a busy 3 years for me & the things that I have learned from BP have allowed me to build a nice little B&H portfolio. Jeff S. & I were discussing my investing via private message & I decided I should make our private discussion public. I am looking for some advice on where to go from here. 

My original business plan was to acquire enough rentals by time I turned 35 to retire from my 9-5 and invest full time, I'm 32 now. For the last 3 years (off & on) I have rehabbed, rented, bought & saved. And I have done well. Now I am reexamining my goals and trying to decide on the best way to move forward. So I am looking for some advice on the most efficient way to move forward.

Some rough numbers:

My portfolio

SFR1 2/1 PITI 620$m Rent 795$m Exps. 20$m [email protected] Value 95k

SFR2 3/2 PITI 720$m Rent 1195$m Exps. 0 [email protected] Value160k

SFR3 4/2 PITI 840$m Rent 1195$m Exps. 120$m [email protected] Value180k

SFR4 3/1 PITI * Rent 900$m Exps. 100$m Owe *

8Plex 13/8 PITI 1420m Rent 5000$m Exps. 500$m Owe 142k @ 9%** ValueIDk

SFR5 3/2 PITI 1100$m Rent 1200$m Exps. 300$m Owe 106k @ 9%** Value180k

Notes:

* Loan pays for both SFR3 & 4

** Hard money 5 year balloon loans. 8plex has 4 years remaining. SFR5 has 5 years.

I just purchased SFR5 last month w/ a 30k$ repair escrow that I will begin remodeling next spring. I am currently renting out the rooms to cover the holding costs.

About me:

I am currently single. I have no living expenses because I live in the apartment attached to the shop on SFR5. I have been "house hacking" since I started this and have not had living expenses for the last 3 years that were not directly associated with expanding my portfolio. I don't have any other debt than my RE Loans. I am not planning to stop "house hacking" in the near future. When I started I had just gotten a raise  to 37k from 31k. Last year I received a raise to 52k.  

I was pretty much doing all the work myself (Landlording, Repairing & Rehabbing) until just a couple months ago. I hired a guy recently to help out with the Rehabbing. I still work 80hr weeks, but things are getting done a lot quicker than they have in the past. 

I am open to all suggestions & don't be afraid to ask anything. 

[Mike Nuss]

That's a very solid portfolio @Rusty Thompson in a short amount of time. Especially considering you're located in Oregon and the difficulties of Urban Growth Boundaries boxing you in a bit. I've seen you post in other threads at looking in more Rural areas of Oregon, rather than Portland to create cash flow. I wholeheartedly agree that there should be good opportunities for cash flow in outlying cities due to better rent to price ratios.

You've basically replaced your salary (prior to the raises over the past two years) since you begun. The 8plex seems to be the biggest obstacle to growing your empire further. Being that the 8plex a) has equity b) has a high interest rate and c) is your biggest time factor.......maybe considering a 1031 exchange with that property would be in line. That would be one difficult exchange to complete. In my experience finding sellers that can wait for you to handle other moving pieces, prior to closing, can be done. Maybe get some direct mailing campaigns going to SFR home owners. Getting some negotiations worked out on exchange properties, prior to selling the 8plex, may help you with that time crunch the exchange will create.

Just my 2cents, but freeing up your time from managing that beast could potentially be the key to growing your cash flow, diversifying your portfolio and aligning your properties to what you've found to be your best niche (SFR).