Advice on how to start scaling

[Andrew Wills]

I have been investing now in my local market, Fayetteville NC, since 2019 and have been extremely blessed riding the post covid appreciation wave. But I may have run into a conundrum.

To start, my position is as follows. I have 2 properties. My first house was bought in 2019 for 170k has appreciated to roughly 240-260k. Currently tenant occupied and cash flowing $460 monthly. My second property is a live in/rehab/rent. Bought for 145k, appraised for 170k and cash flows $200 monthly. Both were purchased with VA loans and I must maintain primary residency in my current unit until March 2023.

Monthly cashflow: 660

Equity: 95k

Reserves: 30k

I have since found several properties in my area selling for roughly 60-80k. After running numbers with local contractors and agents I believe that after a 50k renovation the ARV would sit around 180-200k, but obviously these properties are selling like hot cakes.

All that to say, I have talked to several conventional and hard money lenders and none of them have been willing to allow me to borrow such a low amount. I also know my finances are about to drop significantly once I leave military service so conventional loans will be more difficult to come by due to my DTI ratio.

I'm interested to hear some suggestions for lending strategies and possible way aheads. My goal is to transition into real estate investing and management full time; Both long term buy and hold, and STR, but am I putting the cart before the horse? Should I instead prioritize finding a higher paying job and saving more?

[Nathan Gesner]

Quote from @Andrew Wills:

People are scrambling to buy over-priced assets that won't cashflow in the traditional sense. Why do you want to jump into that? A lot of people are making really dumb decisions this past year and they'll pay for it later.

Stick with the numbers. If something doesn't cashflow, don't try to force it. If you can't qualify for a loan, don't over-extend yourself trying to borrow with credit cards or high interest loans.

For all eternity, sound financial practices have always worked and always will work. Discipline - with calculated levels of risk - create success.