Charting the course
New investor just moving into my first property. It's a single family house that I am adding a basement unit to so that I can house hack. I'm trying to determine what my next move should be and when.
My goal is to replace my income with cash flow from my rental portfolio and I need to complete this in the next 8 years.
Problem is.... I don't know where to start. I'd appreciate suggestions for a plan or for resources that can help me plan.
Thank you for your time
@Alexia McIntyre Welcome... your question is a bit broad for this forum. "How can I become financially free using rental properties?" is sort of what this whole BP is about. Offering some specific data on your situation...and some first steps you're thinking about allow forum readers to jump in with advice or suggestions.
Are you employed? Can you get conventional loans easily? What kind of rental properties are you interested in? How much time can you commit? How much capital are you starting with? Why are you limited to just 8 years? All of these would be hints for us in knowing how to help or what to suggest.
Quote from @Tim Johnson:
@Alexia McIntyre Welcome... your question is a bit broad for this forum. "How can I become financially free using rental properties?" is sort of what this whole BP is about. Offering some specific data on your situation...and some first steps you're thinking about allow forum readers to jump in with advice or suggestions.
Are you employed? Can you get conventional loans easily? What kind of rental properties are you interested in? How much time can you commit? How much capital are you starting with? Why are you limited to just 8 years? All of these would be hints for us in knowing how to help or what to suggest.
Thanks for the guidance!
I'm self employed as of this summer so no 1099 tax returns yet. I was able to get a 0 down conventional for my first house as an owner occupied loan so I figured conventional loans at higher down payments are within reach. I'm interested in multifamily properties and eventually syndicates when I become an accredited investor. I save between $5000-$10,000 a month depending on how aggressive I am about saving. I set the I year limit because I need to recertify for my career at that point but I don't want to. I want out.
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Alexia - it sounds like you are already on the right track. You should continue to learn and network with others as you try to determine your next move. Reading articles/books, listening to podcasts, and going to local meet-ups are all great ways to learn and connect with other likeminded investors.
I recommend honing in on one type of strategy and dedicating time to learning the ins and outs of it. For example, you mentioned multifamily, take some time to read up on multifamily investing. Reach out to other experienced MF investors, listen to MF specific podcasts, etc. I think this is a great place to start!
Hi @Alexia McIntyre Definitely find an investor friendly realtor to help you with these goals. In Chicago, there are rules, restrictions and guidelines you would need to follow to do something like this. Please make sure you're working with someone that is familiar with what is needed in your market. And that they are evaluating the ARV for a project like this with tangible comps. Best of luck!
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Quote from @Alexia McIntyre:
If your current job allows you to save $5,000 - $10,000 a month, then I would keep that job until you've built up a portfolio big enough to replace your income.
It doesn't seem wise to walk away from a good career and straight into real estate when you don't know if you have what it takes to make it work. You have no experience managing a rental yet. I know a lot of good people that give it a shot and then walk away after a couple years because they can't handle dealing with bad renters or the market swings and things don't work out. I recommend building some experience and getting to at least a few properties before you decide to go all in.
@Alexia McIntyre, to piggyback off of Nathan, I would recommend staying in your current 1099 position until you at least have a couple of properties managed. Furthermore, since you are self-employed, start researching and connecting with DSCR lenders. More often than not, DSCR loans are going to be your best financing tool moving forward. In the meantime, and as others have mentioned, you need to niche down on a specific investment strategy. Small multifamily, STRs, LTRs, rent-by-the-room, etc. Hope this helps!