I currently owe $157,000 on my house. $55,000 in various loans,etc. I have $150,000 in a 403(b). Will be out of debt in May-June 2025 (the $55,000). My available income for investing will be around $30-$40k a year just by saving.
I have been pondering alternative ways to fund my first investment property. But I would love more strategies to do more than 1 property a year. I would love to do 2-3 properties a year. We have thought about selling our home buying a duplex and renting the other side. We have considered tapping into our equity or partnering with someone. Or maybe we should go ahead and commit to pay down the house, our mortgage is $1100. I'm a baby to this and learning the jargon so go easy on me in regards to terminology but I appreciate any ideas. Thank you!
I currently owe $157,000 on my house. $55,000 in various loans,etc. I have $150,000 in a 403(b). Will be out of debt in May-June 2025 (the $55,000). My available income for investing will be around $30-$40k a year just by saving.
I have been pondering alternative ways to fund my first investment property. But I would love more strategies to do more than 1 property a year. I would love to do 2-3 properties a year. We have thought about selling our home buying a duplex and renting the other side. We have considered tapping into our equity or partnering with someone. Or maybe we should go ahead and commit to pay down the house, our mortgage is $1100. I'm a baby to this and learning the jargon so go easy on me in regards to terminology but I appreciate any ideas. Thank you!
You are probably a few years away from being able to invest. You need to build up personal reserves and then save for a down payment.
Use that time to learn basic accounting and bookkeeping. Also look at LOCAL areas to invest in, and in what (single family homes, three-flats, etc.). Start small and local. Do NOT set deadlines and dates. Set deal qualifications.
I currently owe $157,000 on my house. $55,000 in various loans,etc. I have $150,000 in a 403(b). Will be out of debt in May-June 2025 (the $55,000). My available income for investing will be around $30-$40k a year just by saving.
I have been pondering alternative ways to fund my first investment property. But I would love more strategies to do more than 1 property a year. I would love to do 2-3 properties a year. We have thought about selling our home buying a duplex and renting the other side. We have considered tapping into our equity or partnering with someone. Or maybe we should go ahead and commit to pay down the house, our mortgage is $1100. I'm a baby to this and learning the jargon so go easy on me in regards to terminology but I appreciate any ideas. Thank you!
You are probably a few years away from being able to invest. You need to build up personal reserves and then save for a down payment.
Use that time to learn basic accounting and bookkeeping. Also look at LOCAL areas to invest in, and in what (single family homes, three-flats, etc.). Start small and local. Do NOT set deadlines and dates. Set deal qualifications.
I do not completely agree with John that you are a few years away from investing, but I do agree with starting small and local. Perfect your craft over time and learn to manage. I love the idea of selling your current home and buying a duplex. This will fast tract you into investing in Real Estate depending on how much you get for your current home. A few hurdles will be how much will you net from the sale of your current home. Interest rate are a factor and your debt of 55K and any other debt such as Cars, student loans.... The crowd here needs more info on your current financial standing to really give you a road map for success. Please share more so we can chime in with more sound advice.
Share info like, income, location, current home value, goals.
You are rushing. Listen to @John Clark because that is sound advice. Maybe you make it sooner, but your post makes me feel uneasy because I think your why is corrupted by speed to some potential fortune, as evidenced by your 7k/month in 10 years. Goals are great, but you are throwing a lot of things at the wall right now.
House hacking is a great option for a lot of people, but you already own a home and have equity in it. So, you propose selling that and putting it into a two-family where you get twice the mechanicals and your first handling of renters. You will lose your equity and possibly rebuild it over time, but why are you rushing?
You are probably looking for ways to leave your job, but your job is what makes you lendable. You should be focused on learning more about the strategies you are proposing and going to meetups to meet other investors, and less on how to force action too soon.
Okay so let's assume you sell for 95% of the Zillow estimate and pay out 5% in commission and another 1.5% in closing fees. After your payoff you have $160K.
If $160K will put down 20% on a Duplex or better and the rental income is enough to pay 75% or better of the of the full mortgage (PITI) they I think you have a winner. You will be responsible for 25% of the mortgage and thus will allow you save faster to obtain a second property. Do the same again, move to another duplex and rinse and repeat. Your income level of $84-95K plus 75% of rental income should make you a well qualified buyer. The key here is to rinse and repeat a few times to build wealth. Keep your debt low to zero on everything but your mortgage, do not move to a second property until you have 6 month reserves for vacancies.
Based on the prices I see for multi family in Little Rock at a glance I think this is very reachable, pay off the $55K first and get to the number crunching!
Thank you both because that is good to know. I suppose my why is to be financially independent but I'm not sure what is "rushing" in this area. I'm still trying to figure out what an appropriate goal is or what is realistic to me. I will for now focus on learning the strategies, going to meet ups, and deal qualifications as a goal and save for now.
Thanks Joseph! I'll save this as an example for the future. I don't want to rush anything so learning what kind of time table I should expect. I'll learn now and also get more clarity on my "why". Appreciate your input and time.
@Jason Guenther Not sure of what is available in your market, but I downsized from a large Victorian mansion to a duplex 5 years ago. I am fortunate that I do not owe on my duplex but we’ve handled selected two tenants that fit with our lifestyle and therefore have the other side rented at under market value.
We offset many of our living expenses through the rent which is helpful.
Depending on what you find available and how many possessions you have but it’s likely possible to find a decent sized duplex to purchase.
Mine is a 3/1 and a 3/3(my side) and by diligently searching the MLS I found it and didn't really have to compromise on size. These things are available but sometimes it takes a while to locate one.
I’d recommend paying off some of your debt in the meantime because having significantly less debt will open more avenues for you.
Even if you can pay off 3 more months of payments towards your $55,000 debt you will be better off. And personally I love buying property during the winter months, sellers get desperate and I’ve found there to be less competition from other buyers.
@Alecia Loveless Wow! That is awesome. Good tenants are a blessing. I’ve heard quite the horror story. I definitely agree that debt needs to come down. I wouldn’t feel comfortable with that looming over my head. Ignorance is my main issue but after reading Rich Dad Poor Dad I’m inspired to get in the game. But I want to at least know the pieces on the board before I invest. I’m sure I’ll be here on the forum for many months slinging out ideas. Thanks for responding!
First off, congrats on being so close to paying off that debt! If you're considering selling your home, moving into a duplex or triplex could be a smart way to lower living costs while building equity and earning rental income. You'll also get hand's on experience being a landlord which is something you'll need to fully understand before scaling.
If you'd rather stay in your home, tapping into your equity through a HELOC or cash-out refinance could give you the funds for a down payment on an investment property. You could also consider turning your current property into a rental and then moving into a 2-4 unit property while holding tight to your current equity.
Partnering with someone is another option to scale faster—one of you could bring the capital while the other finds and manages the deals. If you are looking to scale you will most likely be looking into partnerships of some form down the road and this is exactly how I was able to scale in the last year. Keep in mind though that finding partners takes A LOT of time as you want to actually build a relationship with said partner before getting any money involved.
Hard money loans or private lenders can also help you move quickly, but come with higher interest rates that you'd refinance later on. These are typically not something I'd recommend for first time investors, but you should still take some time to learn.
Another option is seller financing, where you negotiate directly with a motivated seller to carry the note instead of going through a bank. Also look into “subject to” deals, which involve taking over the seller’s existing mortgage. Both options let you buy properties without needing traditional financing. I've been sent multiple creative finance deals in Arkansas from my network over the past few months so I do know they are out there.
Lot's to unpack here but hopefully this gives you a decent high level pictures of some options you might have.
You're in a solid spot with your savings—keep going and feel free reach out if you want to dig deeper into any of these routes. Remember that real estate is a get rich slow game!
Full time job = $4550 monthly; Part time job = ~$2400-$3200 monthly
Little Rock, AR
Zillow estimated my property at $358,000.
My goal is to replace my current income with rentals in at least 10 years (~$7000). Appreciate your assessment!
You need to start thinking a little more thoroughly, and be able to articulate, and test, your assumptions. Example: your $7,000 a month income — is that gross or net? You didn’t say which, so what are we to assume? What quality neighborhoods are you thinking of? Class D neighborhoods pencil out great if you don’t know what you’re doing and don’t mind packing a gun when you go to collect rent every two weeks.
So here’s a tip: never invest in a place where you wouldn’t want to live. Given that you will probably house hack the first few times (3 or 4 years), that tip is literal.
Now comes the most important tip you will ever receive from anyone on BP: Make sure you have 100 percent support from your spouse as to both your overall plan AND the tactics/strategies to fulfill your overall plan. A plan based on property appreciation is very different from one based on cash flow, and is executed differently. Discuss what levels of debt you and your spouse will be comfortable with, as leverage can lose everything, including your home. Is your spouse comfortable with that? Agree on exit plans. What if you aren’t meeting your goals? How long will your spouse allow you to waste money pursuing your dreams? Make sure you know when to throw in the towel without feeling resentment to your life mate. What about life changes? Not to sound too déclassé about it, but broken condoms can equal broken dreams. Have contingencies for your plans. It might take you 25 years (not 10) to replace your (inflation adjusted) current income (gross or net?). Through it all, you have a partner who will be a brick. Whether that brick is something you build with, or is something upside your head, depends entirely on you.
First off, congrats on being so close to paying off that debt! If you're considering selling your home, moving into a duplex or triplex could be a smart way to lower living costs while building equity and earning rental income. You'll also get hand's on experience being a landlord which is something you'll need to fully understand before scaling.
If you'd rather stay in your home, tapping into your equity through a HELOC or cash-out refinance could give you the funds for a down payment on an investment property. You could also consider turning your current property into a rental and then moving into a 2-4 unit property while holding tight to your current equity.
Partnering with someone is another option to scale faster—one of you could bring the capital while the other finds and manages the deals. If you are looking to scale you will most likely be looking into partnerships of some form down the road and this is exactly how I was able to scale in the last year. Keep in mind though that finding partners takes A LOT of time as you want to actually build a relationship with said partner before getting any money involved.
Hard money loans or private lenders can also help you move quickly, but come with higher interest rates that you'd refinance later on. These are typically not something I'd recommend for first time investors, but you should still take some time to learn.
Another option is seller financing, where you negotiate directly with a motivated seller to carry the note instead of going through a bank. Also look into “subject to” deals, which involve taking over the seller’s existing mortgage. Both options let you buy properties without needing traditional financing. I've been sent multiple creative finance deals in Arkansas from my network over the past few months so I do know they are out there.
Lot's to unpack here but hopefully this gives you a decent high level pictures of some options you might have.
You're in a solid spot with your savings—keep going and feel free reach out if you want to dig deeper into any of these routes. Remember that real estate is a get rich slow game!
Man, small world! We could be. Maybe we could hash that out one day :)
Appreciate the high level pictures. I like the idea of having a partner but that, like you said, would be something to develop over time. I've looked into hard money loans but that sounds too risky since I'm just now learning the nuance of things. I'll write down everything you said and use it to form a good goal/plan. Thanks!
Full time job = $4550 monthly; Part time job = ~$2400-$3200 monthly
Little Rock, AR
Zillow estimated my property at $358,000.
My goal is to replace my current income with rentals in at least 10 years (~$7000). Appreciate your assessment!
You need to start thinking a little more thoroughly, and be able to articulate, and test, your assumptions. Example: your $7,000 a month income — is that gross or net? You didn’t say which, so what are we to assume? What quality neighborhoods are you thinking of? Class D neighborhoods pencil out great if you don’t know what you’re doing and don’t mind packing a gun when you go to collect rent every two weeks.
So here’s a tip: never invest in a place where you wouldn’t want to live. Given that you will probably house hack the first few times (3 or 4 years), that tip is literal.
Now comes the most important tip you will ever receive from anyone on BP: Make sure you have 100 percent support from your spouse as to both your overall plan AND the tactics/strategies to fulfill your overall plan. A plan based on property appreciation is very different from one based on cash flow, and is executed differently. Discuss what levels of debt you and your spouse will be comfortable with, as leverage can lose everything, including your home. Is your spouse comfortable with that? Agree on exit plans. What if you aren’t meeting your goals? How long will your spouse allow you to waste money pursuing your dreams? Make sure you know when to throw in the towel without feeling resentment to your life mate. What about life changes? Not to sound too déclassé about it, but broken condoms can equal broken dreams. Have contingencies for your plans. It might take you 25 years (not 10) to replace your (inflation adjusted) current income (gross or net?). Through it all, you have a partner who will be a brick. Whether that brick is something you build with, or is something upside your head, depends entirely on you.
Good advice. I need to be more articulate on my numbers. The 7k is net.
I do appreciate the advice about my spouse. We are in a strategy phase and currently discussing that. I'm fine with this being 25 year pursuit as I do love my job(s). I'm grateful both of them are remote so I can be with my family. One route I've found attractive is possibly paying down all our debt, even mortgage, before going in on a property so we don't have the risk of losing our current home if something didn't go according to plan. And yes, as of now I'm leaning towards a cash flow model and I need to figure out how to execute that plan. Thanks again!
something that has gotten overlooked / suppressed / swept aside recently is this: unless you are executing some high risk, niche strategy - a top performing STR, an insane sub to - there is no cash flow in traditional, vanilla long term rentals in the first few years. none. zero.
this is because of a few things:
-the fact that it actually costs money to transact real estate - those pesky closing costs that are always 10x higher than new investors think they are. this is just the cost of getting in. if you want an estimate of what this will be call a lender and ask. they'll be happy to talk you through it.
-the fact that you will likely be investing / stabilizing during the first few years of owning an investment. getting a property rent ready is generally not free. nor is vacancy. nor is placing a tenant. nor is property management. nor is pesky repairs that don't show up until a few months or years of a tenant living in a property.
i say all this not to discourage you but to arm you with facts. i don't want you to be surprised like so many others are.
and: partnering, tapping into equity, anything else 'creative' just means expensive. tapped equity is just extra expensive money. if you borrow from one property to pay for another you're just losing money and pretending you're not. what you need is cash.
I would get a low down payment house hack. Try a fourplex live there for a year and do it again. Would your current home make a good rental? If so rent it out, if not sell it and go buy something that is. I would say there should be a nice upside to selling a house you know and is in a decent location etc. Make sure to get your house hack first then rent out your other home or sell it. I don't let myself spend any equity from properties (even when I was scrapping and could have really used it) don't touch that equity! transfer it to the next property or leave it be and keep renting it out. Hopefully you will have some cash flow to throw at the non real estate debt. If you are prudent, aggressive and the market remains steady I think you can be a millionaire in 5 years rather easily. And I would be shocked if you didn't have enough to live a middle class life in 10 years with passive income. This will open up opportunities that seem completely unrealistic to you now.
Buy real estate in solid locations where the numbers work (probably tight though), manage the real estate for the future, and repeat. Keep that up and one day you will be a very wealthy man, a very free man.
If you can own 2 million dollars in real estate and the market goes up by 3% you just created 6$0k to your net worth, if it goes up buy 6% you just added $120k.
I would get a low down payment house hack. Try a fourplex live there for a year and do it again. Would your current home make a good rental? If so rent it out, if not sell it and go buy something that is. I would say there should be a nice upside to selling a house you know and is in a decent location etc. Make sure to get your house hack first then rent out your other home or sell it. I don't let myself spend any equity from properties (even when I was scrapping and could have really used it) don't touch that equity! transfer it to the next property or leave it be and keep renting it out. Hopefully you will have some cash flow to throw at the non real estate debt. If you are prudent, aggressive and the market remains steady I think you can be a millionaire in 5 years rather easily. And I would be shocked if you didn't have enough to live a middle class life in 10 years with passive income. This will open up opportunities that seem completely unrealistic to you now.
Buy real estate in solid locations where the numbers work (probably tight though), manage the real estate for the future, and repeat. Keep that up and one day you will be a very wealthy man, a very free man.
If you can own 2 million dollars in real estate and the market goes up by 3% you just created 6$0k to your net worth, if it goes up buy 6% you just added $120k.
Thanks Eric. I'm not certain if it would make a good rental. It is rural and 30 minutes outside of a major city, however, it does have a 20x30 shop that a tenant under the right circumstances might find desirable. I think selling it would be better. Appreciate your take. I am new to this but I'm starting to discern that everyone's path is so different. It's encouraging and a bit discouraging but I think that is the nature of the business. I'll continue to pay down my debt, save, watch my market for a fourplex and see if an opportunity arises. I want to be ready if it does!
You shouldn't be discouraged dude! It takes several years for real estate to add cashflow to your life so I would try and get the ball rolling sooner rather than later. A great goal if I were you would be to own a million dollars in real estate a year from now. After you do that get to 5 million dollars in real estate that is when everything really starts gaining traction and your wealth turns into a run away train. But I can't emphasize enough whatever it is your going to do, go do it. From my experience people who take action end up rich, people who don't end up get left behind even bitter. I have my money on the guy making moves over the guy with the perfect plan to get further, get to FI faster, accomplish his goals.
With the shop etc you are probably better off selling that home and putting into something that pencils better. I just want you to buy a $500k+ income property with a fixed rate with 0-5% down, then use that $150k in equity as a down on an investment property. Once you own a million in real estate you are in the game in a material way that can change your life in the not to distant future.
I currently owe $157,000 on my house. $55,000 in various loans,etc. I have $150,000 in a 403(b). Will be out of debt in May-June 2025 (the $55,000). My available income for investing will be around $30-$40k a year just by saving.
I have been pondering alternative ways to fund my first investment property. But I would love more strategies to do more than 1 property a year. I would love to do 2-3 properties a year. We have thought about selling our home buying a duplex and renting the other side. We have considered tapping into our equity or partnering with someone. Or maybe we should go ahead and commit to pay down the house, our mortgage is $1100. I'm a baby to this and learning the jargon so go easy on me in regards to terminology but I appreciate any ideas. Thank you!
You are probably a few years away from being able to invest. You need to build up personal reserves and then save for a down payment.
Use that time to learn basic accounting and bookkeeping. Also look at LOCAL areas to invest in, and in what (single family homes, three-flats, etc.). Start small and local. Do NOT set deadlines and dates. Set deal qualifications.
This is the most pragmatic advice.
I really recommend you also learn you can have everything, you can't have everything at once.
I would work on getting your income up, and saving properly. $30-40k a year is not enough to manage REI, if anyone tells you it is it's either they got something to sell you or they have not faced a cycle or two of financial hardship(economic not necessarily personal). Don't be discouraged, if anything you want to admire the inflection point of the discipline, conviction, and analysis you'll do. Not discredit it. Trust me, it's worthwhile just appreciate the journey.
My recommendation is to get enough income to pursue a 25% downpayment, enough reserves to cover most of capex and vacancy. Then once you're there start looking for deals not looking to make a deal, there's a difference. At $30-40k a year saved up, that means 1 house every 3-4 years. In all honesty, this is better than 97% of America and 99% of the world. So don't discount it at all.
Don't be impulsive, be calculated. This takes time.
Sorry @Jason Guenther I don't have any sunshine to pump up your tailpipe, I'm just gonna be direct and "keep it real".
I have seen some prolific successes in my time, and a tsunami of wanna-b never-b's. And call me jaded but I often can judge which a person will be in a few minutes because 1 defining difference between the 2 is one is singularly focused, and the other has an entire fairy tale.
You may think it's good planning or what not to go off in the weeds on what every step will be, what you will do after property 14 blah-blah-blah, all of that is only a distraction.
The ONLY thing that matters is your 1-Thing NOW, and your NEXT 1-thing. That's IT, that's ALL, everything else is a distraction, does not exist, and does not matter.
You're 1-Thing NOW, is to get actionable. That means Buy-Ready. How that looks is on the notion of what your next 1-Thing is, getting in, the buy, MAKING that buy.
So maybe that's stacking savings, maybe paying down debt, improving FICO, or maybe it's raising capital, whatever, the details don't matter because there is 101 flavors out there, all that matters is what is your 1-Thing NOW, do that, THAT alone, with fanatical focus like a fat-boy on cake! (I'm a fat boy, I can say that, lol)
DON'T get distracted by the BS of 7 steps away blah-blah-blah, who cares, it's not actionable now or next so it does NOT exist in our minds, worry about it when it matters.
You ever seen the movie "Yes man"? Well, that's a great game plan on how to be poor! Reality is, success is by saying "NO" a hell of a lot more then "yes". It's about being ULTRA selective with your "yes", your time, your focus.
So yeah, financial freedom does not exist in your thoughts or intentions yet, all that matters is getting started, that 1st deal, just that 1. And what you need to do in the NOW to get to NEXT of that buy/in.
Get that cluttered fairy tale stuff out of your mind and stop letting it distract you from all that matters, your 1 THING.
I guarantee that if you follow this action, you will find yourself at new heights you never imagined possible. And it will happen at the fastest rate it could have. And that is the only time that matters, fastest possible. There is no quicker speed in your life then that, the fastest it could happen. And being a beast of focus, attacking that 1-thing, will assure your maximum efficiency.
@James Hamling, thanks for the candid response. I’m by nature a cautious step by step person but a good dose of focus will do me good. You have given me something to think about. I’ll identify that one thing and attack. See if me and my wife can get a game plan. But first… I think my wife left some cake in the fridge and for some reason I can’t shake it from my head ….
I currently owe $157,000 on my house. $55,000 in various loans,etc. I have $150,000 in a 403(b). Will be out of debt in May-June 2025 (the $55,000). My available income for investing will be around $30-$40k a year just by saving.
I have been pondering alternative ways to fund my first investment property. But I would love more strategies to do more than 1 property a year. I would love to do 2-3 properties a year. We have thought about selling our home buying a duplex and renting the other side. We have considered tapping into our equity or partnering with someone. Or maybe we should go ahead and commit to pay down the house, our mortgage is $1100. I'm a baby to this and learning the jargon so go easy on me in regards to terminology but I appreciate any ideas. Thank you!
You are probably a few years away from being able to invest. You need to build up personal reserves and then save for a down payment.
Use that time to learn basic accounting and bookkeeping. Also look at LOCAL areas to invest in, and in what (single family homes, three-flats, etc.). Start small and local. Do NOT set deadlines and dates. Set deal qualifications.
This is the most pragmatic advice.
I really recommend you also learn you can have everything, you can't have everything at once.
I would work on getting your income up, and saving properly. $30-40k a year is not enough to manage REI, if anyone tells you it is it's either they got something to sell you or they have not faced a cycle or two of financial hardship(economic not necessarily personal). Don't be discouraged, if anything you want to admire the inflection point of the discipline, conviction, and analysis you'll do. Not discredit it. Trust me, it's worthwhile just appreciate the journey.
My recommendation is to get enough income to pursue a 25% downpayment, enough reserves to cover most of capex and vacancy. Then once you're there start looking for deals not looking to make a deal, there's a difference. At $30-40k a year saved up, that means 1 house every 3-4 years. In all honesty, this is better than 97% of America and 99% of the world. So don't discount it at all.
Don't be impulsive, be calculated. This takes time.
As always...
Fast solutions have slow problems!
Thank you for the advice and directness. Yea reality of a property a year isn’t wise nor reachable… yet. But property 3-4 years? I could do that. I’ve thought about doing this the Dave Ramsay way and getting rid of mortgage before investing. That might be a route, especially with my annual available income. No mortgage would help me weather a storm if a bad renter or economic collapse set in
I currently owe $157,000 on my house. $55,000 in various loans,etc. I have $150,000 in a 403(b). Will be out of debt in May-June 2025 (the $55,000). My available income for investing will be around $30-$40k a year just by saving.
I have been pondering alternative ways to fund my first investment property. But I would love more strategies to do more than 1 property a year. I would love to do 2-3 properties a year. We have thought about selling our home buying a duplex and renting the other side. We have considered tapping into our equity or partnering with someone. Or maybe we should go ahead and commit to pay down the house, our mortgage is $1100. I'm a baby to this and learning the jargon so go easy on me in regards to terminology but I appreciate any ideas. Thank you!
You are probably a few years away from being able to invest. You need to build up personal reserves and then save for a down payment.
Use that time to learn basic accounting and bookkeeping. Also look at LOCAL areas to invest in, and in what (single family homes, three-flats, etc.). Start small and local. Do NOT set deadlines and dates. Set deal qualifications.
This is the most pragmatic advice.
I really recommend you also learn you can have everything, you can't have everything at once.
I would work on getting your income up, and saving properly. $30-40k a year is not enough to manage REI, if anyone tells you it is it's either they got something to sell you or they have not faced a cycle or two of financial hardship(economic not necessarily personal). Don't be discouraged, if anything you want to admire the inflection point of the discipline, conviction, and analysis you'll do. Not discredit it. Trust me, it's worthwhile just appreciate the journey.
My recommendation is to get enough income to pursue a 25% downpayment, enough reserves to cover most of capex and vacancy. Then once you're there start looking for deals not looking to make a deal, there's a difference. At $30-40k a year saved up, that means 1 house every 3-4 years. In all honesty, this is better than 97% of America and 99% of the world. So don't discount it at all.
Don't be impulsive, be calculated. This takes time.
As always...
Fast solutions have slow problems!
Thank you for the advice and directness. Yea reality of a property a year isn’t wise nor reachable… yet. But property 3-4 years? I could do that. I’ve thought about doing this the Dave Ramsay way and getting rid of mortgage before investing. That might be a route, especially with my annual available income. No mortgage would help me weather a storm if a bad renter or economic collapse set in
I'm not against that plan, despite the entire board likely being. With that said, if you decide to change your plans and not get into REI that solution will still reap it's reward for peace of mind. Take that into account.
I firmly believe no investor should invest until there's zero consumer debt, mortgage I prefer paid off too but I get why it's not the highest priority. If someone does make it, I'm all for it.
With the financials that you described, I don’t think that you need to sell your house and get into a duplex unless you guys want to move. You probably have a pretty good interest rate on your home so I would encourage you to stay there unless you don’t want to stay there. And if that is the case, then I think moving into a duplex would be a good idea
It looks like you have pretty good income, coming in compared to your expenses, so I would say open up a HELOC on your home in order to access some of the equity that you have in your home.
If your home appraises at 360k and you own around 160k then you could likely get a loan for around 130k. You have more income than expenses, so you could make a monthly payment on your home equity if you use your home equity for investing.
Then I would say to partner up with somebody in the area where you would like to invest in real estate. Make sure that that is a reputable person. That is super important. Partner with this person on one or two deals where you provide the money and they do the work and then you divide the profits. Whether it’s a flip or whether it’s a buy and hold for a couple years, either one should work. Make sure that you buy the property well under Marc value so you can create some instant equity when you buy it. You’ll be able to learn a lot through this process and if you do your numbers right, your return should be more than 30% per year if you hold the property for three years or less. This will help you pay off your $50,000 much easier and it will help you get investing in real estate.
I currently owe $157,000 on my house. $55,000 in various loans,etc. I have $150,000 in a 403(b). Will be out of debt in May-June 2025 (the $55,000). My available income for investing will be around $30-$40k a year just by saving.
I have been pondering alternative ways to fund my first investment property. But I would love more strategies to do more than 1 property a year. I would love to do 2-3 properties a year. We have thought about selling our home buying a duplex and renting the other side. We have considered tapping into our equity or partnering with someone. Or maybe we should go ahead and commit to pay down the house, our mortgage is $1100. I'm a baby to this and learning the jargon so go easy on me in regards to terminology but I appreciate any ideas. Thank you!
You are probably a few years away from being able to invest. You need to build up personal reserves and then save for a down payment.
Use that time to learn basic accounting and bookkeeping. Also look at LOCAL areas to invest in, and in what (single family homes, three-flats, etc.). Start small and local. Do NOT set deadlines and dates. Set deal qualifications.
This is the most pragmatic advice.
I really recommend you also learn you can have everything, you can't have everything at once.
I would work on getting your income up, and saving properly. $30-40k a year is not enough to manage REI, if anyone tells you it is it's either they got something to sell you or they have not faced a cycle or two of financial hardship(economic not necessarily personal). Don't be discouraged, if anything you want to admire the inflection point of the discipline, conviction, and analysis you'll do. Not discredit it. Trust me, it's worthwhile just appreciate the journey.
My recommendation is to get enough income to pursue a 25% downpayment, enough reserves to cover most of capex and vacancy. Then once you're there start looking for deals not looking to make a deal, there's a difference. At $30-40k a year saved up, that means 1 house every 3-4 years. In all honesty, this is better than 97% of America and 99% of the world. So don't discount it at all.
Don't be impulsive, be calculated. This takes time.
As always...
Fast solutions have slow problems!
Thank you for the advice and directness. Yea reality of a property a year isn’t wise nor reachable… yet. But property 3-4 years? I could do that. I’ve thought about doing this the Dave Ramsay way and getting rid of mortgage before investing. That might be a route, especially with my annual available income. No mortgage would help me weather a storm if a bad renter or economic collapse set in
I'm not against that plan, despite the entire board likely being. With that said, if you decide to change your plans and not get into REI that solution will still reap it's reward for peace of mind. Take that into account.
I firmly believe no investor should invest until there's zero consumer debt, mortgage I prefer paid off too but I get why it's not the highest priority. If someone does make it, I'm all for it.
I’m not against it either. If and when you feel you understand the business deeper and see an opportunity that is worth it, you can refi to expand later on.
