New Investor, 2 doors, both with high equity and cash flowing
Investor · Decatur, TX · Member since 2022 · 9 posts · 19 votes
New Investor, 2 doors, both with high equity and cash flowing
Most Popular Reply
Jaron WallingPro Member
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votesQuote from @Matt Miller:
@Jaron Walling the 2 properties I currently have were acquired via inheritance. They were purchased a decade ago for cash and are worth roughly 3x the purchase price today. They have had repairs through the years including roof replacements, AC replacements and one having foundation repairs. The property's are both in good condition and with the repair history should be free of major repair needs for the next few years. One has had the same tenant for ten years and the house is well maintained and orderly. The management company does regular site inspections so I am comfortable that it's a solid hold. Both could also use a marginal rent increase as they are below market today. I have been listening to BP for over a year now and just joined the forums as I now have actual property to work with.
That's amazing and blessed position to be in. You skipped like 6 chapters in the REI playbook. These properties are in the harvesting phase. It doesn't seem to match your personal, or financial goals. Probably need to better define those goals, figure out your "why", because it will change your strategy.
You could sell those properties (likely at a huge stepped up basis) or cash-out refinance, get liquid, and find/buy/create the next deal. You answered a question you didn't even ask. If you cash-out some equity (50-60 LTV, low risk) and increase the rents it could be a net neutral depending how below market the rents are. That's a big win-win for you! Doesn't damage the cash-flow to bad and lets you scale into other deals. Could be 2-3 more houses in 2 years, or if you leverage personal savings, retirement funds, OPM, or HM it could be 3-4 houses in 3 years. That's like 5 rental properties (2 with solid equity) in 4 years. That's big swing all because of the equity you have right now.
14 Replies
- 1yArman AhmedPro MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 967 votes
Matt, you’re in a really strong spot—two free and clear rentals with steady cash flow gives you a lot of flexibility.
Your equity is the key here. A cash-out refi or HELOC lets you keep that monthly income while putting your capital to work. If you want to stay mostly passive, more rentals are usually easier to scale and manage through systems/teams than semi-passive businesses like storage or laundromats, which can eat up more time than people expect.
One approach I’ve seen work well is to tap equity from one property, keep a cushion, and use it to test a couple more rentals—you’ll learn a lot without overextending yourself.
Curious—are you leaning toward staying fully passive, or do you want to be a little more involved with the next move?
- Investor · Decatur, TX · Member since 2022 · 9 posts · 19 votes1y
@Arman Ahmed that was my goal, leave one property untouched and use cash to BRRRR new properties. I'm not opposed to hard work so my goal is to find the best cash flowing properties whether it be rentals or businesses so I can fund the next venture without taking on partners. Passive/Semi Passive doesn't change the equation much, I have flexibility with my W2 and have a wife that I can employ to assist. Just trying to avoid a fool rushing in scenario
- 1yArman AhmedPro MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 967 votes
That’s a great approach, Matt — keeping one free and clear as your safety net while BRRRRing others is a smart balance. Since you’ve got the flexibility and help, I’d double down on building a system around identifying and managing cash-flowing rentals first. Rentals scale cleaner and give you options down the road if you want to branch into semi-passive businesses. With your equity and W2 strength, lenders will like working with you too. The key is just lining up solid markets, teams, and deals so you’re not rushing in blind
- MD/DC · Member since 2024 · 1k+ posts · 1k+ votes1y
I like that you are keeping your W2 and hopefully taking advantage of tax deferred accounts also. Paying off investment properties isn’t always the best strategy especially in recent years when rates were so low. Unless you are also holding a significant amount in total stock market index funds for example you are probably not optimizing your potential. Come up with a financial plan and asset allocation. That will guide you and also prevent costly emotional deviations.
- 1yJaron WallingPro MemberRental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
@Matt Miller What's stopping you from pulling equity and scaling? What's stopping you from flipping or doing value-add BRRRR deals?
- Investor · Decatur, TX · Member since 2022 · 9 posts · 19 votes1y
@Jaron Walling well to be honest I have only had the properties for a little over a week. I am really trying to do the research to make sure the market I target has strong rental demand and that I buy smart so I can retain positive cash flow after debt servicing. My goal is to acquire 2 additional properties/year at minimum.
- 1yJaron WallingPro MemberRental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
Quote from @Matt Miller:
@Jaron Walling well to be honest I have only had the properties for a little over a week. I am really trying to do the research to make sure the market I target has strong rental demand and that I buy smart so I can retain positive cash flow after debt servicing. My goal is to acquire 2 additional properties/year at minimum.
"I am really trying to do the research to make sure the market I target is strong" - I hope you did some of that before buying, and jumping into BP asking questions.
- Investor · Decatur, TX · Member since 2022 · 9 posts · 19 votes1y
@Jaron Walling the 2 properties I currently have were acquired via inheritance. They were purchased a decade ago for cash and are worth roughly 3x the purchase price today. They have had repairs through the years including roof replacements, AC replacements and one having foundation repairs. The property's are both in good condition and with the repair history should be free of major repair needs for the next few years. One has had the same tenant for ten years and the house is well maintained and orderly. The management company does regular site inspections so I am comfortable that it's a solid hold. Both could also use a marginal rent increase as they are below market today. I have been listening to BP for over a year now and just joined the forums as I now have actual property to work with.
- 1yJaron WallingPro MemberRental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
Quote from @Matt Miller:
@Jaron Walling the 2 properties I currently have were acquired via inheritance. They were purchased a decade ago for cash and are worth roughly 3x the purchase price today. They have had repairs through the years including roof replacements, AC replacements and one having foundation repairs. The property's are both in good condition and with the repair history should be free of major repair needs for the next few years. One has had the same tenant for ten years and the house is well maintained and orderly. The management company does regular site inspections so I am comfortable that it's a solid hold. Both could also use a marginal rent increase as they are below market today. I have been listening to BP for over a year now and just joined the forums as I now have actual property to work with.
That's amazing and blessed position to be in. You skipped like 6 chapters in the REI playbook. These properties are in the harvesting phase. It doesn't seem to match your personal, or financial goals. Probably need to better define those goals, figure out your "why", because it will change your strategy.
You could sell those properties (likely at a huge stepped up basis) or cash-out refinance, get liquid, and find/buy/create the next deal. You answered a question you didn't even ask. If you cash-out some equity (50-60 LTV, low risk) and increase the rents it could be a net neutral depending how below market the rents are. That's a big win-win for you! Doesn't damage the cash-flow to bad and lets you scale into other deals. Could be 2-3 more houses in 2 years, or if you leverage personal savings, retirement funds, OPM, or HM it could be 3-4 houses in 3 years. That's like 5 rental properties (2 with solid equity) in 4 years. That's big swing all because of the equity you have right now.
Sounds like you’ve built a really solid foundation already, Matt! Free and clear properties with steady cash flow puts you in a strong position. A lot of folks get stuck in analysis mode at this stage, so you’re not alone there. One thing that’s helped me is writing out clear criteria for what the “next move” has to look like before I pull the trigger, whether that’s a certain cash-on-cash return, a business that doesn’t eat up more than X hours a week, or properties that hit a minimum rent-to-value ratio. That way you know when something checks your boxes instead of spinning on hypotheticals.
If it helps to bounce ideas around, I’m always down!- 1yJaron WallingPro MemberRental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
Quote from @Min Zhang:
Sounds like you’ve built a really solid foundation already, Matt! Free and clear properties with steady cash flow puts you in a strong position. A lot of folks get stuck in analysis mode at this stage, so you’re not alone there. One thing that’s helped me is writing out clear criteria for what the “next move” has to look like before I pull the trigger, whether that’s a certain cash-on-cash return, a business that doesn’t eat up more than X hours a week, or properties that hit a minimum rent-to-value ratio. That way you know when something checks your boxes instead of spinning on hypotheticals.
If it helps to bounce ideas around, I’m always down!This. Really need to define that "why" and understand how much effort someone is putting into REI. Most of the strategies are not passive.
We're paying contractors over $27k in labor right now remodeling a property. I'm at the property 3-4 times per week to manage the project. I'm swinging hammers when I can save money, repairing stuff, buying appliances, and painting the interior. Not passive.
- 1yMelissa JusticeBusiness MemberRental Property Investor · Phoenix, AZ · Member since 2024 · 519 posts · 1k+ votes
That’s a great position to be in and congratulations on having two properties free and clear and producing solid cash flow! A lot of people would love to be in your shoes.
Here’s how I’d think about it:
Tapping Equity: With $450–500K in value and no debt, you've got flexibility. A cash-out refinance or HELOC could allow you to access capital while keeping your properties working for you. Even if you only leveraged a portion, you could multiply your returns by picking up more rentals without overextending.
Rental Properties vs. Business:
More Rentals: The safe, tried-and-true wealth builder. You already know how to manage rentals, and scaling into new markets can diversify your income.
Semi-Passive Business: This can be great but usually comes with more risk and “active” work than expected. If your goal is financial freedom and generational wealth, rentals tend to provide steadier, scalable returns.
Paralysis by Analysis: Totally normal at this stage. What helped me (and many others) was to set clear buy-box criteria- markets, price point, return goals - and then only pursue deals that fit. This eliminates a lot of noise and keeps you moving forward.
At the end of the day, you’ve already proven you can make smart decisions (two properties free and clear is huge). I’d suggest starting with a refinance/HELOC strategy to free up capital, then decide whether your next move is a turnkey property in a cash-flow market or a local business that excites you.Always happy to chat more about specific markets or run deal scenarios side by side.
Best of luck!
- Lender · Nationwide · Member since 2023 · 362 posts · 237 votes1y
I think a good path forward would be to do a cash out refinance on one or both of the properties so you have some money for down payments on your next property. If you only need to put down 20% on each new property, you could start to scale quickly. I'm a mortgage broker and happy to help answer any questions you have around cash out refinance and financing.
- New to Real Estate · Miami, FL · Member since 2024 · 1k+ posts · 478 votes1y
Matt, you're in a strong position — two paid-off, cash-flowing properties and a flexible W2 is a rare combo. The equity you’ve built is your tool now. You don’t have to rush, but sitting on it too long means missed opportunity.
If you're considering more rentals, leveraging that equity through a cash-out refi or HELOC could let you scale without giving up control. If you're leaning toward a semi-passive business, just make sure it fits your lifestyle and doesn't take more time than you're ready to give.
Feel free to reach out if you need any help!
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