Late start to real estate investing

[Mike B.]

Hi all,

I came across the BiggerPockets and the episode hit close to home. The episode is called Start at 45, Retire at 55: The Late Starter's Rental Playbook. I will be 43 in October and my ride will be 40 next year. To this point, our money is either in HYSAs, brokerage or retirement accounts (IRAs and 401Ks). We have saved a decent amount and have $100,000 liquid, and access to another $250,000 if we sold assets in our brokerage account which we prefer not to but may need to based on this first property we are vetting. We also have about $400,000 of equity in our home.

We are not super knowledgeable and are open to suggestions as we are looking to build passive income to hopefully retire from our W2 jobs early. Depending on how much we could make in real estate, my wife would prefer to take a lower paying, less demanding job as she doesn’t think she can work in her current role for another 15-20 years.

We live in Atlanta, Georgia and our dream is to retire to the Lake Oconee area (hopefully some on the forum are familiar of the market). If we could afford it, we would buy a lake house to have a place to get away from the city on the weekends. The counties Lake Oconee extends to are Greene and Putnam and there are a ton of STR restrictions. Fortunately we want to go the LTR route as we don’t have a ton of time to actively stay on top of things.

We have formed an LLC that is properly structured and have opened a business banking account. We have identified a property manager who grew up in and has strong ties to the area. From listening to other podcasts I have learned how vital it is to have an excellent property manager you can trust. She introduced us to a local real estate agent and we are now looking to line up potential financing options and would like to work with someone potentially in that area who can take a relationship approach and guide us as we build out our portfolio. We are confused about what options we have and what is best. A conventional mortgage where we put 20% down, taking out a HELOC or cash out refi or I’ve heard of DSCR loans and I’m sure there are other avenues to finance a real estate portfolio.

I’ve been using Claude for properties we have identified and it’s pretty amazing what it can do. It put together a model showing a combination of what we would need to purchase for and/or get for rent to cash flow.

One we are particularly interested in is a new construction single family home in a great neighborhood, a wonderful starter home. It’s going for ~$450,000. I know a lot of the examples I see, even on this podcast, the properties are significantly cheaper. I just don’t know that in this area I’m looking at that there is a ton of low cost housing and to be honest I’m not so sure how gung-ho I am of dealing with what would probably be more work in most likely needing to do renovations and having a harder time finding a good renter among other obstacles. But again, I’m open to options from others who have been in my shoes and have a different view as how I should get started. Bottom line, I want to be successful in this and don’t want to rush and make mistakes. I’m not trying to buy more than one property a year.

If you’ve made it this far, I appreciate it and can answer any questions people have.

Thank you!

Mike

[Nicholas L.]

@Mike B.

hi Mike.  while it's not too late to start, you should have realistic expectations, and for LTRs, you should expect:

-it won't be passive in the first few years, and

-there's no cash flow.  none.

to be clear - there are other benefits to real estate investing, but cash flow isn't one of them right now.  the amount of equity you would need to have in a portfolio for cash flow to be meaningful is likely several million dollars.

anyone who promotes or focuses on cash flow is selling something.  i am not.

hope this helps