Formulating My Buy-and-Hold Strategy, Feedback Appreciated!
Hello all, I am about to have some money saved up and I want to spend it smartly. I’ve been reading about real estate and the like for a few years now and I’m really interested in pursuing it for some long-term wealth/security. This will kind of be a long post, so I apologize in advance if this should have been in another forum or a blog- I’m new to this community- so just tell me if it should be somewhere else and I’ll move it immediately.
A little about myself: I'm 27, recently married with a 5 year old daughter. I'm active military, and own one property that I rent out. I am debt free (aside from a low-interest car payment and the mortgage) and I've got some decent money saved up. After my next deployment, I'll have something to the tune of 80-100k in the bank set aside to invest. I bought my condo (high rise, downtown San Diego) in Nov 2012 with a zero-down VA loan that it currently making $650 a month in positive cash flow, which is only $200 a month if you take the HOA fees into account (which has meant in effect that I am taking a slight loss with maintenance). The condos in the same building of comparable value have appreciated from 50-70k in those couple years, by my reckoning. My wife and I make enough that we're willing to put some risk into the money, because we're still going to be able to pay the bills if all this money gets hit by a meteor or something.
I’ve been reading the forums here and my own books voraciously and I think I’m ready to put some options out for general scrutiny. If you take the time to read this, thank you in advance, and please pick apart anything you think might not be a good idea.
STRATEGY ONE
Sell my condo after some minor upgrades, and best case scenario make 70k on it. Add that to the savings and have around 150k to throw around. Use this money to make 25% down payments on 3-4 properties (or a multifamily) in SD or Phoenix (where I’m from and my extended family lives) and from there, use the cash flow to save for more properties. Refinance when it makes sense to maximize returns and continue until 10-15 properties are owned, pay down the loans, and be set for retirement.
STRATEGY TWO
Sell the condo I currently have, then do the same thing as above up until the 3-4 properties (or a multifamily) are bought, but use the cash flow to pay down the principals on the original properties, refinancing when it makes sense until the homes are owned outright and then use the income to buy more properties, rinse and repeat.
STRATEGY THREE
HOLD ON to the condo I currently have, put the saved money into a refinance, and then make at least $800 a month in cash flow. Use the cash flow to pay down the loan, refinance as needed. Assuming the value of a high-rise condo with a view in downtown SD will continue to rise, make use of the cash flow until the value is attractive enough to sell, then sell, use the money to buy more properties, rinse and repeat.
I’m assuming that some of what I said doesn’t make a ton of sense to an experienced professional, but that’s why I’m here, haha. Thanks for reading and any feedback would be awesome.