I am 22 on active duty located in Houston, Texas. I purchased a home when I was 21 and have put a tenant into it to move closer to work. If possible I would like to try and BRRRR this house but I don't know where i'd go about rehabing it. My round trip drive was pushing 2 hours a day and I wasn't having it anymore. I now live in an apartment less than a mile from my job so I bike almost everyday. I am not married so this is all on a single income, I also have no car loan, no student debt and no credit card debt. I am fortunate to have the VA loan available to me so house hacking a multi family is definitely an option. I really would like to learn more and start using the BRRRR strategy. I'm probably approaching this the wrong way by saving up as much as I can and then dumping all of that into a place. I have around 10k to get into another property but finding something in this market isn't easy for me. I want to have at least five properties before I transition out which is in about two years. Overall I would like to purchase a cash flowing property by the end of the year. Any advice or where or how to get started would be appreciated.
Thank you in advance for your words of wisdom.
Greetings to a fellow vet.
Brrrr is a fantastic strategy in general, but it's not for everyone. Are you particularly handy? Could you do the renovations yourself or would you need to contract it out? Would you have the time to do the work yourself while also holding down your military job? Would you be willing to live in a home while it is under renovations, and if not where would you stay and how would you afford a second place to stay during the reno?
Brrr is also more expensive upfront as you have noticed since you need both the downpayment and the reno funds. There are loans such as the 203k loan that will wrap the cost of reno into the loan amount. The downside is they generally require a lot of extra paperwork, you can't do the reno yourself and have to contract the work out, and the interest rates are much worse than a traditional 30yr loan and are usually roughly a full 1% higher. That 1% interest rate makes a huge difference over the course of a loan and can easily add an extra $125 a month on a typical home worth 200k.
Personally I would skip Brrr for now and stick to the VA loan and house hack it. Either buy a 3 or 4 bedroom single family home and find a couple of roommates, or go bold and buy up to a 4 unit complex and live in one and rent the others. I house hacked my first home I purchased and it really set the tone for my investing career. I had a 3 bed house and my mortgage was 800 a month, I rented the other two bedrooms for a flat $500 each so that covered my entire mortgage and most of the utilities allowing me to rapidly save up money for my next purchase.
My biggest concern is that you said you already have a rental but only have 10k to purchase your second place. Does this mean you have 10k total, or 10k plus your reserve funds for your first rental. Because if you only have 10k total then I would be extremely cautious about over extending yourself. Hot water heaters break, HVAC units break, roofs need replaced. If you did use that 10k to purchase a second place and the AC unit went out on your first rental how would you pay for it? While I understand your desire to scale up rapidly, and most people when they are young think nothing bad in life will ever happen, but you can lose everything in the blink of an eye by not having enough funds in reserves for emergencies. Investing is a marathon, not a sprint so make sure you have that reserve fund set up before you do anything else.
Im surprised you found the time to invest in a property already early in your enlistment. When i was active duty it was all anout training for the next deployment.
However, i wasnt very good about what i did with my money at an early age.
As far as next steps go i would hold onto that 10k right now. As Ben Zimmerman mentioned, if a water heater goes out or some unexpected expense happens and you dont have the funds then you could be in trouble.
Try to get your current property stabilized first using the BRRRR strategy. You dont have to buy a new property every few months. Since your getting out in a couple years i would say stabalize what you have and really dig into the numbers of maybe one other property that looks good on paper. Get ready for employment in the civilian sector and land your self a decent career. Once you're settled in a new civi position, start making offers again using the BRRRR. By then three years would have passed and you have some equity built up in your current real estate property.
Just my thoughts on what to possibly do but its all on you. Active duty and vets really do get some amazing rates with a VA loan. Just don't stretch your self too thin when dealing with multiple locations back to back.
@Abraham Trevino You have so much opportunity ahead of you! I love to see young service members get into real estate so early. Using your VA loan to buy a multifamily property and house-hack it is the first step I recommend taking. Then once you start to build up more capital and make connections with others in the industry that can help you do a BRRRR, you can go down that path. But first, go use your VA loan and house-hack.
There are tons of military investors on here that are willing to help so please feel free to reach out if you have any questions. Good luck!
@Ben Zimmerman @Anthony Wienke @Stuart Grazier Thank you for your input. That is probably the best way to go for me, I am just stuck finding a decent multi family around my area. I obviously cannot out of state invest with the VA loan at this current time. I think I may be looking for to hard for a bigger unit when there are multiple smaller ones like a duplex that have so much potential as well.
@Abraham Trevino following, I am in the same with an upcoming PCS and trying to decide if I should sell or rent.
If you do get out will you be staying in that area?
Ben, the 10k is strictly to spend on a new property. Like you and Anthony mentioned I think it would be best to hold that and just get set up before getting into another property without having sufficient funds to do anything, then i'll just be going no where. For now, i'll just focus on getting into something I can house hack and that will cash flow. I want to try and stabilize my current property for a BRRRR like Anthony said but don't know the next step to make on that, so I will be doing more research around that area.
@Christina Colon yes, I will be staying in the area after I transition. I don’t want to spread out and have properties everywhere just yet
@Abraham Trevino maybe consider finding a subject-to deal that requires $10k or less.
Have you looked at ADPI. Active Duty Passive Income. It's a great group that can help active, reserve, guard and veterans not just get into real estate investing but has resources to help them with their VA loans and more. Really good vetted professionals are available through them. Eric Upchurch would be a great person to get in touch with. He's a former Special Operator with the Nightstalker Aviation Unit.
@Abraham Trevino Hey brother, I agree with Stuart, VA house hack for the win! I have an article about this on the BiggerPockets members blog. Would love to connect with you and introduce you to some of the other military real estate investors out there!
@Mark Sewell I have been looking around my area for a while but I think i'm going to stick with the house hacking tip first until I can get into something else.
@Nate Marshall I have heard of them and I do follow them I just haven't posted anything on their forums yet, maybe that would help get me pushed in the right direction
@David Pere I follow you on other social media and first heard about you on a BP podcast. When I was talking to a good friend of mine and mentioned your name, he actually told me he went to BRC with you. Small world. I'd appreciate any wisdom you're willing to throw my way. Just trying to get started while I can.
@Abraham Trevino That is awesome, thank you! Friend of yours, and you're in Houston...it wasn't Beaubrun was it? Sure thing brother, shoot me a colleague request.
@David Pere Sure is, we've been working together for a bit and all we really talk about is real estate now. I sent over that request, thank you for that.
@Nate Marshall thanks for the post. I’m going to look into them!!
@Abraham Trevino investigate the Midwest for more reasonable cash flow opportunities. The BRRRR strategy works great with properties over $125k ARV. Buying in the right areas will insure you can get your cash out.
@Jabari Long That is the plan, I'm looking to try and shift my current property into my first BRRRR. Just trying to plan everything out now ahead of time.
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