Hey Bigger Pockets masterminds- If you were me, what would be your next move? I've lived in Hawaii most of my life. For five years I've house hacked a short term rental with great success. Earlier this year, the value of my house increased enough to take out a heloc, which I reinvested in another vacation rental in St. Augustine, Florida where I grew up. I have systems in place to self manage remotely, and It's also doing well. I've joined BP Pro, analyzed deals, been doing my homework, and I've got the bug! My goal is to buy an investment property each year. Within a few months, I'll pay off some personal debt to get my DTI ratio low again. I'll have a 2021 tax return of about $200k gross (rental and W-2 income). I was in a good position with the Airbnb IPO, so I have about $20,000 in stock as cash reserves. That's my situation. So what's next? Any good ideas from you Bigger Pockets wizards? My main question is where does the next down payment come from? In Hawaii, the cost of living is high, so it's not easy to save. Do I wait until I can take out another heloc on the St. Augustine house? For investments, I've considered another STR, long term rentals, or something different like a warehouse, storage units, etc. Probably along the east coast of Florida from Jacksonville to Melbourne, where I'm familiar and seem to get a favorable bang for the buck. Or where I live in Hawaii (Big Island) if something is affordable enough. Or Utah, California, Oregon where I have family. Do I diversify, or focus on one area? I'd love to know your thoughts. Thanks for your input!
1) Sell out or rent out your Hawaii house hack and get into a lower cost of living area where you can save more aggressively. Here in the Jacksonville/St. Augustine area that certainly qualifies if you can get or keep your W-2 job. Other parts of Florida are also very low cost of living.
2) In smaller increments than a typical down payment you can get RE syndication shares with a pretty decent cash flow.
3) You can use the Nomad strategy to buy as owner-occupier serially with lower down payment (FTHB, 3.5% FHA, or 5% conventional OO). If possible Nomad combines best with 4-3-2-1 (start with a quad, then tri, then duplex, then SFH's as a workaround to certain FHA restrictions).
Hey Greg! Great questions. I would recommend partnering up with people. I didn't have much or any capital to begin with. So I partnered with people who did between special lenders or business partners. I am currently on track buying about 5-6 STR's to hold per year because of this.
@Greg Seivert . Congratulations on your success so far! One option is to do an Airbnb arbitrage. Rent an apartment or house that allows you to sublease, furnish it, then re-rent it out on Airbnb, VRBO, and also to corporate tenets for six months at a time. This can be quite profitable. And it takes little money down – mostly for furnishings.
I think a better option would be to find a very well positioned furnished cabin in Gatlinburg Tennessee. This evening, I had dinner with my friend David. David’s goal was to quit his job as an auto industry engineer by buying vacation cabins in Gatlinburg. He thought it would take him several years to do it, but as an engineer, he figured out some shortcuts and found the right cabins. He was able to quit his job at General Motors in 10 months.
He was sharing with me that the cash on cash return and some of these leveraged cabins is 40 to 60% annually.
I have researched this enough to believe it is true. PM me if you want to chat with David. Good luck!