Newbie investor looking for advise/help
Hello. I am a newbie wanna be real estate investor looking to buy more property. I really want to use the Brrrr method to be able to cash out refinance and scale, but with interest rates and low inventory here in CT I'm unsure if I should do this for now. Currently, I own a duplex, which my partner and I rent out the top floor, and live in the bottom floor. We have 5 children. 17,16,13, and twin 17month old's. The 13 and 16 year old share a decent sized room. The 17 year old has a smaller bedroom, and the twins have our old dining room, but will eventually need a bigger room. Our goal is to move out, rent the bottom unit, and find a single family that can fit us all comfortably. However, we would like to secure some more duplex's or triplex's before this and then use the hopeful cashflow to pay for some of the single family mortgage if this is the best route to take, or should we go straight to single family since their is such low supply. My partner has the deed of the house in her name, which makes me eligible for a FHA or FHA 203k, which I would like to use to force appreciation, but not sure in this market or with my experience if I should or not. We both work full time on top of this. I make between 150-175k and my partner makes about 40k, but is currently going to school and pursuing my same career, which she could potentially be making 100k in 2.5-3 years. Our mortgage is 2,600 a month. The tenant pays $1400 a month. Our unit we live in now could easily go for 2k a month. Long story, but by the end of the year our mortgage will be at roughly 2k a month. We have 10k in savings and about 40K in equity in the house. We have about 50-60k combined in student loan and credit card debt. I wanted to give the full picture of our situation for the most specific advise. Thank you!
Hi @Paul Meiners! Welcome to the BP community. Given what you shared above, it sounds like you're not an ordinary "newbie," but I appreciate your humility and willingness to learn and grown with everyone else. That's what makes RE Investing so great!
There's a lot to chew on in your post, but I'll try my best to share a few responses and then some advice.
1. You're right; finding a property to do a traditional BRRRR is a tall task in CT right now. With inventory as low as it is and interest rates where they are, it's a challenge to find a property under market value with the chance to force immediate appreciation. Folks are doing it, but it will require lots of patience and a fine tooth comb. I'd recommend getting connected with a trustworthy wholesaler.
2. House hacking another multifamily - especially because you could use an FHA loan sounds like a great way to go. I'm not sure where you live now, but depending on where you're looking, there are lots of great places where you can still house hack for free (the other 2 or 3 tenants pay for your entire mortgage). If your long-term goal is to build out a portfolio of properties, this seems like the best next step to get there. This will allow you to build your portfolio, leverage your current home as a rental and create additional cash flow, and save on paying a mortgage for the time being. If you sock that money away, you'll be able to buy another multifamily in the next year or so.
3. If your goal is to create immediate cash on hand, finding a partner and going in on a flip would be a good option. However, this again is incredibly challenging right now given the low inventory.
4. If you can find a single family that can fit you comfortably, that's a great option, however that will be challenging with $10k saved for a downpayment.
5. Have you looked into Down Payment Assistance or Time to Own funds? I've worked with a few buyers who have successfully used both to purchase a home despite not having a lot of their own money saved for a Down Payment. The TTO funds tend to run out quickly, so make sure you talk to your agent/lender to make sure they're still available.
This community is a fantastic resource, too! You're smart to post here and get some advice. You'll learn a lot!
Good luck and let me know if you have any questions!
Hi Paul, I have found value investing in Cleveland, OH because it is home to Cleveland Clinic, lot of good neighborhoods, landlord friendly laws, stable appreciation and good cash flowing properties. There are also abundant opportunities for small multi family and SFH. I have been able to scale up to 12 doors in 2 years so definitely recommend this area. Feel free to reach out and we can discuss.
I recommend taking care of your family first. You have a large family.
I was in a situation where I had to move last year. I'm active duty military. 😉
Instead of trying everything I could to get another property after moving, I formed a JV to help leverage our resources.
I wish you all the best.
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