How to buy one LTR every year

Question

Hello! I follow several REI coaches/experts and many of them say they bought at least one LTR every year.  I'm looking to buy my first and I just don't see how that's possible without a massive amount of cash. It will likely take all of the $20k I have saved for a down payment on my first LTR, which took me several years to save.  I'm looking to build a portfolio in the San Antonio, TX market. I know financial details can vary, but can someone give me advice, strategy, or hope for how I could position myself to buy 1 LTR per year?

Jamie O'Connell · Answer

I would say house hacking would be your best option. That way you can put less down (as mentioned in other posts) live "rent free" in one property and in two years do it again OR in year two buy another multi family with 20-25% down. If you do that you can buy the first one year one, buy the second one year two and then repeat and buy another "personal" one year three. By that time you will prob have enough monthly coming in you could go out and buy a personal home that isn't a multi family in theory.

Side note: Remember that if you are going from W2 to non W2 that to get approved for a personal Loan you would need two years tax return on that non W2 income most likely.

Ezekiel Trevino · Answer

What you could do is take that 20K and put it as down payment for an LTR. However, you could also house hack if you plan to live in one of the units. If you live in one of the units, your down payment would be 3.5% instead of 20%. You could also do BRRR.

Drew Sygit · Answer

@Del Brady what your dealing with is old news!

From 2010 to 2022/2023 a lot of housing markets were experiencing double-digit appreciation annually. - This made it relatively easy to refinance or do a HELOC to tap the equity created by the appreciation, combined with your original down payment equity and any improvements you did to raise the value.

Real estate is now flat-lining or falling in many markets, making the above mostly impossible.

You do still have a few options to chase your goal:

1) Buy fixer-uppers that you can fix up yourself and increase the value.- Just check with a knowledgeable & trustworthy agent about what improvements will actually lead to an increase in value that exceeds the funds spent.

2) House hack and rent out every other bedroom to generate cash to save up for next purchase!- Live in worst room- Live in the basement if possible and rent out all the bedrooms to maximize rental income- Try STR and MTR strategies for even more income

3) Once you do both of the above, explore HELOC options & amounts to tap increased equity.- Just be careful of overleveraging and getting into too much negative cashflow and imploding.

Your biggest challenges:1) The potential of future falling home values2) Trying to hit positive cashflow

Ned Carey · Answer

@Del Brady Look into the creative strategies on how to buy with little or no money out of pocket. BP sells a book about it.

Some people look at flip one and buy one with the profits as a model. Maybe you cn only do one every two years, that is still moving forward. As you grow in real estate and in financial ability it become easier. It might take two years to do 4 but in the next five years you might do 10

Kerlous Tadres · Answer

Hey Del, I would recommend starting small and leveraging financing options like FHA loans for a lower down payment. With your $20k, consider house hacking by buying a duplex, live in one unit, and rent out the other. To build momentum, focus on improving cash flow through smart property management or light renovations. The goal is to build equity quickly, which will enable you to scale your portfolio. In my opinion, with the right strategy, it’s absolutely possible to buy one LTR per year by using your initial investment wisely and reinvesting the profits.

Orion Izzard · Answer

Buy fixers under market value. I take out zero interest loan at Home Depot, rehab myself, refinance, rent and repeat.

Aaron Zimmerman · Answer

House hacking or partnering would be the way to buy one a year in my opinion. House hacking allows you to potentially leverage low down payment loan options. Partnering allows you to complement your experience with another. Otherwise, putting down 25% for investment property is going to be challenging.

Seth McGathey · Answer

Hello, as others have said, house hack is going to make the most use of your money. And a BRRR is going to be best way to get your money back so that you can do it again right away.

But, to be honest, most people can't accomplish the LTR every year. That is a great goal, but goals require work and time. What is more common for most people is something closer to this.

year 1: buy first property

year 2: save money

year 3: save money

year 4: buy second property

year 5: refinance 1st property to buy third property

year 6: buy 4th property

year 7: HELOC on 2nd property to buy 5th property

year 8: buy 6th property

Then at this point you propbably have enough rental money coming in that you can buy a property every year. And you likely have the ability to continue refinancing/getting HELOCs to buy more properties so that you can buy more than one a year if you want.

If you can successfully BRRR most or all of your money out of your deals, that will speed up this schedule. But the best thing you can do is get started. Don't focus so heavily on your second deal that you never make your first deal.

If you use best principles for growth on each deal, you will be growing as fast as you personally can. And whatever that pace is, is good enough. Those principles are:

Put as little down as you can and still make the deal work.

Get your return as quickly as you can.

Reinvest everything you make off your properties.

Good luck!

David Fern · Answer

People who say buy a house a year usually save a lot of $ each year. They are usually high income earners and low spenders. Real estate is capital intensive, a point that’s often underscored in these forums. Focus on boasting your income and savings if you want to speed things up.

Del Brady · Answer

Thanks Ned, that's helpful and I appreciate the encouragement.  Did you read the BP book about creative financing?

How to buy one LTR every year

Most Popular Reply