What would you do in this scenario ?

Question

Hey everyone, I’m closing on my first duplex for 175,000 using an FHA loan. In Upstate New York.  I’ll be living in one unit for at least a year, and once I move out and both units are rented, I’m projecting around 800 a month in cash flow. While I’m living there, I’m about 300 a month out of pocket. I work six days a week with long shifts. Income is good, but my free time is very limited. Looking ahead a year or two, I’m trying to decide which path makes the most sense. If you had very little free time, would you spend it renovating lower-priced properties to build equity, (BRRRR) even if that meant slower growth? Or would you focus on your career, save aggressively, and buy more turnkey or lightly value-added places that cash flow but don’t build as much equity? For those who’ve been in a similar spot, which strategy paid off better for you in the long run, and why? Thanks in advance ,I really appreciate any help with this.

Michael K Gallagher · Answer

congrats @Tyler Williams if I were to do it again I'd have gotten into a scaleable income or started using my w2 income sooner in my career when I still had it to just build up the cash, ultimately leverage and loans are great, but the cash is what lets you make lucrative moves quickly. but if your job pays well and the income is scaleable, theres much power in maximizing that and letting your house hack compound on itself for several years.  Could potentially just keep house hacking every few years too.

Abel Curiel · Answer

Hey Tyler!

Great questions and congratulations on the duplex acquisition!

I'd take a look at the current market... how is inventory? Which properties are sitting on the market?

Are you seeing more BRRRR opportunites? more turn key? more light value-adds?...Given your schedule, the BRRRR seems like the least-practical route, BUT that depends on the deal itself... suppose you find a BRRRR deal for 60-70% of ARV (assuming that's good in your market)... If the deal is good enough, you may be able to justify and account for help i.e., a GC or project manager.

If you're looking in the same location/market, why not look for all 3 simultaneously and see which opportunity arises at the right time?

All the best!

Abel