Are these sound strategies for a buy & hold investor?
Hi BP,
I've come to you with a few questions about some scenarios I had in my mind. @Joel Florek helped me hone in on what exactly I need to do (thanks, Joel!). I come here in hopes of getting more opinions on if I have my head on right or not and what tweaks need to be made.
I will start by saying that I would like to be self-employed by 30 and when my first child does come in my 30s I will want (unceasingly) the desire to be a stay at home parent. I would like my portfolio to be majority buy and holds as I will need the cash flow to reach my goals. Here are some scenarios, let me know what you guys think.
Scenario 1: This is the scenario I have lulled on the longest. I do not have much capital ($15K>), but I do have a starting base that is encouraging. I am in a unique position where I have the ability to wholesale at very little cost ($200>;1k mailings). I had the idea of wholesaling up enough capital to have 5% down for a pretty decent house (3-family) in a nice neighborhood. I know of FHA but am not sure of the house quality. After speaking with Joel he thought it'd be pointless to waste time trying to wholesale when I could be using that time to build equity somewhere else (wise advice). My idea was to buy a turnkey property, one that didn't need much work at all. If any, minor or cosmetic at the most. Is this unrealistic? Should I be going the BRRRR route? What do you guys think?
Scenario 2: This is an idea that I initially had coming in. Buying a duplex and renting out the other apt, living for free and refi the next year. However, I shot that idea down because I figured (and was advised) a 3-plex would be better for my buck. But in relation to scenario 1, should I just go for a duplex, put in the time, build equity, refi next year and then get a 3-family? Thoughts on this?
Also, please let me know if I am misinterpreting something, but are refis' not as "attractive" with houses that are already in good condition? What is the difference between buying a home already in great shape vs not so great shape outside of the possibility to raise it's value? I believe I am missing a piece to this puzzle. Nonetheless, I'm confident you all can help.
So to sum this up, I am now considering these 3 options, but #2 seems the best right now:
1) Wholesaling for about a year to build significant capital then buy a 3-family. (Reminder: my marketing costs are virtually non-existent and I could possibly mail 2x a month)
2) Buy a duplex relatively soon, rent it out, build equity, refi and then buy a 3-family. (Awesome advice, Joe!)
3) Buy a duplex and still wholesale on the side (this opportunity is almost too good to pass up). Could I then combine refi money and wholesaling capital to then buy an even better property? Thoughts?
Thanks!