I'm new to BiggerPockets but have been rapidly trying to get as much information as possible about real estate investing, from here, the BP podcast, and from other books and websites as well. My question to those with experience in real estate investing is this: what strategies have you found to be the most successful in getting your real estate investment portfolio off the ground?
My initial thought when I decided to enter the real estate game was to try and acquire rental properties as quickly as possible so I can build cash flow. Now, however, I am becoming more attracted to the notion of trying to flip properties in my early years as much as possible, so I can generate a good starting cash base and a cash-flush business, then once that is established build a portfolio of rental properties to generate long-term stable cash flow. I'm interested to hear other investors' takes on this, either those with lots of experience or those starting out.
I'm in a similar situation and have been considering doing the BRRR strategy vs. just flipping for a while. If you can purchase the types of properties you eventually want buy and hold then it might make sense to just start in with the BRRR, as your amount of capital shouldn't decrease after you refinance each place you buy. If you can't currently buy what your long term goal for cash flow is (e.g. a 100 unit multifamily) then maybe flipping to build up enough capital for this kind of purchase would make sense. I'm not sure, and am interested to hear what others will suggest.
That makes sense Eric, thanks for your input. I suppose the goal maybe ought to be to find those properties that fit the 70% rule (purchase price of the property needs to equal no more than 70% of the ARV - repairs). That should give an investor a good likelihood of refinancing to get their money out if they want to rent the property, or sell for a profit.
The complicating factor to me is that at some point, likely very soon in the game, buy-and-hold investors need to find private money, since obtaining conventional lender financing will get more and more difficult the more properties you own. That problem can (at least in my inexperienced eyes) be addressed by flipping properties until an investor has enough cash to fund all or most their own deals.
Getting financing shouldn't get more difficult. Many lenders will count 75% of the income from your rentals, so as long as this exceeds the PITI your DTI ratio should increase as you accumulate rentals. Or is there another problem you're thinking of? After a certain number of properties (say 10) you won't be able to get more conventional mortgages, but can just switch over to commercial loans, with terms that can still be pretty good.
I didn't realize they would count the income from the rentals. Does that hold true even if the rent is going to an LLC? I've been reading that after four or so properties it would get tough to obtain traditional financing. That is good to know though, that maybe it's not as big an issue as it is in my mind.
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