I have done a lot of research on the DFW area and feel that is the best area to buy my first rental property. I would like to buy multiple properties over the next few years so that my husband and I can retire in 10 years.
We are both working and can afford to save/invest about $60k per year... My first thought was to buy multiple houses but I am constantly seeing podcasts on multi family and I feel that might be a better option... We can either buy 2 or 3 houses this year or save 2 years and buy a building...
My question is this: what would be your advice for the best way to use our money to become finally free?
Any advice would be appreciated.
Hey Brigitte. I'm here in Houston and had a similar thought process when I got started. While I also heard that multi-family is the way to go, what I found is that my net worth was not high enough to merit purchasing a property of the size that I wanted (~50 units) where I could afford the property manager more effectively.
So I proceeded to purchase a single family house that was flooded, and I'm working on purchasing a few others in similar condition or in strong rental areas. The purpose here is to create enough captured equity that I'll be able to 1031 the houses (defer taxes) and afford the larger loan for a multi-family later on. Other houses that I have that are strongly cash flowing I can use to supplement my income and help with operations costs when starting into the MF property.
I have also invested in a pair of fourplexes, which is not quite the multi-family model (which is 5+ units) but a good starting point with a larger supply of units so a vacancy does not hurt quite as much. Those will cash flow nicely, but there isn't as much on the equity capture, so it's a mixed bag depending on your goals.
An alternative in the meantime is to look into being a passive investor on other larger properties that have lead investors and watch how they run the syndication and their plan to improve the property. You won't have any power to make day-to-day decisions in this model, but nonetheless it is a good learning experience.
@Brigitte Keene I personally would start looking right now for single family properties, small multi's or even small commercial that you can buy under market and begin your investing journey. As you are able to save more to set yourself up for a larger property, sell the existing portfolio and exchange into a larger deal.
You could also do as Jeff Smith mentioned and invest in syndications. Either way use this time to constantly learn and grow, so that by the time you are able to step it up, you are ready.
Thank you guys! I'll pm you both
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