How to Leverage Equity Properly When Getting Started.

Question

Good day all! I have had the long-time itch to invest, but I've let fear hold me back. I currently own a VA backed SFH rental with about 50K in equity. Currently in the process of a refi. I am active duty military looking at retirement in about 14 months, and stationed overseas until retirement. I am curious how I can get into the game now, but not jeopardize financing availability in a year when it's time to purchase our primary residence in Florida.

I am extremely interested in the BRRRR strategy, especially multifamily, but I am stuck in analysis paralysis when it comes to trusting a team from so far away.

Any tips or strategies are highly appreciated.

Dustin

I am extremely interested in the BRRRR strategy, especially multifamily, but I am stuck in analysis paralysis when it comes to trusting a team from so far away.

Any tips or strategies are highly appreciated.

Dustin

Dustin Heflin · Answer

@Chris Stroup yes, I will be receiving medical disability and retirement pay. I would really appreciate a conversation with you.

Chris Stroup · Answer

@Dustin Heflin What are you doing once you get out?  Are you getting retirement pay and disability?  There is a good chance you will be getting as much as you are making now.  I am 100% disabled and the tax-free check isn't too far from what I was making when I was in.  This gives you a pretty big safety net.

What is your risk tolerance?  Is there anyone you can partner with to share the financial load and workload?  The best thing I did to get started was to get two partners.  There is a lot that goes into this but for me, it was worth it.

I am happy to jump on a phone call with you and chat for a few minutes.

Dustin Heflin · Answer

@Joe Norman I have considered this option. I guess I’m trying to flex my W-2 income before it’s gone. Waiting until I’m stateside may be the best decision based on my circumstances.

Dustin Heflin · Answer

@AJ H. I appreciate the input. I do have access to the BP calculators. I’m also evaluating different markets as well. I will hit the calculators in the coming weeks and get more familiar with the process.

Dustin Heflin · Answer

@Chris Stroup my credit is good, not excellent. I have access to a decent amount of capital that is currently earmarked for transitioning back to civilian life. I’ve been contemplating how to utilize the equity in my rental property along with leveraging my W-2 income before it’s gone. But at the same time, I don’t want to leave myself high and dry when it’s time to move my family next year.

Thoughts?

William Lacy · Answer

@Dustin Heflin Following, because I am in a very similar situation.  Overseas, and looking to either sell or refi my VA backed SFH, but I am overseas for at least 16 months.  I feel like I need to get in the game now, but the overseas issue is not making it any easier.

Chris Stroup · Answer

You have so many options.

Depends on your credit score and how much money you have access to.  If both of those are good, it is going to be easier to get loans while you are still in.  Take advantage of that!  If they are not good, spend this time raising your credit score, saving as much money as you can, and learn learn learn.

Bill F. · Answer

@Dustin Heflin

If I were in your shoes, with little RE knowledge, 12hrs ahead of everyone else, still on Active Duty, I'd learn as much as I could about RE and max out my TSP for the next 14 months.

The RE won't move until you get back. Sometimes slow is smooth and smooth is fast.

Joe Norman · Answer

BRRRR from overseas sounds like too much risk, and too much of a headache, for me. Why not spend the next 14 months learning and saving so that you can hit the ground running with the BRRRR strategy once you're in Florida?

Aaron W. · Answer

@Dustin Heflin Thank you for your service and congrats on your decision to get into real estate!

You have some options to get started into real estate, but before deciding on your path, what is your why in investing?  What are your goals to accomplish your why?  Do you want to invest for cash flow, appreciation, or a combination?  Do you want the cash flow now? What is your appetite for rehab?  What amount are you willing to invest in order to keep the financial availability to purchase your primary home in Florida?

Depending on how much you will be able to cash out on the refinance, you could use those funds for your investing. It is possible to invest with little to no money down if you can find the great deals. Financing is an obstacle that can be overcome when you find the right deals whether through hard money, private money, investors, or partners.

Perhaps finding a more experienced partner can help you overcome the analysis paralysis and guide you through the deal. Not only will you learn a lot, but the momentum from this first deal could help you jump into your future deals.

I recommend focusing on developing your deal analysis skills. This is an invaluable skill every investor needs. You should start now and practice every day, even if you aren't buying yet. Through analyzing deals, you will begin to develop your own investment criteria and recognize when you find those deals.

Good luck!