I am a fairly new investor located near Fayetteville, NC. My wife and I currently own two properties, one rental and our primary residence. We are going to be going under contract on a new primary residence soon for about $375k. So in the near future we will have our home, two rental properties (both single families), and almost exactly $100k in savings. We are planning to set aside approximately $15k for new furniture, house-related items, etc, and we want to keep at least $30k in reserve. So with a working budget of $55k, should I look for BRRRRs myself, take on a partner, wait until I have more to work with, or (insert your suggestion). Thanks in advance!!
@Logan L. You're sitting almost exactly in the same position I am. The prices are crazy in every market. Have you ran the numbers for the current primary to see if it pencils out as a rental? Sometimes they don't; they break even or negative cash-flow every month. That's not a wise investment if it's costing you money.
Have you determined an investment strategy that your wife can agree on? I'm not married but I'm coaching my girl friend slowly about this stuff because she's never owned a property. Investor mindset is different than HGTV mindset.
Are you stepping up in home size? Generally the bigger expensive properties don't work as a rentals. At $375k you're locking in less exit strategies. If you want to rinse and repeat like you're trying to do on the current primary buying a huge house won't work. Most properties are over priced but if you can swing it find a cheaper deal and make sacrifices to give you more exits (cash-flow rental, flip, BRRRR). That's smart to keep that $30k in savings for reserves.
@Jaron Walling Hey Jaron, firstly, yes I ran the numbers for our current house and it actually cash flows very well on paper.
In terms of the investment strategy, my wife is pretty hands off honestly, but supportive of what I choose to do and I am leaning toward BRRRR right now because of the ability to recycle that capital. Eventually I would like to do commercial REI, but that's a few steps ahead.
As for the new house that we're buying, he have no intention of ever making that a rental. It is a home that we intend to live in for up to 10years at which point we'll sell. Also, it's important to note that we are buying the house with zero money down (military - VA loan), so that's not eating up any of our capital.
@Logan L. That's great man! If you're aiming for the BRRRR strategy look for the distressed properties. They're hard to find now days but it's impossible. Look for long days on market, FSBO, terrible pictures, anything that conventional buyers hate.
Updated about 2 months ago
not impossible *
@Jaron Walling thanks man, that's a great idea. I know I need to build my "core four" and hopefully between an awesome agent and scouring Zillow I'll be able to find a distressed property that fits the bill for a good BRRRR!
@Logan L. If you have the desire/time I would start an LLC and do your own BRRRR's. I started doing this about a year ago and ive learned a lot. I finished up my first BRRRR about two months ago. Best of luck!
@Douglas Spence DM’d
@Logan L. , the current market is crazy, but in your position, you should be good. Stick to your numbers and be patient. If you don't already attend the local meetups, you should start, a lot of service members and veterans in the groups. If you have any questions, don't hesitate to ask.
I feel like we might have a lot in common. I started a few years ago in a similar situation with almost the exact amount in savings. I’ll be happy to chat with you. Shoot me an email or text that’s the easiest way to get ahold of me.
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