Single family home next?

Question

Hi I'm 28 years old and single. I have about 100k in stocks (retirement s&p) and I bought a 2 family house in May 2019 for 535k put down 20%, 30 year. I'm living in one unit, renting out the other, and renting out the garage. I pay about 750 towards the mortgage to live there after my renters pay me (with taxes, insurance, etc included.)

I was thinking about saving for another real estate property but I'm not sure what direction I should go towards. Condo? Another Multi? Single Family Home? Something out of state? I'm trying to think of the future and I was thinking maybe getting single family now, renting it out. Then maybe if I have kids one day moving in there later on. Not sure what turns my life will make.

Brenden Mitchum · Answer

Hey @Steve Totino

I think you are suffering from a common case of lack of direction. Do you have a 5 year vision? Obviously, we cannot account for all the twists and turns in life but if you have an idea of where you want to be in 5 years you can work back and start building short-term goals and taking action towards those goals. Let's say in 5 years you wanna quit your job and be financially free. So now you need to determine how much you need every month in passive income to do this. Let's say it's $10k (this should be more than enough for most). So how many units do you need? Assuming each door cash flows at least $100 (which it should) this means you need 100 doors. Obviously this means single family is unrealistic so there is not much reason to buy them. Now you know you need to do multifamily and probably even jump into large multifamily. Obviously, this is just a quick example so figure out where you wanna be in 5 years and work backwards to find out what strategy and actions to take right now. If your vision includes your current job and only a little bit of extra cash from rents, maybe single family would be a good option. It all depends on where you want to be and when you want to be there. This should also tell you if you wanna invest OOS. If your current market is not conducive to reaching that goal then look elsewhere but make sure you really do your homework.

Please, feel free to message me anytime if you have questions or just want to chat!