Five years into rental investing and feeling like I've plateaued.

Five years into rental investing and feeling like I've plateaued.

Anchorage, AK · Member since 2014 · 10 posts · 2 votes

I'm in need of some guidance for taking my investments to the next phase/level. I bought my first duplex five years ago in Anchorage, Alaska and then bought a triplex down the road two years later. Three years ago, I transitioned the duplex into a triplex. So I'm sitting on two triplexes, the first bought wit my VA loan, the second bought through FHA. They are both doing well. But I made some rocky decisions along the way that were great learning points and that did not sink the ship. Mostly, I went too fast and spent more than I could handle on remodels and I am crawling out of that debt right now. Luckily, I net above the mortgages (~$1450 for the first property $1025 on the second). So the debt is being whittled away at a steady pace. My goal is to continue acquiring properties and eventually pay one off by shoveling a portion of the net from all the properties into one of the mortgages.

My question is more of an opening up to ideas.  Where would you go from here?  I'm feeling a bit stagnant.  The past five years and the associated learning curve has left me with little expendable cash so I need to play the waiting game for a bit and build some capitol.  But as I do that, I'd like to start turning the gears in a good direction and one that will help me build on the foundation I have so far.  

So, I appreciate any advice that anyone is willing to offer.

1Reply
21 views

Most Popular Reply

Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
8y

Sometimes REI isn't flashy or exciting, you might just have to embrace the grind as you build up reserves for your next acquisition.

See this reply in the discussion

5 Replies

Jump to latestLatest
  • Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes
    8y

    Never do remodels that don't add to cash flow. For example, if the going rents in your area are $2,000 for a remodeled place, and you can only command $600, then yes, remodel! If your are getting the same rents as the area, but YOU think some "sprucing up" will make your place show better, then DON'T remodel.

    The issue you are facing will be low DTI ratio and high credit utilization. Gurus always talk about buying properties with Other People's money, but I haven't ventured into that arena yet. I'm about to close on a condo for my primary residence and will be looking for my next investment property early next year.

  • Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
    8y

    Sometimes REI isn't flashy or exciting, you might just have to embrace the grind as you build up reserves for your next acquisition.

  • Blake ElderBusiness Member
    Professional · Wasilla, AK · Member since 2014 · 35 posts · 16 votes
    8y

    Hey Patrick, good call on reaching out! Often when you are in a spot like that it is helpful to revisit your goals. What are you trying to accomplish with RE investing? Often by focussing on the big picture that will pull you through the details of what to do next. The other thought is, perhaps you can refinance your current properties, and then have some extra cash to invest in the next deal, or you could look for owner finance deals etc. Or you could stop paying extra on your mortgages (I think I read that right that you are paying extra on them) and put that money aside for the next purchase. Hope some of this helps, it is what I would do in your position!

    RMG Real Estate4.940 Reviews
  • Investor · Anchorage, AK · Member since 2013 · 229 posts · 133 votes
    8y

    Hi Patrick,

    I bought my first duplex in 2014 with 10% down. I refi'd before moving out and PMI dropped off within a couple months after paying for a broker price opinion. Much of this was made possible by an upward trending market and buying right. Currently, I'm in my third owner-occupied property and am looking to refi next year or will be requesting PMI be taken off at the two-year mark since the loan was sold to Freddie Mac: https://new-content.mortgageinsurance.genworth.com...

    I've done some analysis and depending on the type of loan, PMI can be treated like additional interest to determine if you should seek alternative financing. Most recently, I was getting 9% apr on the PMI related portion of the down payment (anything above 80% LTV). So, it can really be a killer if kept on for the long term.

  • Anchorage, AK · Member since 2014 · 10 posts · 2 votes
    8y
    Originally posted by @Connor Dunham:

    Hi Patrick,

    I bought my first duplex in 2014 with 10% down. I refi'd before moving out and PMI dropped off within a couple months after paying for a broker price opinion. Much of this was made possible by an upward trending market and buying right. Currently, I'm in my third owner-occupied property and am looking to refi next year or will be requesting PMI be taken off at the two-year mark since the loan was sold to Freddie Mac: https://new-content.mortgageinsurance.genworth.com...

    I've done some analysis and depending on the type of loan, PMI can be treated like additional interest to determine if you should seek alternative financing. Most recently, I was getting 9% apr on the PMI related portion of the down payment (anything above 80% LTV). So, it can really be a killer if kept on for the long term.

    Connor, thanks for this bit of info. I'm a bit slow so I was wondering if you might be able to expand on the PMI being treated like additional interest idea. Maybe I'm not understanding PMI as well as I thought I did. I pay PMI for the property that I've financed with FHA. It is a monthly addition to the mortgage. But you're saying that this comparison only works in relation to the down payment portion of PMI? Or can I apply the same principle to the ongoing PMI that I pay each month to determine if refinancing under a higher interest rate would still be more lucrative than my current mortgage with PMI attached?

    And thanks to everyone else that has responded as well.  This is good stuff.

Join the conversationCreate a free account to reply, vote on answers and follow this thread.