Skip to content
General Landlording & Rental Properties

User Stats

11
Posts
10
Votes
Don Roberts
  • Rental Property Investor
  • Hawaii
10
Votes |
11
Posts

ENDGAME – what do you all think???

Don Roberts
  • Rental Property Investor
  • Hawaii
Posted Aug 1 2019, 22:15

BP Community,

New poster but long time investor here. Looking for some advice from the collective Bigger Pockets Community. Please leave comments as this will be a factor into the future way ahead (your feedback will be considered for what to do next).

Background: I started buying real estate (RE) and in 2003 and generally bought, remodeled, and rented out houses. I am in the Navy and most purchases were bought as a primary residence when we moved somewhere, and rented out when we moved. Soon I will retire (July 2021 – retirement age: 51), and will have 6 investment properties with 5 paid off. The plan is to move to a no state tax state (TX) to a good school district for my son to start/finish high school.

Overall situation in 2021 after retirement:

Net RE value: ~ $2.2M

Rental property mortgate: ~ $800k (house in Hawaii)

Equity: ~ $1.4M

Monthly cashflow (includes military pension + rents – RE tax – RE Ins – estimated monthly repairs – last mortgage for investment property):

~ $9,000 (considering heavy repair budget for rentals. Probably not likely, so this is a conservative monthly income after expenses. More likely will be $9,500 to $10k)

I am estimating $3k to buy a nice house (estimating $300k to $400k house) in a good area with good high schools in TX (this includes taxes, ins., utilities). Lets say $4k on the ultimate high side.

This thus leaves ~ $9k - $4k so about $5k (conservative – but likely higher) monthly to live off of after bills, mortgages, etc. Plenty to live off of in a low cost state such as TX. Currently I am in HI, so moving almost anywhere is cheaper than here. 😉

My thoughts:

I had a vision almost 20 years ago (to buy and hold and slowly accumulate rental properties as I transferred to various duty stations) which I have accomplished as I stuck to my plan and long term goals. I never went in 'big' as I saw my best friend from high school and my brother go from 12 and 14 properties to both bankrupt in a few years after the 2008 bubble popped.  

I want to teach my son RE investing. I was thinking of buying a RV to travel each summer while my son is on summer break from high school, and look for 1 to 2 good deals each summer to buy, rehab, and rent out. These would be geographically dispersed throughout the U.S. (to limit geographic risk), and analysis will be performed to buy in the ‘path or progress’ for various cities. We will also look to purchase in areas next to Universities and rent out individual rooms … AirBNB’s, etc.

Advice??? I have thought of a few different COAs listed blow. Please when you leave comments, let me know which one you think is best and why:

Goal: teach my son (14 yrs old in 2021) about RE investing. This will be continuous education for the next several years. When he attend college, I want to buy a house for him in his name so he can house hack to pay a large % (or all) of the mortgage.

Risk metric (low / med / high): Risk is defined as ‘possibility of a financial loss’ and for the COAs below is estimated to be that taking on more debt (even though RE debt can be thought as good) as more debt = more risk. I think we may be at the top of a RE cycle and price appreciation may be flat (at best) and falling drastically (at worse). If correct, then this is not the type of market to take on more risk (more debt).

Baseline situation in 2021: I do not plan on getting a job after retirement from the military, and just live off of the pension and RE investments.  Being 51 years old and tons of education/experience, I can get a well paying job, but when you get older you realize time is more important than money.  Current plan is not to work and enjoy life.  ;-)

COA 1 (low risk): Don’t buy any more rental properties, live off of the monthly cash flow that I have. Son will be educated from traveling to rental properties to do repairs, learning how to do accounting and managed the rental properties, etc. No additional risk as no new debt is accumulated.

COA2 (medium risk): Take out HELOC (or cash our refi) from current rental properties. In summers, look for 1 to 2 properties to purchase across the U.S. While living in RV, have son help renovate and put in ‘elbow grease' to renovate properties, then rent out. Risk is more debt, but if purchased correctly cashflow will pay for mortgage ++ and houses will cashflow.

COA3 (high risk): Same as COA2, but purchase 3 to 4 properties per year by taking out more loans against equity. Higher risk than COA 2 as more debt = more risk … and RE market may be falling in the U.S.

BP forum ... what do you all think?  Collectively we are a wealth of knowledge.  Let me know what you think (the good, the bad, and the ugly).


Regards,

Don

Loading replies...