Hi - New Member - Looking for some input

Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes

5mo

Congrats on your success so far. You have achieved a lot, and your goals of getting out of your W2 are realistic.

Here are some idea I would share with you. These are reactions to things you mentioned in your post. Thinking about thse differently might help you get to your goal faster. I'll go in order as I found them in your post.

- You said your one property is cashflowing great at $1,500 per month but later said you had no mortgage. Almost every property with a paying tenant and no mortgage will give you cashflow. You would probably make different decisions if you looked at RoE. What is the annual return that equity is giving you? For example, if that house was worth $400,000 your RoE is 1,500*12/400,000 =4.5%. You could get about the same return in Treasuries. This means you are doing a lot of work and taking on risk for essentially zero added return.

- Look for investments that give you a much larger RoE. I typically like to see 20% plus. In many cases the best way to improve RoE is to take on debt. Taking on debt will reduce your cashflow. I never buy a property that doesn't also have good cashflow. It is harder to find one that both cashflows and gives you good RoE, but it can be done.

- Your original home is rented, and that covers the mortgage, but presumably not taxes, insurance, maintenance and vacancy. On the surface, this looks OK. In reality, this is a money pit. If you still are in the window where you could sell this and avoid capital gains, it is worth considering.

- You rented to family members. This is definitely not recommended. There are too many nightmare posts on BP about people that rented to friends and family. See if you can unwind that tactfully.

- New construction has additional risks. There are too many to go into in a short post.

- Condos have a lot of additional risk. Just google what happened in Florida last year. I'm glad you are selling this property.

- The Georgia idea you mentioned at the end. This is typically done in areas where flipping is impossible. Either the homes are too inexpensive and nobody wants to write a mortgage on them or the buyers have rough credit and most lenders won't finance them or require crazy high rates. Either way, you are taking on a lot of personal risk in those areas.

Based on what you have said, I would encourage you to look for existing fixer-upper SF homes as rent properties. You already seem to have good skills in rehab and are clearly not afraid of being a landlord. Look for a property where you can capture a lot of equity. (Example, purchase price $250,000, rehab $50,000, ARV $350,000). Use a hard money loan to minimize out of pocket. Do the math up front. What is your equity capture? What is your cashflow? What is your ROE?

Good luck

4 Reply

Anne PaynePro Member
OP
VA · Member since 2024 · 6 posts · 4 votes
5mo
Quote from @Greg Scott:

Congrats on your success so far. You have achieved a lot, and your goals of getting out of your W2 are realistic.

Here are some idea I would share with you. These are reactions to things you mentioned in your post. Thinking about thse differently might help you get to your goal faster. I'll go in order as I found them in your post.

- You said your one property is cashflowing great at $1,500 per month but later said you had no mortgage. Almost every property with a paying tenant and no mortgage will give you cashflow. You would probably make different decisions if you looked at RoE. What is the annual return that equity is giving you?  For example, if that house was worth $400,000 your RoE is 1,500*12/400,000 =4.5%. You could get about the same return in Treasuries. This means you are doing a lot of work and taking on risk for essentially zero added return.

- Look for investments that give you a much larger RoE.  I typically like to see 20% plus. In many cases the best way to improve RoE is to take on debt. Taking on debt will reduce your cashflow.  I never buy a property that doesn't also have good cashflow. It is harder to find one that both cashflows and gives you good RoE, but it can be done.

- Your original home is rented, and that covers the mortgage, but presumably not taxes, insurance, maintenance and vacancy. On the surface, this looks OK. In reality, this is a money pit. If you still are in the window where you could sell this and avoid capital gains, it is worth considering.

- You rented to family members. This is definitely not recommended. There are too many nightmare posts on BP about people that rented to friends and family. See if you can unwind that tactfully.

- New construction has additional risks. There are too many to go into in a short post.

- Condos have a lot of additional risk.  Just google what happened in Florida last year. I'm glad you are selling this property.

- The Georgia idea you mentioned at the end. This is typically done in areas where flipping is impossible. Either the homes are too inexpensive and nobody wants to write a mortgage on them or the buyers have rough credit and most lenders won't finance them or require crazy high rates. Either way, you are taking on a lot of personal risk in those areas.
Based on what you have said, I would encourage you to look for existing fixer-upper SF homes as rent properties. You already seem to have good skills in rehab and are clearly not afraid of being a landlord. Look for a property where you can capture a lot of equity. (Example, purchase price $250,000, rehab $50,000, ARV $350,000). Use a hard money loan to minimize out of pocket. Do the math up front. What is your equity capture? What is your cashflow? What is your ROE?
Good luck

0 Reply
Anne PaynePro Member
OP
VA · Member since 2024 · 6 posts · 4 votes
5mo
Quote from @Anne Payne:

Quote from @Greg Scott:

Congrats on your success so far. You have achieved a lot, and your goals of getting out of your W2 are realistic.

Here are some idea I would share with you. These are reactions to things you mentioned in your post. Thinking about thse differently might help you get to your goal faster. I'll go in order as I found them in your post.

- You said your one property is cashflowing great at $1,500 per month but later said you had no mortgage. Almost every property with a paying tenant and no mortgage will give you cashflow. You would probably make different decisions if you looked at RoE. What is the annual return that equity is giving you?  For example, if that house was worth $400,000 your RoE is 1,500*12/400,000 =4.5%. You could get about the same return in Treasuries. This means you are doing a lot of work and taking on risk for essentially zero added return.

- Look for investments that give you a much larger RoE.  I typically like to see 20% plus. In many cases the best way to improve RoE is to take on debt. Taking on debt will reduce your cashflow.  I never buy a property that doesn't also have good cashflow. It is harder to find one that both cashflows and gives you good RoE, but it can be done.

- Your original home is rented, and that covers the mortgage, but presumably not taxes, insurance, maintenance and vacancy. On the surface, this looks OK. In reality, this is a money pit. If you still are in the window where you could sell this and avoid capital gains, it is worth considering.

- You rented to family members. This is definitely not recommended. There are too many nightmare posts on BP about people that rented to friends and family. See if you can unwind that tactfully.

- New construction has additional risks. There are too many to go into in a short post.

- Condos have a lot of additional risk.  Just google what happened in Florida last year. I'm glad you are selling this property.

- The Georgia idea you mentioned at the end. This is typically done in areas where flipping is impossible. Either the homes are too inexpensive and nobody wants to write a mortgage on them or the buyers have rough credit and most lenders won't finance them or require crazy high rates. Either way, you are taking on a lot of personal risk in those areas.
Based on what you have said, I would encourage you to look for existing fixer-upper SF homes as rent properties. You already seem to have good skills in rehab and are clearly not afraid of being a landlord. Look for a property where you can capture a lot of equity. (Example, purchase price $250,000, rehab $50,000, ARV $350,000). Use a hard money loan to minimize out of pocket. Do the math up front. What is your equity capture? What is your cashflow? What is your ROE?
Good luck

Thanks for writing. I don't know how to reply so hopefully this works. My house that I rent to family is fine. We are super tight and there isn't anything I can't fix if it gets broken. The rent covers the mortgage, taxes and insurances so no worries there. I don't want the house vacant and I don't want to get rid of it so it works for me the way it is.
The house I rent for $1500 I paid $78k for and put $40k in it. I do always debate it though because I could sell it for $225k and get a better return in the stock market.
I grew up building houses and I am a structural engineer plus I have a side job lifting existing houses. There isn't anything new or scary there for me and I would just pay cash not get a loan for the new construction plus I have a wholesale deal worked out for modular structures so it is essentially just utilities, foundations and grading, the house gets set with a crane.
This condo is not similar construction to the florida surfside condos nor is it exposed to the same environment, it's just the usual pain in the butt with HOA's and monthly dues that I don't want to hang around. Plus I took over the HOA to get the place straightened out which is not something I am willing to do for more than a year. It's almost all the way back on track so I can leave them on solid footing. It would be a good rental but again I would make comperable in the stock market so not worth dealing with a tenant.
The whole thing I am looking for in Georgia or similar isn't about using a mortgage company, it is about holding the note myself and collecting the mortgage payments for my cashflow. I am not big on borrowing and paying interest to other people. I am looking to see if anyone has experience with that and how it is going. Not looking to be one of the sleezy people that is a slum lord but looking in low cost areas. This was I don't own the house or have to deal with tenants. A little less than the stock market but owner finance is traditionally higher than a bank because they are typically people that can't get traditional financing and it would provide that monthly cash flow I am looking for.
Buying a house for 250k, putting 50k into it and selling it for 350k isn't worth my time by the time you pay an agent, likely the buyers agent and taxes. I bought the condo for 106k, put 30k into it and selling it for 215k which is the kind of deals I go after. The uglier the better, people don't have vision and those are my favorites. Also I can't rent a 350k house and cover the costs. I would always make more in the market. I am always curious about this taking on debt thing. Why use someone elses money when it is at a cost to your bottom line?
I appreciate the discussion, I usually just debate with myself.
0 Reply

Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

5mo

Quote from @Anne Payne:

Hey everyone, I’ve had the membership for a while but haven’t really taken full advantage of it yet. I’m an engineer and a mom to a 5- and 2-year-old. I got into real estate because I want more flexibility and time with them, with the long term goal of replacing my W-2 income. I’ve been figuring things out as I go.

I bought a pretty rough waterfront house back in 2016 and fully renovated it. After having my first daughter in 2020, I purchased my first investment property, initially to deal with a squatter situation across the street, and it’s turned into a strong performer, cash flowing about $1,500/month. My original home is currently rented to family and covers the mortgage.

Since then, I’ve picked up a vacant lot with a great barn/workshop that was built about three years ago, along with another vacant lot, both on the same street. I’m planning to build on the lot with the barn and am still deciding what to do with the second one. I also have a condo flip hitting the market tomorrow and a primary residence in town.

At this point, everything is paid off except for my original home, since the mortgage rate is only 2.75%.

The challenge I’m running into now is that my job is very high stress, and I find myself bringing that stress home more often than not. I recently spoke with a friend who mentioned someone he knows is buying houses in Georgia through a wholesaler, renovating them, and then owner-financing the sales.

Is anyone here doing something similar? I could potentially pull cash out of my properties to try this approach, but I feel a bit stuck on what the right next move is.

I also just want to say I really appreciate everyone who contributes here, I’ve learned a lot from reading through the threads.

What @Scott Gregg

Be careful as several posters will suggest you cashout refi your equity and then hire them to find you other properties to buy. Many of them will claim to be "investor-friendly", but really won't care if you make a good investment as they are actually just, commission-friendly😌

[email protected]248-209-6824

Logical Property Management4.9451 Reviews

Website View Page

1 Reply

Jimmy LieuBusiness Member

Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes

5mo

Quote from @Anne Payne:

Hey everyone, I’ve had the membership for a while but haven’t really taken full advantage of it yet. I’m an engineer and a mom to a 5- and 2-year-old. I got into real estate because I want more flexibility and time with them, with the long term goal of replacing my W-2 income. I’ve been figuring things out as I go.

I bought a pretty rough waterfront house back in 2016 and fully renovated it. After having my first daughter in 2020, I purchased my first investment property, initially to deal with a squatter situation across the street, and it’s turned into a strong performer, cash flowing about $1,500/month. My original home is currently rented to family and covers the mortgage.

Since then, I’ve picked up a vacant lot with a great barn/workshop that was built about three years ago, along with another vacant lot, both on the same street. I’m planning to build on the lot with the barn and am still deciding what to do with the second one. I also have a condo flip hitting the market tomorrow and a primary residence in town.

At this point, everything is paid off except for my original home, since the mortgage rate is only 2.75%.

The challenge I’m running into now is that my job is very high stress, and I find myself bringing that stress home more often than not. I recently spoke with a friend who mentioned someone he knows is buying houses in Georgia through a wholesaler, renovating them, and then owner-financing the sales.

Is anyone here doing something similar? I could potentially pull cash out of my properties to try this approach, but I feel a bit stuck on what the right next move is.

I also just want to say I really appreciate everyone who contributes here, I’ve learned a lot from reading through the threads.

Hey Anne, welcome to BP and you’ve already done more than most people getting started, especially balancing all that with kids and a demanding job. On the owner financing strategy your friend mentioned, people are definitely doing it and it can work well in the right situations, but it’s a different game than rentals or flips since you’re basically becoming the bank, so you want to be really clear on buyer quality, down payment size, servicing, and what happens if they default because that’s where most of the risk is. It can create solid monthly income and sometimes better returns than traditional rentals, but it’s not as passive as it sounds upfront, especially if you’re already feeling stretched with your W2. Based on everything you shared, it might be worth first stepping back and asking what actually reduces your stress, not just what increases returns, since you already have equity, paid-off assets, and a strong cash-flowing property, which is a great position to be in. Sometimes the next move isn’t adding a new strategy but simplifying, like stabilizing what you have, building a small reliable team, or choosing one clear lane instead of stacking more projects. If you do explore owner financing, I’d start with one deal and treat it as a test run rather than going all in right away, just to see how it fits your time and stress level.

[email protected]614-300-7535

Jimmy Lieu, Red 1 Realty4.9120 Reviews

Website View Page

0 Reply

Anne PaynePro Member
OP
VA · Member since 2024 · 6 posts · 4 votes
5mo
Quote from @Jimmy Lieu:

Quote from @Anne Payne:

Hey everyone, I’ve had the membership for a while but haven’t really taken full advantage of it yet. I’m an engineer and a mom to a 5- and 2-year-old. I got into real estate because I want more flexibility and time with them, with the long term goal of replacing my W-2 income. I’ve been figuring things out as I go.

I bought a pretty rough waterfront house back in 2016 and fully renovated it. After having my first daughter in 2020, I purchased my first investment property, initially to deal with a squatter situation across the street, and it’s turned into a strong performer, cash flowing about $1,500/month. My original home is currently rented to family and covers the mortgage.

Since then, I’ve picked up a vacant lot with a great barn/workshop that was built about three years ago, along with another vacant lot, both on the same street. I’m planning to build on the lot with the barn and am still deciding what to do with the second one. I also have a condo flip hitting the market tomorrow and a primary residence in town.

At this point, everything is paid off except for my original home, since the mortgage rate is only 2.75%.

The challenge I’m running into now is that my job is very high stress, and I find myself bringing that stress home more often than not. I recently spoke with a friend who mentioned someone he knows is buying houses in Georgia through a wholesaler, renovating them, and then owner-financing the sales.

Is anyone here doing something similar? I could potentially pull cash out of my properties to try this approach, but I feel a bit stuck on what the right next move is.
I also just want to say I really appreciate everyone who contributes here, I’ve learned a lot from reading through the threads.

Hey Anne, welcome to BP and you’ve already done more than most people getting started, especially balancing all that with kids and a demanding job. On the owner financing strategy your friend mentioned, people are definitely doing it and it can work well in the right situations, but it’s a different game than rentals or flips since you’re basically becoming the bank, so you want to be really clear on buyer quality, down payment size, servicing, and what happens if they default because that’s where most of the risk is. It can create solid monthly income and sometimes better returns than traditional rentals, but it’s not as passive as it sounds upfront, especially if you’re already feeling stretched with your W2. Based on everything you shared, it might be worth first stepping back and asking what actually reduces your stress, not just what increases returns, since you already have equity, paid-off assets, and a strong cash-flowing property, which is a great position to be in. Sometimes the next move isn’t adding a new strategy but simplifying, like stabilizing what you have, building a small reliable team, or choosing one clear lane instead of stacking more projects. If you do explore owner financing, I’d start with one deal and treat it as a test run rather than going all in right away, just to see how it fits your time and stress level.

Thanks Jimmy. I definitely hear you on the stress and branching out thing. My goal is to replace my income so I don't have to have the high paying W2. I love to work so couldn't stop but there are definitely things that are so much less stressful I could do part time so I have summers off with my girls and more freedom. I don't want them to grow up and have missed out on all that time with them. In that vein I could look at renting my condo instead of selling and renting my house that the family is in after they move out. That would get me $4100/month. I just don't love the condo because of the HOA fees. I could sell it and buy another house in gloucester though and do the same thing. That's a good way to think about it. I love the idea about doing a test property holding a mortgage too. Thanks for chatting.
0 Reply

G. Brian DavisPro Member

Investor · Hatboro, PA · Member since 2016 · 2k+ posts · 846 votes

5mo

Hi @Anne Payne. Given your goal of more time and less stress, I’d be cautious about adding something like owner financing it can work, but it’s more hands-on and adds complexity. You might be better off scaling what’s already working or even looking at more passive investments. That’s actually what we focus on in our co-investing club, vetting deals together so you can grow without taking on all the day-to-day. Big picture, your next move should simplify your life, not make it busier.

0 Reply

Anne PaynePro Member
OP
VA · Member since 2024 · 6 posts · 4 votes
5mo
Quote from @G. Brian Davis:

Hi @Anne Payne. Given your goal of more time and less stress, I’d be cautious about adding something like owner financing it can work, but it’s more hands-on and adds complexity. You might be better off scaling what’s already working or even looking at more passive investments. That’s actually what we focus on in our co-investing club, vetting deals together so you can grow without taking on all the day-to-day. Big picture, your next move should simplify your life, not make it busier.

Thanks Brian. Is a co-investing club like a small group where you look at the deals or is it like a conglomerate? I looked at 1 in Texas where they buy apartment buildings and stuff and it is a lot of people. I am too much of a control freak to get into business with a big group. If it is small, how did you all start out the group?
0 Reply
G. Brian DavisPro Member
Investor · Hatboro, PA · Member since 2016 · 2k+ posts · 846 votes
5mo
Quote from @Anne Payne:

Quote from @G. Brian Davis:

Hi @Anne Payne. Given your goal of more time and less stress, I’d be cautious about adding something like owner financing it can work, but it’s more hands-on and adds complexity. You might be better off scaling what’s already working or even looking at more passive investments. That’s actually what we focus on in our co-investing club, vetting deals together so you can grow without taking on all the day-to-day. Big picture, your next move should simplify your life, not make it busier.

Thanks Brian. Is a co-investing club like a small group where you look at the deals or is it like a conglomerate? I looked at 1 in Texas where they buy apartment buildings and stuff and it is a lot of people. I am too much of a control freak to get into business with a big group. If it is small, how did you all start out the group?

Ours is more of a small, deal-by-deal group, not a big blind-pool or conglomerate. You choose what to invest in, so you’re not handing over control, you’re deciding case by case. We started pretty organically, just a handful of investors wanting to vet deals together and learn from each other, and it grew from there.

1 Reply
Anne PaynePro Member
OP
VA · Member since 2024 · 6 posts · 4 votes
5mo
Quote from @G. Brian Davis:

Quote from @Anne Payne:

Quote from @G. Brian Davis:

Hi @Anne Payne. Given your goal of more time and less stress, I’d be cautious about adding something like owner financing it can work, but it’s more hands-on and adds complexity. You might be better off scaling what’s already working or even looking at more passive investments. That’s actually what we focus on in our co-investing club, vetting deals together so you can grow without taking on all the day-to-day. Big picture, your next move should simplify your life, not make it busier.

Thanks Brian. Is a co-investing club like a small group where you look at the deals or is it like a conglomerate? I looked at 1 in Texas where they buy apartment buildings and stuff and it is a lot of people. I am too much of a control freak to get into business with a big group. If it is small, how did you all start out the group?

Ours is more of a small, deal-by-deal group, not a big blind-pool or conglomerate. You choose what to invest in, so you’re not handing over control, you’re deciding case by case. We started pretty organically, just a handful of investors wanting to vet deals together and learn from each other, and it grew from there.

That's awesome, thanks for the ideas!!
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Hi - New Member - Looking for some input

Hi - New Member - Looking for some input

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