Family of 4 with 2 SFH rentals in Philly looking for next move

1 Reply

Hi!

My mortgage broker told me about Bigger Pockets and it looks like I came to the right place. My husband and I own 2 SFH in South Philly that turn an amazing profit because we bought at the right time. We are both in agreement that our biggest asset is the equity we have stored in these houses-- about $400k. The question is: What do we do with it? Our ultimate goal is to generate enough passive income to quit our jobs and travel with our kids whenever we want (WITH a nanny of course... that's part of my fantasy). Right now we're generating about $24k/year in rent, and my husband is the landlord.

It seems our options are:

  • Take out a home equity loan on one or both houses and buy a larger, turnkey multi-unit. I've run these numbers and it seems like we would only add about $20k to our annual passive income. I know that's almost doubling the passive income but for such a huge commitment in time and debt, it doesn't seem quite worth the risk.
  • Try a BRRRR using the stored equity and do a series of smaller and cheaper SFH. I'm still working my head around the numbers on this. I don't really understand the "Refinance" part.

I'm not considering flips because with 2 small children it would add a lot of stress to project manage something so huge. Also, it's a buyer's market in Philly right now. It seems everything has had a price drop. That's my anecdotal experience but I could be wrong. We feel confident in the stability of the Philly rental market.

Thoughts? Tips? I am excited to find a network of people who can help with these decisions because my husband and I keep talking ourselves in circles about it.

Welcome, Rachel! Your goal of quitting your job and traveling sounds wonderful - and the nanny part sounds divine - I think you've found your tribe here ;)

Sounds like you've already put yourself in a great position with these first two properties. I've only been doing REI for about three years, but I've learned that there's rarely one right answer to a big question like this one. It all depends on your specific goals and risk / pain tolerance at this point of your life.

With that said, here are a couple of the questions and considerations I would have if I were in your shoes. Not asking for answers, just food for thought:

 - what is my freedom number, meaning, how much do I need monthly / annually to leave my job and realize my dream of traveling?

 - given my $400k of equity, what are all possible options to get me to that freedom number? 

 - what is the fastest option to get me to that number?

- in addition to the two options you listed, I would likely also be considering an FHA owner / occupied multifamily, as this could be a great cash flow generator down the line.

At the end of the day, you have multiple good options to choose from...it just comes down to identifying the one best for you at this point in your life. 

Keep us posted! 

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