What would a wise man (or woman) do?

4 Replies

Help steer me in the right direction please.

I am a 25 year old school teacher who can currently save around 40k a year. Mostly from my salary, but I also own two SFH which I rent for $1300/month each with mortgages of around $800/month, including taxes and insurance.

My goal is to retire by the age of 35 and focus my energy on either owning an apartment complex or commercial real estate. What road do you think would help me arrive to my destination?

1) Continue to buy and hold every time I save enough for a mortgage until I reach the 10 mortgage limit?

2) Go up to 4 mortgages then focus on paying the 4 properties off one at a time?

3) Take 1 mortgage out per year and invest the rest in index funds?

4) -Create an alternative road-

*Any year now I could fall in love, get married and have kids. This might substantially increase or decrease my savings potential.

I think this is going to come down to your personality and what nich suits you the best in real estate but I would start by analyzing as many deals as possible as if you are going to need to find 100% of the money elsewhere and as if you aren't going to lift a finger to run the operation. By doing this you will not fall for properties that only cashflow well because of your savings and you will create systems that will work if your teaching and your love life get crazy. 

Good luck

One way you could try to pay off those mortgages AND have money to put down on more is doing lease options/seller financing with your current properties. My husband and I have done a couple of these with our own homes before he retired from the military, and except for a few bumps in the road that you would still deal with as a landlord, things went pretty well. On one property, we received a $5000 option fee (we would request a higher amount now that the market here locally is turning around) that we used to put new floors in when the old tenant couldn't buy the property. We did it again with a new tenant who ended up relocating, and we ultimately sold it and made a small profit. If you consider going this way with it, definitely look into the laws in your state and make sure you have a good contract that protects you.

@Jeremy Wickens thank you for your sound advice Jeremy! Yup I’ve heard that many settle for mediocre deals simply because they have the money to purchase it cash. Mortgages are on top of great leverage, a good way to keep our math in check

@Giselle Mayhew thanks for the tip Giselle, I’m happy for you and your husband’s success. Believe it or not, rent to own was the strategy which first attracted me towards the world of real estate back in college. Many perks from higher monthly payments to less involvement in the maintenance. However, unfortunately it is no longer legal down here in Texas..