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 a 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.
Saving 30k a year from a teacher's salary is very impressive considering they all claim to be working for poverty wages!
@Don Gouge Thankfully my city pays us a decent enough salary. Plus I do just about everything extra I can from after school clubs, to Saturday school to summer school. Also, it pays to be bilingual in Texas
@Ivan Loza the 10 mortgages limit is just for traditional mortgages. There are lenders that offer portfolio loans for more mortgages at once.
A simple but effective plan is to buy a property with a mortgage every time you save up enough for that. Keeping in mind to hold a fund for reserves as well. At 30k a year from your salary, and then reinvesting cashflows it would grow pretty quickly.
To speed this up a bit you could buy slightly distressed properties to do a BRRRR strategy.
@Tyler W. Luckily I’ve built a great relationship with my loan officer and I’m confident that her bank will continue to finance many more of my properties. Still, I will look into portfolio loans and other creative strategies for when it’s time to move on.
I understand the BRRR process; however, I'm not too good at assessing rehab costs. I'll need to do my hw. What sort of problems in a house do you consider deal breakers?
Thanks for the advice!
@Ivan Loza props to saving $30,000 in Dallas as a teacher. I know, personally, that's nearly impossible. How do you do it? I worked in a district in DFW and my paycheck every month was $3800/mo (with my coaching & masters stipend). Total for the year to be around $45,000. That means I would have to live off $15,000 for the year - or $1,250/mo. Would love to see your breakdown!
I ended up leaving teaching/coaching(loved to coach) and pursued my real estate dreams full time. It's been an absolute blast and I wouldn't change it for the world, but nonetheless, it's impressive!
My route is #1. Definitely. Leveraging other folks money to make me money! Interest rates are great right now - so no use of #2 and paying them down. Now if your mortgage rates were 6%++ then that would be different. I currently have three loans out at 3.75/4.25/3.25 that are great. Now #3 I can't vouch for as that's not my where my expertise lies. If that's a niche you have and know a lot about, it may be a great route, but it wouldn't be for me.
Love your * at the end - as I'm single and very much could have the same happen to me, ha! Keep it up though man, love it!
@Kenneth McKeown our situations are surprisingly similar! The short answer is I live rent free. I’ve been living in the back of my parent’s house ever since I moved back to Dallas 3 years ago. I have plenty of privacy, my own entrance/restroom and all so I will probably continue to do so until I pick up my 4th rental in about 15-18 months or settle down.
Ytd my checks come in at an average of nearly $4300/mo if I factor in all of my stipends and extra duty pay and I’m confident that this will continue to grow each school year.
My expenses breakdown per month: $250 groceries, $250 set aside for traveling, $400 nights out/dates, $300 clothes (and random amazon stuff lol), $300 gifts/kindness (birthdays for example), $300 bills. I don’t necessarily budget or adhere to these numbers, I just don’t have expensive taste and they’re usually what naturally occur.
If you don’t mind me asking, has your salary increased significantly since becoming a realtor? And if so, how long did it take to do so? I’ve considered it, but it’s hard to let go of the long summers and breaks lol. Plus I imagine I’d get stuck in traffic much more frequently then my current 8 min commute.
Also, how did you manage to get such low interest rates on investment property mortgages? My two current are under 5%, but my loan officer said from here on out they will be higher. Even then, it beats having to wait until I save enough for all cash purchases.
Thanks for the input! Ha yeah a lot will change depending on our future wife’s financial situation!
@Ivan Loza I've been able to really take off as a realtor. However, not many do. It's like an 88% attrition rate where people fail miserably. I've only been a realtor for two years though - but it's safe to say I have a job that will keep me plenty happy for decades to come. It's not for everyone though and I highly discourage people to take my success and try to duplicate it. I just don't think it's possible for many if any (and I could write a book on that lol).
That's insane though that you're able to live off such a short amount of living expenses. I definitely could do better with my monthly expenses, but I've also began making much better money so I've enjoyed life a little more this year (tons of traveling).
I've been able to accumulate a lot of properties as primary occupant homes. I still believe I could get a home under 5% too with where interest rates are - but I wouldn't expect for long. Interest rates are at a great value right now. You definitely have a great setup and an absolute beast of a story to tell when you're in 30's. I'm 29 and hoping to be right there around 35 myself (50 doors by 35 is the goal.. and my brokerage also has a way of passive income too). Love the hustle though!
Maybe it’s because I grew up poor, but I don’t feel secure even with 7 figures in assets. I am gonna work at Walmart at 70 as a greeter
@Kenneth McKeown lol I’ll take your word for it. Congrats on your success as a realtor and investor!
Interesting, I didn’t know acquiring properties as a primary residence was a strategy investors played. That’s how I got my first 2, but I can’t imagine how I would go about replicating it?
That’s a killer goal, I’m sure you will surpass it! Mine is to reach 5 digits in monthly cash flow by 35 (I’m 25)
@Tom Makinen lol I’m pretty happy at my job, but I just want to be free from a boss and set work hours.
@Ivan Loza why even mess around with single family if multifamily is ultimately where you want to be! There is a common misconception that investing in single family will prepare you for multifamily. I can tell you that it does not!!! I took the same approach of buying single families and thinking this would prepare me. I have wholesaled a ton of deals, thinking that would prepare me, I have sold lots of turnkey deals to investors, and none of that activity has prepared me! I am now pursuing multifamily and really starting from ground 0! I would say jump right into multifamily!
@Stephen Akindona first of all thanks for the push. The 2 main things holding me back from jumping straight into multi family investing are a lack of funds and time. I don't have no where near the cash to afford 20% down on an apartment complex. I hope to use the money generated from SFH's to eventually afford those big purchases. How did you go about funding yours?
@Ivan Loza I am always looking to leverage OPM with my investing strategies! I bought all of my personal SFRs with OPM and plan to acquire multifamily properties via syndication. You do need some money to invest in real estate but you need to always be thinking about how you can leverage OPM to do deals.
@Stephen Akindona I do like the idea of an infinite ROI, I wIll look for books and podcasts outlining different methods to use OPM
@Ivan Loza I am just too conservative to be over leveraging myself everywhere, the stress of dealing with a boss is better than over leveraged and then end up losing everything.
@Tom Makinen leverage as in from mortgages or other people’s money? What’s your strategy?
I have mostly stocks in my holdings, I am trying to expand a little into real estate. Still I feel a little uneasy about borrowing too much. God forbid something happens and I have 4-5 mortgages come due. It’s stupid I know, but psychologically I feel more ease. I think it’s growing up poor thing causing it.
@Tom Makinen yeah I was skeptical at first as well. Mostly because my dad and uncles have always bought their properties cash. But the more I read into it, the less risk I find. If anything I’m beginning to believe it’s safer to only put 20% down
Given your age - #1. You have time on your side so take advantage of today's low interest rates. If you're looking to pay down mortgages eventually, might as well max out the 10 conventional financing and then pay down.
@Jonathan Oh I think this forum has helped me make up my mind; mortgages until I drop! Thanks!
@Ivan Loza I agree, but then I also remember what happened during the last housing crash and you see how these homes going for $5000 in the midwest.
@ Stephen Akindona What exactly does it mean to leverage other people's money? Are you talking about mortgage debt? Money from family and friends? Hard money lenders?
@Tom Makinen But in a scenario in which a home’s value goes down to 5k would you rather foreclosure and loose your 20% equity? Or all of the funds poured into an all cash deal?
And well since my strategy is to hold regardless of the market, I’m not too concerned with rents decreasing in my city of Dallas, the fastest growing metroplex in America.
I do want to continue learning though, so if you have a list of risks involve with multiple mortgages that aren’t also present with cash offers please do share.
Try to find some 2plex/fourplex and consider using your leveraging limit there. Try to get your net worth up through appreciation of these properties so you can expedite getting to that apartment building.
Im 34 and I can retire but Id be bored out of my mind.
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