Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
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.
If I can continue to pay my mortgage sure, but what if the house is vacant and I don鈥檛 have the money to pay the mortgage.
You are too too young to realize what happened first hand during the last crash (I don鈥檛 know much as I wasn鈥檛 impacted by it, but thinking back I can see how crazy it was).
@Tom Makinen But in a scenario in which a home鈥檚 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鈥檓 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鈥檛 also present with cash offers please do share.
Rental Property Investor 路 Central, FL 路 Member since 2016 路 950 posts 路 821 votes
7y
Congrats, honestly you're doing just fine in your current path. Why change what isn't broken. If the market changes then adjust. But if you can utilize the saving rate you have right now to get as many rentals (SFH or Multi) that you can I'd continue with that until some external factor changes that.
With what you shared, my only question is what do you do with your current savings while you wait to buy your next property? Maybe do some short term private lending? Or at worst a CD ladder or something to add a little more to your net worth for little work.
Rental Property Investor 路 Durham, NC 路 Member since 2016 路 7k+ posts 路 7k+ votes
7y
@Ivan Loza. Assuming you鈥檙e owned then single family for a bit now, I鈥檇 say jump to small
Multifamily. Say a duplex or triplex. That's what I did. I bought 4 SFR, and I'm now under contract to buy my 3rd duplex this year... the cost per door is so much lower. Everyone knows that, but it's a totally different thing to see that in real life examples.
I am about the same age as you, to give you an idea so it鈥檚 very possible.
Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
7y
@Eric C. Thanks so much for the encouragement. I never looked at my saving periods as opportunities for mini investments. Is there a particular app or website that you use for these short term loans? I anticipate my next saving period to last 10 months, the one after that to last 8 months, then grow to multiples deals per year after that. But I鈥檒l look into it, perhaps a couple of months is all that is needed. Thanks again, I love learning new strategies!
Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
7y
@Caleb Heimsoth way to go man, congrats! Given that I鈥檓 mostly focused on cash flow, I am beginning get convinced that multiplexes are my way to go from now on. Thanks for the tips
Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
7y
@Caleb Heimsoth for my generation the age will be 67. So I would still need 32 more years. I would probably take it out early, pay the fees and invest whatever is left into real estate.. or a vacation
@Caleb Heimsoth for my generation the age will be 67. So I would still need 32 more years. I would probably take it out early, pay the fees and invest whatever is left into real estate.. or a vacation
Ouch okay, I was thinking it would be 20-25 years. Yeah that鈥檚 probably not worth it then. I used to live in Dallas, so I was just curious.
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.
The one thing that has helped me the most is exposure to different aspects of the businesses (construction,, realtors etc...). I would find something that fits into your schedule and max out the mortgages.
Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
7y
@Kurt Kwart luckily I have a very insightful realtor, loan officer and home inspector; and all make themselves very available when I need guidance. Additionally, I鈥檓 also well connected to many Mexicans who offer high quality, affordable contractor work. (It鈥檚 not racist because I鈥檓 Mexican too lol). So even though I鈥檓 very early on my journey I completely agree that surrounding yourself with more knowledgeable brains is key.
Congrats on your success and thanks for giving me even more confidence that maxing out mortgages is the way to go!
Rental Property Investor 路 Springfield, MO 路 Member since 2017 路 266 posts 路 312 votes
7y
Ivan-
As REI and former educator who recently retired (from education) after 35 years of service, I would like to throw in my two cents.
I started investing in RE later in life after my children were grown. So I envy the head start you have. That said, IHMO you have a sweet deal going now and I would ride it for a long time. My reasoning is:
A. Texas pays teachers better than almost all area states. ( I was in OKLA and we were 48 out of 50) Putting back 40K a year gives you options you won't have if you just live off your rental income.
B. Your insurance is paid for by the school. young and single insurance is cheap. See what your premiums would be with a spouse and children At nearly 60 as I am, it goes very high.
C. You have more time off than most people. This is great if you start a family and have a spouse with a 50 week a year job. ( i raised my daughter by myself and could only do it because we had the same schedule during the school year and summers off)
D. Owning properties is a job! Even people who made millions in RE are still working. I don't get this " I'm a REI and retired at 28" what a load of crap. I have 7 doors and stay very busy managing them. They are an investment and I put in a lot of time and money to keep them rented and cash flowing.
E. If you love your job as an educator as I did, keep following your passion. In 35 years, I had 4 days I dreaded going to work. They were personal issues and not work issues.
F. You are young and you have time to grow your business. Be smart and grow slowly. Talk to some of the older members here. The ones who went through the housing market crash. Ask them what happened to the "maxed out the mortgage" people in "08. I was there and saw it. I had 3 doors all paid off. Not much but it flowed good cash and allowed me to buy good properties very cheap because loans were hard to get.
G. Focus on quality and not just quantity. Spend time learning to use the resources and mentors on here. Find value in using 1031's and diversify into notes and liens or hard money lending.
I will probably get some blowback on this, but being debt free and having a portfolio I can manage myself allows me to sleep very well at night. Remember, opinions are like fingerprints. Everyone has a handful of them and they are all different. In the end the only ones that matters are yours.
@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!
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.
I鈥檇 check out a dating website for a woman that owns an apartment complex, and then fall in love. :)
Just keep grinding. It will take time. Don鈥檛 over leverage.
@Jonathan R. Ha easily the most solid advice I鈥檝e received.
Thanks, will do
I鈥檇 probably check out the Fort Worth or Oklahoma City market, some place within a couple hours and buy single family homes for 40k if I were you, cash deals, no leverage till you鈥檝e done many of them and are more comfortable. Utilize the 401k, perhaps unsecured loans from a credit union to help you get going.
And yes, find a smoking hot female real estate investor. It鈥檚 all about networking. :)
Minneapolis, MN 路 Member since 2016 路 19 posts 路 13 votes
7y
@Ivan Loza - great post, this is the exact question I have been contemplating as well. I am going to go your same route, acquiring more properties instead of rapid pay off of fewer. I am aggressively saving each month, investing my savings in index funds in Robinhood until I hit a point where I can avoid 20% down+closing costs. Good luck dude!
Super impressed with your ability to save so much as a teacher! I am saving up for my first SFH rental in 2020. I have no advice to give, but there are definitely a lot of gems in this post!
Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
7y
@Jonathan R. Tornadoes keep me from looking into Oklahoma, but I hadn鈥檛 realized how affordable properties are in forth worth and only 40 min away. I鈥檒l make sure to extend my radius on my next hunt.
Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
7y
@Josh Bast wait are your index funds investments separate from REI or are you utilizing them to finance your REI? If so, is it posible to invest in index funds short term (months) and take money out without a significant penalty?
Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
7y
@Riyad Qattum is wholesaling more of a part time job than an investment? Either way, I like they idea of using my brain rather my money to make more money! Thanks!
Minneapolis, MN 路 Member since 2016 路 19 posts 路 13 votes
7y
@Ivan Loza - it's a holding place for my savings until I hit the necessary $ amount I need. I use Robinhood, where I can move money in and out relatively easily. No fees. I have my money invested in VTI or VOO index funds....there is obviously the risk of losing some money by doing this, but I couldn't just let it sit there and earn .05% interest or whatever money market account offers. I'm using a HELOC to fund purchases in addition to personal savings...and I can't go fast enough. I anxiously await every pay period to put more money away!