Retired in my early 30s! 馃彎

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Retired in my early 30s! 馃彎

Ivan Loza
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.

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Most Popular Reply

Don Gouge
Johnson City, TN 路 Member since 2017 路 209 posts 路 367 votes
7y
Saving 30k a year from a teacher's salary is very impressive considering they all claim to be working for poverty wages!
34Reply
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  • Jay HinrichsBusiness Member
    Real Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
    7y
    Originally posted by @Kenneth McKeown:

    @Jay Hinrichs I was part time for about 6-12 months then left. Not hard to match income of a teacher with a realtor as long as you're a hustler such as myself. I just knew I couldn't grow much being held to a 9-5 or really a 7-7. 

    I know just reminded me of my Dads real estate companies in the 60s and 70s we always had a bevvy of part time agents that were educators..  Not so much these days.. But I find teachers being for the most part well organized and smart do quite well once they learn sales techniques  IE qualify present and close. 

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    2Reply
  • Ivan Loza
    OP
    Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
    7y

    @Nathan E Reyna So many are pointing me towards the rehab game that I have to look into it. I have a lot to learn though. I hadn鈥檛 really considered hotels, I know there鈥檚 a big barrier to entry, but with the right partnerships everything is posible.

    0Reply
  • Frank Patalano
    Rental Property Investor 路 East Providence, RI 路 Member since 2018 路 1k+ posts 路 1k+ votes
    7y

    Hi Ivan,

    Former School Teacher here who retired at 41 to manage my portfolio and consider other opportunities.

    I like choice #1 based on the choices that you gave. Actually the 10 mortgage limit does not apply to commercial lending. I had 17 mortgages at one point. I have paid a couple off and am selling a couple because of how hot the market is.

    Good Luck

    0Reply
  • Ivan Loza
    OP
    Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
    7y

    @Randall Weatherall are the deals so lucrative that they offset not receiving rent for an entire year? If so, it鈥檚 definitely something to look into

    0Reply
  • Ivan Loza
    OP
    Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
    7y

    @Frank Patalano That鈥檚 awesome man, it seems like the more successful people on this thread are suggesting that I max out my mortgages and then some. Thank you and congrats on your great success

    1Reply
  • Robert Arquilla
    Contractor 路 Warren, OH 路 Member since 2015 路 147 posts 路 55 votes
    7y

    @Josh Bast I鈥檓 curious, what kind of returns are you getting with your index funds? I have some cash I鈥檝e been saving up to invest in real estate that I鈥檝e just been keeping in my safe (too easy to access putting it in the bank for me) that I am thinking about doing the same thing you did and put it in robinhood.

    0Reply
  • Josh Bast
    Minneapolis, MN 路 Member since 2016 路 19 posts 路 13 votes
    7y

    @Robert Arquilla - I鈥檒l be honest, I just started this strategy so the return has been next to nothing...but you can look at the returns over time for specific funds and gauge. I just couldn鈥檛 let the money sit there which is why I鈥檓 going this route. Hope it works out for us!

    1Reply
  • Jorge Ydlibi
    Miami, FL 路 Member since 2019 路 35 posts 路 26 votes
    7y
    Originally posted by @Ivan Loza:

    @Jorge Ydlibi Yeah that鈥檚 definitely an option, especially if the numbers are right. Do banks not check to see if you already have other active primary residence loans? I鈥檓 not sure how that works

    I agree 100%. Another crash would mean lower property taxes if anything. I鈥檓 not too concerned with my properties values, more so cash flow. And like you said, rent is highly unlikely to go down in a metroplex which is growing as fast as Dallas is.

    Banks do check, which is why with the BRRRR method you refinance the loan after the first year into a conventional mortgage. At that point if you did the numbers and rehab perfectly you can even pull out your initial investment since the property will then be assessed to a higher value and you can then use those funds to buy your new 2-4 unit

    0Reply
  • Ivan Loza
    OP
    Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
    7y

    @Rachel Foster Thanks for the caution Rachel. I鈥檒l make sure to check my numbers with a dozen different calculators before moving forward on any future deals

    0Reply
  • Juan Castano
    Developer 路 Houston, TX 路 Member since 2018 路 1 post 路 1 vote
    7y

    WHY would you need to wait to buy cash-flows from each house you buy...

    You only need 50,000 to retire and time.

    How?

    Wrap around financing:

    1) Buy 1 house/ sell it owner financed (30% higher and at around 10% interest rate, over 25 years) on a wrap and get ALL your down payment back (or more) --> $400 to $500 cash-flows

    2) Repeat #1 above from down payment received from buyer

    3) Repeat #1 and 2 above until you reach your retirement objective (30% of people you finance to will default on the first 5 years and most will refinance 3 to 5 years in.

    What is a wrap: Wrap around financing; you keep your existing mortgage with the bank and originate another with a closing attorney ($1,000 to $2,000 at the most = Warranty Deed & Note/mortgage)

    1Reply
  • Ivan Loza
    OP
    Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
    7y

    @Juan Castano I have seriously been googling how owner finance works on houses you have mortgages for all day today. I noticed you鈥檙e from the area, please tell me you have a preferred wrap around finance lawyer in Dallas?

    0Reply
  • Michael Ealy
    Developer 路 Cincinnati, OH 路 Member since 2018 路 1k+ posts 路 3k+ votes
    7y
    Originally posted by @Ivan Loza:

    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.

    Instead of the above,

    1. Buy a 2-4 unit apartment instead. You get more cashflow and the cashflow is more secure vs vacancies.

    2. With your savings rate, combined with the cashflow from the 2 houses you already have, you can buy probably two 2-4 unit apartment buildings per year.

    3. Once you reach the 10-loan limit, look into doing a 1031 Exchange. You can then exchange your 8 small apartment buildings into one 100-unit apartment complex.

    The above to me, is just faster specially since your goal is to own an apartment complex.

    And I am biased for apartments. I've acquired over 1,000 apartment units...and became financially independent in just 7 years because of them.

    4Reply
  • Ivan Loza
    OP
    Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
    7y

    @Michael Ealy wow you鈥檙e killing it out there, congrats on your massive success! Interesting, I didn鈥檛 even know there was such a thing as 2-4 unit apartments. But I just googled it and there鈥檚 a ton. Thanks for helping me think bigger!

    1Reply
  • Alejandro Tirso
    Investor 路 Union City, NJ 路 Member since 2019 路 32 posts 路 7 votes
    7y

    @Ivan Loza Consider owner-occupying a multi-family.  Even if you're living rent-free at your parents, how long would it take you to save up a 20% down payment for a multi-family?  Probably longer than 5% down for an owner-occupancy.  Your single and young; you could duplicate this in a triplex every year.  Haven't run your numbers personally, but I think it'd work.

    You eliminate a lot of the competition you have in SFH market at the higher price points in a multi-fam. You could even get one that needs some work and add equity through rehabs. David Greene talks about getting out of your comfort zone and harnessing momentum to make sure next deal is better than last. Seems like you know what you're doing in SFH, jump into multi and get tenants to pay your portion of rent + mortgage so you're still living free while building equity!

    Either way you're killing it!  Good work.  

    1Reply
  • Ivan Loza
    OP
    Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
    7y

    @Alejandro Tirso Man everyone on here thinks big, it鈥檚 great! You鈥檙e right about how much quicker I could make big purchases if only I lived in them for a year. I wonder if I can purchase a 2-4 unit apartment through owner occupancy if I live in one of the units. Thanks!

    0Reply
  • Kyle Wells
    Realtor 路 Lake Stevens, WA 路 Member since 2018 路 122 posts 路 91 votes
    7y
    I would avoid major rehab issues such as structural issues (although you could get a free quote and bake that into your offer), electrical re-wiring, and major plumbing issues. Those just tend to have snowball effects that can kill a deal. Most other issues aren't deal breakers. I would highly recommend building a strong relationship with a real estate broker that has experience with rehabs projects and has strong recommendations for a contractor and property manager. Once you do a few BRRRRs, you'll start to know how much things typically cost (flooring, paint, counters, appliances, etc.). Always bake in an extra 10% in rehab costs for any potential cost overruns. 

    Originally posted by @Ivan Loza:

    @Tyler Weaver Luckily I鈥檝e built a great relationship with my loan officer and I鈥檓 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鈥檚 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!

    1Reply
  • Ivan Loza
    OP
    Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
    7y

    @Kyle Wells Thanks that鈥檚 very helpful information! Will definitely work on building and fortifying those relationships

    0Reply
  • Alejandro Tirso
    Investor 路 Union City, NJ 路 Member since 2019 路 32 posts 路 7 votes
    7y
    Originally posted by @Ivan Loza:

    @Alejandro Tirso Man everyone on here thinks big, it鈥檚 great! You鈥檙e right about how much quicker I could make big purchases if only I lived in them for a year. I wonder if I can purchase a 2-4 unit apartment through owner occupancy if I live in one of the units. Thanks!

     You can. I just got my first.  It gets more difficult with each additional unit but to my knowledge you can get up owner financing up to 4 units.  

    1Reply
  • Ivan Loza
    OP
    Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
    7y

    @Alejandro Tirso That鈥檚 awesome, congrats! Then I鈥檓 definitely aiming for a 4 unit property as my next investment. I鈥檓 excited, thanks for expanding my horizon

    0Reply
  • Brenda Navarro
    New to Real Estate 路 Ontario, CA 路 Member since 2019 路 1 post 路 0 votes
    7y

    @Ivan Loza Hi Ivan, can I ask what you googled exactly? Looking to invest in small multi family units but not having too much luck on LoopNet

    0Reply
  • Account Closed
    New to Real Estate 路 Fort Lauderdale, FL 路 Member since 2015 路 3 posts 路 0 votes
    7y

    @Tyler Weaver I think the BRRRR strategy is a great idea to speed up the process.

    0Reply
  • Ivan Loza
    OP
    Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
    7y

    @Brenda Navarro I actually didn鈥檛 make up my mind on multi family investment until today so I wouldn鈥檛 know what to tell you quite yet. Sorry

    0Reply
  • Ivan Loza
    OP
    Real Estate Agent 路 Dallas, TX 路 Member since 2017 路 136 posts 路 141 votes
    7y

    @Samuel Minaya thanks for the tip, I think I will utilize BRRRR with small multi family units next

    0Reply
  • Shelby Matson
    Member since 2019 路 3 posts 路 1 vote
    7y

    @Kenneth McKeown I like your advice, Kenneth! What kind of methods or techniques do you use to ensure that your portfolio will withstand a recession?

    1Reply
  • Hoang Nguyen
    Rental Property Investor 路 Mill Creek, WA 路 Member since 2017 路 35 posts 路 10 votes
    7y

    @Ivan Loza

    If you can pay all the debt then you are good to go. Good luck to you invest in real estate!

    0Reply
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