I am relativlry new in real estate investing. As it stands my wife and I own 2 seperate 4 plexes in our area that we utilized the VA home loan for and house hacked both. So far things are going well our first prop genereates 850 in cash flow and we currebtly pay about 200 towards our martgage in the prop we own/occupy. I'd love to get some insight from more experienced investors as to what our next move should be. Currently have about 35k of capital and about 1 1/2 years left in the military. I'm going back and forth between trying to purchase a small duplex with a conventional loan, pushing all of my extra cash toward my cheaper property "debt snowball", or continue to gain more capital? Any and all reccomendations/advise would be greatly appreciated. Thanks in advance to all. Sorry for the long post!
If that's your last $35K, you may want to keep some of it as an emergency fund to help your transition from military to civilian live. If you've got the transition covered, then you might want to buy a property while interest rates are low (they're expected to increase, but not by much). Hard to say without knowing more.... do you have kids to support? Is your MOS transferable to civilian life? etc. Good luck!
Hey Joe, thanks for the input i appreciate it and will def take it into account when moving foward in my FI goals!
@Ryan Hebron Sounds like you are off to a great start. If the numbers work out and you can still cash flow, I would recommend pulling the trigger on the duplex and keep working towards building smart debt. With debt comes leverage. Are you planning on moving into one half of that small duplex? Good luck going forward.
@Sean M. Hey sean, thanks for the input, after doing some more research and crunching numbers it is looking like I will try to go for the duplex with a conventional loan. We will not be occupying the Duplex though. Short term goal is to secure that then build our capital for at least 1 1/2-2 years then move into a different 4plex using our VA Loan again. That will put us at 14 total doors in 4 years. Just out of curiosity how did you get started and what rate did you purchase properties when you first got going? Looking back would you have been more or less aggressive? Thanks again for the input!
My goal is 10 doors by the end of 2018. I am currently at three, with two SFH and one short term vacation rental. I purchased my first home in the summer of 2016 with no intentions of becoming a RE Investor. When I started learning more and more and "caught the bug" as they say, I realized I could rent out that home, earn cash flow, and maximize my VA benefits to purchase another SFH in the same area. You definitely did it the right way by purchasing quads with your VA. I am trying to be as aggressive as possible for the first few years and seeing how much debt I can accumulate. Your start is certainly inspiring.
@Sean M. Right on man, thanks for sharing! Hopefully you're able to continue to expand in 2018! Make sure to hit the Success Stories Blog when you get some deals locked in, I'm eager to see how things go for you.
@Ryan Hebron take a look at how quickly you can accumulate cash again for your next purchase and what you plan on doing after leaving the military with both your civilian career and your location. If you can accumulate that $35k again by the time you leave the military and you have a solid idea of what you will be doing, or more importantly how much you will be making, and where you'll be living, I would say go for the duplex.
However, if it will take you a while to accumulate another $35k and your future prospects are up in the air I would wait. My main reasoning being going through a lot of changes in the near future you don't want to shut yourself out to better opportunities. $35k may get you a decent duplex where you're at now but maybe $60k will get you a nice 8 plex where ever you end up moving to.
As I don't know you full situation take this for what it's worth, but as long as the numbers work investing in the duplex will beat not investing in anything else all day long.
You might want to looking into financing with Navy Fed. One of my Soldiers told me about their program: https://www.navyfederal.org/products-services/loans/mortgage/first-time-homebuyer.php
Bottom line, no money down or PMI (in some cases). He used this option to purchase his third home. Truthfully I haven’t explored this option with Navy Fed, but wanted to share in case you meet their criteria for traditional financing.
Regarding your concerns with avoiding snowballing into debt, what do you typically keep in reserve for each of your properties? 6 months mortgage? $10-20K maintenance emergency fund? We’re PCSing back to the states and we just purchased a home in Germany (no money down). We’re cash flowing €100 a month after all expenses have been paid. We’re trying to leave a substantial cushion before we buy another property, but having difficulty putting a solid number down. Thoughts?
@Kirk Olson Kirk, Thanks for the input, yea I realize I was a little vague with our plans moving forward and our current financial situation which does make it difficult for people to input their opinions and recommendations. I will be staying in the local area and will go to school using my G.I Bill and my wife will become a full time real estate agent in our area. Our family monthly income should actually increase by about 15% with me getting out. I did not consider saving more and looking into bigger investments though, I will def take that into consideration. Short term goal is to purchase 1 multifamily with a conventional then move our family into another 4 plex with a FHA or reuse the VA Loan. Where are you currently at with your investing and how is it going so far?
@Mark Pijanowski Hey Mark, thanks for the input! I have called Navy Fed before because I heard of a similar program but the Loan officer I spoke to did not seem well versed, he informed me that we would only qualify for their traditional loan, I am going to re engage with them though. That's awesome you guys went out on a limb and invested in Germany, where are you guys located? My wife and I spent 4 years there before we PCS'd to our current duty station, FT. Campbell. We were stationed at Kleber Kaserne. Did you guys invest in single or multifamily home out there? I typically keep 2500 on stand by per door with an additional 5k for savings but I have heard people want as much as 5K per door and then 3-6 months security blanket. I feel comfortable with our 2500 mainly because our buildings are brand new but, to each it's own.
@Ryan Hebron I was where you are not too long ago. I just purchased 8 units back in October to add to my personal portfolio and now I'm moving forward with helping friends from my time in the Army invest in real estate. I now think of every dollar set aside for investing as purchasing power. If I have to put 25% down each $1,000 is actually worth $4,000 worth of real estate. At 20% it's worth $5,000.
Sounds like you've got a solid plan after exiting the military with your future career. So I guess when it comes down to it, do you want to continue investing in small multifamily properties or do you want to scale up to larger multifamily properties? Answer that question and you'll answer whether you should go with your duplex or wait.
@Ryan Hebron Thanks for the insight, we're sitting at about 10K, but we need to paint the outside of the home soon, so we'll certainly need to bump that number up. German homes are sturdily built, so we're hoping for the best in terms of long term maintenance.
Interestingly enough, I worked at Daenner Kaserne, back in 2012. We're currently in Vilseck (Rose Barracks). We purchased a SFH. The location is just off post and the layout of the home caters to the American family, as the layout is very open and spacious. If you make it back this way, I'll certainly recommend that you invest here.
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