Post Military Plan: What would you do?

16 Replies

BP,

What would you do......

Next year I will be transitioning to civilian life, which will likely take me back to Texas. I will have around 100k to be used on a personal property and/or first deal.

My goal is to focus on commercial real estate using cash flowing apartment complexes in order set myself up for early retirement. I define early retirement as $50-75k / year while working <20 hours a week.  

So what would you recommend to set me up for success? 

What can I do now? 

What targets would you set 1 year out, 5 years out, 10 years out?

@Gregory Schwartz thanks for your service! What branch were you in? 

Sounds like you have a nice nest egg saved up which is awesome! What I am doing is daily trying to learn my market (Salt Lake City) by running numbers on deals that I see daily from MLS hot sheets that my realtor has set up for me. I also am constantly trying to study and learn as much as I can.

One thing that may work well for you if you are in a position to do so is the house hack. I have been house hacking a two unit for the last 4 years and it has worked out fantastically. This was before I even knew about BP so I probably could have found a better deal...which is what I am trying to do now. I am looking for a four unit to house hack. Not such an easy feat in this market and with a wife and two children who are used to a lot more space than the downgrade will give us! The reason I suggest that for you is that it would allow you to get into a deal for very low money down...you could even use a VA loan for nothing down and have a huge reserve. Once you do that you could then possibly have funds left over to acquire other units. You could even move every year into a new four plex for a few years. This would allow you to acquire more and more units every year for little money out of pocket.

Anyway, this is somewhat the plan I have. I have two kids and a wife so it will be a sacrifice compared to what we are used to but totally worth it. And it sounds like you are used to moving around so I thought it could be a good option for you. 

@Ryan E. I'm in the Marines.

I have been extremely lucky to have a wife that makes a good paycheck and has been raised to save.

Huge fan of the idea of house hacking. When you say that your duplex has been fantastic for you, do you mean in terms of minimizing expenses or have you been lucky enough to take advantage of strong appreciation? I can only imagine trying to find a quadplex that has room for you, your wife and your 2 kids. I wish you luck!

@Gregory Schwartz that's great. I work with a few guys who were in the Marine Corps and they are great guys. Yeah my house has been awesome for me mostly because of the appreciation. I bought for 334k and put down 5%. I think if I put in about $10k worth of updating I could sell for close to 500k. If I were to rent out both units my gross rents would give me about $1700 above my mortgage payment. Like I said, I bought before I knew what was up from down in real estate investing but I guess I just got really lucky. It's in a great area that will continue to go up in the long term even if it dips in the short. 

If you and your wife are open to house hacking then that's for sure the route you should go! You can get some experience managing a few other tenants and move every year to take advantage of the low interest of owner occupant loans. If you can find fixers then you can even combine a couple of strategies....house hacking, live in BRRRR, live in then rent, etc. You could possibly look at the AirBnB model as well. But if you house hacked a new fourplex every year for five years you'd have 20 units by the end of five years which is very powerful. Now, of course the danger is with low down payments you may be highly leveraged but you can always choose to put more money down or you can also buy value add and create some equity.

The first thing I would do is read as much as possible and network too. I would be careful regarding hard goals as you never know what will come up and you don't want to press just to "buy something." Put systems in place to look for and make offers on properties and then adjust as necessary. $100,000 is certainly a good place to start from.

@Gregory Schwartz From one vet to a soon to be, I second @Andrew Syrios . Maintain the path of absorbing as much info as you can and keep networking. Furthermore, @Ryan E. nailed it with the VA loan. :p

Its great that you know you want to focus on CRE but before anything else; remember investing is a business. So, if you haven't, I'd highly recommend you learn more about business fundamentals to significantly enchance your game plan.

Originally posted by @Khenkis K. :

@Gregory Schwartz From one vet to a soon to be, I second @Andrew Syrios. Maintain the path of absorbing as much info as you can and keep networking. Furthermore, @Ryan E. nailed it with the VA loan. :p

Its great that you know you want to focus on CRE but before anything else; remember investing is a business. So, if you haven't, I'd highly recommend you learn more about business fundamentals to significantly enchance your game plan.

 I would add one thing. Don't get caught up in paralysis by analysis. I would pick a "drop dead" date that you will start actively looking for properties. You might not buy for a while, but make sure to pick a date to start. Otherwise you may fall into the trap of just learning and learning and learning and never actually doing.

@Ryan E.  Sounds like a great deal. Are you of the mindset to pay down the loan to increase monthly cash flow, sell for the capital or refinance? 

@Andrew Syrios I completely agree with you, I am absorbing as much knowledge as possible. Do you have a favorite book? I have read a few of the common recommendations but am always looking for books that inspire other investors or better their businesses. 

@Khenkis K. I am a big fan of the advantages of the VA loan. Slightly concerned about being overleveraged (100% LTV).

I am interested in learning the in and outs of the business side of commercial real estate. What would be a good career to pursue that would best lead to success as a CRE investor? Broker, property manager, or maybe something in finance?

Have you used your va loan yet? If not...use that to buy a duplex to house hack. That's what I did....then when it appreciates in value by 25%.....refi out of it into a conventional loan so that you still don't have to pay pmi....

Then use the VA Loan again

Repeat

@Gregory Schwartz I will just sit tight and let the tenants pay off the loan. On the house I am house hacking my interest rate is super low so I will let the property appreciate and let the loan get paid down by tenants. Utah's population is expected to double over the next 30 years so I expect the values and rents to continue to climb in spite of any short term dips. 

I also agree with what @Andrew Syrios said about making sure to study and study. I have been studying non stop for the last couple of years since I found BP and am learning so much and still have sooo much to learn. That being said you learn so much more by doing, so the start date deadline is a great idea! My strategy has changed a few times and I wish I would have just focused on buying the next rental instead of coming up with big plans. I got side tracked and partnered in a passive role on a few flips which didn't really help me to acquire more rentals like I planned. Had I just purchased a four plex a year ago I would be that much farther along and probably ready to move into another new one. Lots of fantastic lessons I never could have truly and actually learned by just reading on BP. 

@Gregory Schwartz I was in a similar position as you just over a year ago minus the going to Texas part. I was in the Army, and in from Texas, and I have about 30K saved up and had the real estate itch at this point so I decided to buy a home and investment (house hacking) and I don't regret it at all. For you just some key things I would point out is that Texas is an awesome state for veterans in many ways including real estate. You can find the exact chart if you google "Texas veteran real estate benefits" but if you have a disability rating you can be exempt from paying a certain amount of money (thousands) in property taxes. So being a vet if you were trying to maximize your unique benefits I'd say buy a multi family house (2-4) units and live in one unit and rent out the others. I say this because the obvious reasons house hacking is attractive- but especially for vets because you can use your VA Loan to secure a great loan with possibly nothing down and a better interest rate- you can also have the funding fee waived if you, again, have any % disability which is great because that means no PMI and no funding fee- and finally you could do all that potentially without having to pay any property taxes. None of those would be available if you were to buy a commercial building.. not to say that's necessarily a bad thing.. but still just something to think about. I guess my final piece of advise is make sure you get yourself set up for post military success as far as your benefits go (disability and what not). Good luck!

1) For multifamiliy, I'd recommend going to Rod Khleif's multifamily conference in ATL. November 2-4. Get educated. Awesome, awesome networking and education event and my whole team will be there. 

2) If you are young and single, HOUSE HACK A FOUR PLEX WITH YOUR VA LOAN! Glad to help you put together the details, my friend. Send me a DM or email.

3) Check out my recent BP article to look at some strategies you can employ. https://www.biggerpockets.com/renewsblog/how-to-use-the-va-loan-to-build-capital-for-real-estate-investing/

@Gregory Schwartz Congrats on the first step, that’s the easy part. There’s a million ways to go about it. You have to decide what you want to do to get there. Will you have a job when you move? Will your wife? Getting a VA loan depends on actual income. There isn’t much you can buy without it in the traditional sense. Get your disability paperwork going with the VA as fast as possible. It should be completed before you get out. Helps with the VA loan. Best of luck to you. There’s a million ways to get to your end game. Just figure out a plan and go with it. You can learn as you go for a lot of it.

@Eric Upchurch , unfortunately, I will not be able to attend Rod Khleif's multifamily conference this fall but will keep that in mind. I think that house hacking is in my future. I am married and although my wife is onboard with house hacking and growing our wealth she told me a backyard will be a must have so we're leaning toward duplexes. I enjoyed your article, it appears you were able to grow your wealth with some informed purchase and a good amount of sweat equity. 

Account Closed You make a really good point. In order to get the VA loan, I will still need the income side of the debt to income ratio. I'm leaning toward pursuing a career as a real estate agent, I feel this will also give me a competitive advantage in whatever market I end up in.

@Gregory Schwartz  First of all, I want to thank you for your service sir!

I second what @Andrew Syrios and @Ryan E. had recommended. Also, if you're thinking about investing into commercial MFH real estate, start reading books on the topic. Also, anywhere you're located, there're local REI clubs, join them and network with like-minded investors. It helps to build up your network and get educated faster, and you may end finding future partners for potential deals.

Some of the MFH books to start with are by Steven Berges on buying apartment complexes and David Lindahl about emerging markets. 

Best of luck!

@Gary Redman The lack of PMI is for all VA backed loans. However there is a funding fee involved for a VA loan. If you have 10% disability rating the fee is waived. That alone saves you a ton of money on repeated VA loans.

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