Aspiring Real Estate Investor Looking for Guidance on Next Steps

[Meara Trine]

Hello everyone! This is my first time posting, so please excuse my lack of knowledge. I recently discovered BiggerPockets and I am learning quite a bit from the podcast. My husband and I are in our mid 40s and looking to get into real estate investing. We live in Brevard County, Florida. 

Last year we sold our large home in Merritt Island, and purchased a condo for our daughters near USF in Tampa (no more paying for dorms) and a townhome for ourselves. We paid cash for both properties, we then took out a mortgage on our townhome to purchase a rental property (another townhome). Although two of the properties are technically paid off, all three of them have HOAs and only one of them is bringing in rental income. The rental income does cover the mortgage and the HOA for the rental, but it does not cover any taxes or insurance. Not sure if we should have gone about things differently, but there isn't much we can do about that now. 

We would like to try house hacking as our next move, but unfortunately there isn't a large inventory of multi-family homes in Brevard County, FL. We are currently looking at a rare Duplex that is listed for $429,000. We could move into one of the units and rent the other side, but the rent definitely wouldn't cover the whole mortgage. We would get a 15 year loan and try to put down $50,000. Each unit is two bed/two bath. It's not really in the best area, but it's not the worst either. It has good bones, but would need some minor upgrades (flooring, appliances, cabinets, bathrooms, etc.). If we moved into one of the duplex units, we could rent the townhome we currently live in for $1975 a month realistically. We could rent the other half of the duplex for $1550 a month realistically. I'm just not sure what to do moving forward. I feel like we may have made a mistake getting three properties with HOAs, although we do save on insurance since the HOAs cover the roof and outside structure. Should we move forward with the duplex and house hack? Should we get another townhome or condo with an HOA? We can purchase a three bedroom townhome or condo for $220,000, but we couldn't house hack in that case and we would have another HOA. Any guidance for a newbie just getting started???

[Arman Ahmed]

Quote from @Meara Trine:

Hello everyone! This is my first time posting, so please excuse my lack of knowledge. I recently discovered BiggerPockets and I am learning quite a bit from the podcast. My husband and I are in our mid 40s and looking to get into real estate investing. We live in Brevard County, Florida. 

Last year we sold our large home in Merritt Island, and purchased a condo for our daughters near USF in Tampa (no more paying for dorms) and a townhome for ourselves. We paid cash for both properties, we then took out a mortgage on our townhome to purchase a rental property (another townhome). Although two of the properties are technically paid off, all three of them have HOAs and only one of them is bringing in rental income. The rental income does cover the mortgage and the HOA for the rental, but it does not cover any taxes or insurance. Not sure if we should have gone about things differently, but there isn't much we can do about that now. 

We would like to try house hacking as our next move, but unfortunately there isn't a large inventory of multi-family homes in Brevard County, FL. We are currently looking at a rare Duplex that is listed for $429,000. We could move into one of the units and rent the other side, but the rent definitely wouldn't cover the whole mortgage. We would get a 15 year loan and try to put down $50,000. Each unit is two bed/two bath. It's not really in the best area, but it's not the worst either. It has good bones, but would need some minor upgrades (flooring, appliances, cabinets, bathrooms, etc.). If we moved into one of the duplex units, we could rent the townhome we currently live in for $1975 a month realistically. We could rent the other half of the duplex for $1550 a month realistically. I'm just not sure what to do moving forward. I feel like we may have made a mistake getting three properties with HOAs, although we do save on insurance since the HOAs cover the roof and outside structure. Should we move forward with the duplex and house hack? Should we get another townhome or condo with an HOA? We can purchase a three bedroom townhome or condo for $220,000, but we couldn't house hack in that case and we would have another HOA. Any guidance for a newbie just getting started???

You’re actually in a more stable position than it probably feels like, you’ve already converted equity into income-producing assets, which most new investors never get to that stage. The main tradeoff you’re running into is HOA-heavy ownership versus cash flow, and that’s really limiting your upside and flexibility more than anything else. That duplex could work as a house hack, but if it doesn’t meaningfully reduce your housing cost, it becomes more of a lifestyle decision than an investment one. A lot of investors in your situation eventually compare these higher-cost, HOA-heavy markets with the Midwest, where you can still find duplexes or small multifamily with stronger cash flow potential and fewer recurring restrictions. The key is deciding whether your next move is about convenience and location, or improving your long-term cash flow position.