Quote from @Leslie Beia:
Hi All!
I've been investing for 5 years, combo of BRRRR, Airbnb, and flips, near me and out of state. I listen to podcasts and read books and have absorbed a ton of information over the years, so I'm familiar with numerous strategies, at least in concept. This year, I'm partnering with my sister, who is in a miserable corporate job taking her nowhere. But she has the W2 income and around $500k cash she's able to deploy towards our goal, which is to reach 'financial freedom' in 5-10 years. For me, that looks like around $15k/month income (and I'm starting from very little- long story). I have her figuring out her FI number, it's going to be a lot more than mine, but she also has a substantial 401k. So I'm thinking a good target will be around $30k/month to replace both of our incomes and live how we want to live, respectively.
We both live in MI and my current plan is to invest in single- and multi-family in solid, path-of-progress neighborhoods in metro Detroit, and also get some larger SFH's in the more expensive market where we live and do rent-by-the-room/co-living. We have a very severe affordable housing issue here! We are both committed to re-investing any cash flow back into the asset to snowball equity as quickly as possible. I like MI because of our climate, which is relatively stable compared to much of the country. I think our cooler climate and fresh water resources are going to attract a lot of population in coming years, especially as CA/FL become impossibly expensive for many people.
I'd love feedback and advice from those of you who are well ahead of me. I've resisted long term rentals, but am finally accepting that this is the most boring but solid way to create wealth. I am definitely focused on appreciation over cash flow. I am planning to BRRRR in DET and do turn-key up here as we are so short on labor. Are there other pathways I should consider, based on my goals and experience? I'm going to be doing all the research and execution, and I would self-manage the co-living at least the 1st year or two to learn it. Regular LTR's in DET would be fully managed. I love doing flips but I don't often see enough spread in DET and again, labor is too scarce up here to make it viable. It's exciting to have capital, I just want to be very careful and strategic. Thanks in advance for any insight!
Hi Leslie! This is a great question to start with, I appreciate that you mention you're familiar with many strategies in concept. It's funny how you can fill your mind with education and then when the moment of truth comes and you have to decide it can feel paralyzing in some ways.
Educating yourself is so important, and I think that the general education of listening to the podcast can serve as a great foundation. But when you're really ready to put rubber to the road you have to start being more active in your education, seeking out specific information and really thinking through what that would look like for you. Versus just listening to whatever topics are on the pod that week. That's the real difference that will allow you to make educated decisions.
First let me say I agree with @Greg Scott - starting with 500k is quite a bit different than 25k or 50k and should be treated as such. Secondly, I would like to point out you do not need to spend 500k in one place, at one time, spreading yourself too thin is a recipe for disaster.
Many investors if they make a mistake can recover as long as they took risk proportional to their tolerance and income. But for most investors, recovering from that mistake may take some time to rebuild. You however have the luxury to take a couple big swings and be able to recover and repeat what worked much quicker.
Ultimately no one else can make this decision for you, and it sounds like it's you driving the decisions for both yourself and your sister. Here's a couple practical steps I'd recommend to help make your decision:
1. Read Start with Strategy and do the accompanying workbook. I love how practical and concrete this book is about evaluating options and making a decision. I was stuck in analysis paralysis for 10+months and then I read this book and no joke had my next project under contract within 3 weeks. Now that project is done, I'm re-reading the book to evaluate where I am now and what step to take next.
2. Depending on when you see this response, I think Momentum 2025 could be a perfect fit for where you're at right now, it's a weekly 8-week virtual series going over all kinds of RE topics with the pros, there's time for Q&A and also everyone will have access to small accountability groups to network and bounce ideas off one another. This session starts next week on 2/11 (recordings of sessions will also be available to participants). Message me if you're interested as I have an offer I can give you!
3. No matter what strategy you choose, you could choose to offset some of your active investing income with passive RE investing through Syndications or private money lending. I would definitely do more research into both as they can be lucrative niches in the investing world. PassivePockets.com has a free 7-day trial to go look around and chat with others who are actively investing in syndications. Lend to Live is a great book on the topic of private money lending, and Devon Kennard is also someone I follow closely who has a private lending business.
