All Forum Posts by: Travis Timmons

There is no secret strategy or secret markets. Save money, invest in quality assets, and wait. Please don't do a SDIRA or borrow against your primary residence to do an out of state BRRRR. It is not going to work, and the only people that will tell you it is a good idea are those with something to sell.

@Dan H. I agree that leverage + appreciation that real estate offers is a better investment than index funds if we assume historical averages for both. Also using leverage to get in and out of deals to make an outsized return beats boring index fund investing as well. Same goes for tax benefits...I'm on my 3rd live in flip and have done cost segs/bonus depreciation for STRs. The tax savings are real and they're spectacular. 

The point that I am trying to make is that for someone who has never invested in real estate, $360-380k compounding at 9% is probably going to outperform using a $300k to try their hand at real estate investing. It's a tough market that requires some pain, heavy lifting, patience, and/or inconvenience to get a worthwhile return. 

@Niko Rossley Ah...I missed that regarding the $4k. I think out of state investing in a declining or stagnant rust belt market for "cash flow" is really bad idea. You should look at this windfall and move forward with a "don't lose" strategy rather than making the absolute best investment. 

I think that stupid loses more than smart wins. You're in a great spot. Don't screw it up, and if you can live in the place mortgage free, that's life changing, and probably the exact outcome that the family member who left you this house would want.

You need way more than 20% down. The loan/closing costs, make ready expenses, and cash reserves needed are just more than expected. 

Let's take a common scenario - investor wants to buy a $200k rental, they think $40-45k in cash will get them into it. Realistically, you probably need $60-65k. Ask anyone who as ever bought a house - the only guarantee is that you are about to spend a pile of money. There will be a stabilization period in the first year or two where you feel like all you do is spend money on this stupid house.

Other than that, buy the property you want to own the most 10 years from now, not the one that looks good on a spreadsheet in year 1. Good luck and feel free to reach out if you think that I can be helpful. I have absolutely nothing to sell.

You can't make $4k a month with a $400k house as your starting point. The math does not math at all. Real estate does not pay at all for the first couple of years unless you pay cash for a property. If you want more income, get a job that pays more. If you want income 5-10 years from now, real estate is great if you know what you are doing and are patient.

Oddly enough, a 5% withdrawal rate on $400k in index funds gets you halfway there with no work, no hassle factor, and without draining your bank account. 

The cash flow bros on the internet are not pitching a realistic view of real estate investing in 2025. If you need or want income, leave it paid off and rent it. You are not going to come close to $4k per month of actual income with $360-380k of investible cash if you sell it or $300k of leverage at 7-ish% after you refinance. 

You're in a great spot here, but don't try to create an outcome that does not fit. And please do not buy cheap, out of state properties in questionable neighborhoods that look great on a spreadsheet. They don't actually make money or go up in value.  

I work part time and mostly live off of cash flow from real estate and investments. I've gone through this exercise. You don't have enough money to create $4k in income (unless I am missing something) and real estate in the current market does not pay you well at all. If you want a roadmap to financial independence, I recommend looking into Wes Moss's books and content. You probably need a net worth of $1.5-2M invested in the right places (not 401k/retirement or primary home equity) to get there.

Sell it if the property is a loser and you can stomach the loss; don't sell it because you want a different living situation. You have to look at the condo market and the housing market as if they are 2 different markets altogether. There are some coastal markets that boost these numbers, but there are 70% more condo sellers than condo buyers at the moment. You can go on zillow and see for yourself. Pick any market at random. You'll find loads folks that bought condos in the last 4-5 years that have them listed for less than what they paid. There is no guarantee that a condo will appreciate. I think the historical average is 0.5-1% per year for condo appreciation. 

There's no way for me to actually give you advice on what to do as I am not completely informed of all factors, but don't bank on the idea that appreciation will bail you out if you hang on for another 1-2 years.  

If you inherited the property, I'd suggest selling it (with step up basis) pretty much tax free, toss it into an index fund, and forget it is there. The dirty secret that most people here don't want to say out loud here is that index fund investing returns the same or better than most real estate without any of the hassle. 

Here's a fun stat - a 9% annual return, which is reasonable if you re-invest dividends, gets 8x your initial investment in 24 years. I don't know how old you are, how bad you need income, or any other factors, but you need to fight the feeling that you "need to do something with this money." Real estate is far more active and gives a greater sense of accomplishment, but the market is ugly right now. Unless you want to take on heavy rehabs or house hack, I just don't think that it is worth it. Even short term rentals don't actually cash flow in most markets...you can make it look good on paper, but end of year actual numbers do not cash flow until probably year 3. And even then, it's pretty meager. Take the tax free cash, let compound interest do its thing, and forget that it is there.  

And don't pay for a course. 

99% of the time a "private money lender" that takes down a deal for new or new-ish investor comes from a friend or family member. That part usually gets skipped over on podcasts because it sounds a lot cooler to say that you raised private money than it does to say that mom and dad or your rich uncle gave you money. If you are experienced with a track record of success, it's still hard to get a stranger to loan you their money, but it is a bit more feasible. 

If you have some cash to throw into the deal (10-20%), you can find a hard money lender, but that is expensive money that comes with a shot clock. That puts way too much pressure on the deal to work out as I see it and can end badly. If you are trying to buy a property and have zero cash to put into it, you're just asking for someone to do you a favor by loaning you the money. That's just way too much risk given that you could walk and losing nothing if the deal goes sideways.

1. There are no secret strategies.

2. There are no secret markets.

3. Slow and steady still wins the race.

Work hard, save money, take advantage of 3-5% down payments and house hack in the best possible location within your budget, rinse and repeat. There's so much that you do not know, and you simply don't have enough cash to pursue this strategy. You know that already, though. 

 ^^THIS^^

I'm back again telling you not to BRRRR out of state as a first time investor. Get off of this $80-125k out of state BRRRR idea. It's not going to work. You will lose money. Pick a new strategy. The cheap houses are the most expensive after you own them, and it's not close. It's an older housing stock with a lower quality tenant base. That means more maintenance and repairs, vacancy, missed rent, theft/damage, and lower rents. A roof on a house that rents for $750/month costs the same as a roof on a house that rents for $2500/month. You can't keep up with CapEx if your gross rents are $10k/year.

Look at properties at or above the median home price for the area. Put simply, look in neighborhoods where people with options want to live - things like walkability, access to short commute times for work, good school districts...The kind of things that a person with a 700+ credit score looks for when they rent.