Critique my build-to-rent long term plans.

[Matt W.]

Hi BP, 

As background, I've dabbled in lots of strategies in the past 4 years of real estate investing; currently own 3 long term rentals, 1031'd into multiple and bigger properties a few times, done several flips, purchased traditional and tax foreclosures, bought from estates and wholesalers, tried a medium term/nurse rental (hated it and sold for a decent profit, became a "long term flip").  So far everything has turned out well, not because I'm so smart but mostly because of strong local market and economic factors. 

Point being, I've tried many flavors and think I'm narrowing down what would work for me. My wife is a high W2 earner, so that makes the tax benefits of real estate especially important for us. I'm a licensed GC and agent, and would like to leverage these as much as I can.  The market where I live is very competitive and everyone has the same playbook for buying foreclosures and from wholesalers, so almost every existing house gets bid up to unprofitable levels.

My plan is to start buying buildable lots and build my own very simple 3/2 @1500 sq ft houses. I would pay for the lot and build with several lines of credit I have that are very strong and much cheaper and easier to use than hard money or construction loans. I would refinance the homes with long term debt and rent them for 2-3 years and then either sell them to pay a lower long term capital gains rate and put the money into a syndication, or 1031 them into something larger or invest in a Delaware Statutory Trust (DST). Ideally, I could build a few every year and use a combination of exit strategies to "waterfall" money at different times into the future.

For my family and me, real estate is all about money for the future. We are fortunate that my wife's income supports our daily needs, so investments don't need to cash flow from day one. This plan seems like the smartest option for us, because even if I got a 9-5 making $100k, after state and federal taxes once combined with my wife's income, that would end up being about $60k. 

If anyone has any constructive feedback or experience, I'd love to hear your take.  Thanks!