Newbie looking for Advice

[Rick Novotny]

Hello BiggerPockets team and users,

@Brandon Turner @Joshua Dorkin @Scott Trench

I love what you guys are doing! I wanted to discuss my current situation. Where I am and where I'm headed. Hearing thoughts of more experienced investors could help me discover an investing technique I haven't thought of.

I am 28 years old, making six figures from my career plus a little bit of rental income while house hacking. I am fascinated with the concept of becoming financially free. I am single with no kids which makes it easy for me to set everything aside for investing. When I add up the income from my various streams and subtract the expenses such as my normal living expenses, repairs, and mortgages, I found that I am spending only 38% of my total income. Investing roughly 60% of my income is life changing and I am already starting to see the results in just 12 months time. I started building credit late, but my credit score is now 730-740 and I own about $430,000 in assets with two mortgages totaling about $340,000. I save an average of $70,000 cash per year for investing purposes and have about $24,000 liquid cash at the moment.

Currently, I am living in the house I purchased near Denver (Westminster) in May, 2016. It is a 3 bedroom, 2.5 bathroom, 1600sq. ft. townhouse built in 2007. I rent my extra rooms for the additional income. The expenses are almost completely covered by my roommates. Here are the current numbers:

Purchase Price:$298,000.00

Down Payment:$10,430.00

Loan Amount:$287,570.00

Amortized Over:30 years

Loan Interest Rate:3.790%

Monthly P&I:$1,338.32

Total Cash Needed:$16,430.00

Monthly Income:$1,350.00

Monthly Expenses:$1,847.48

Monthly Cashflow:-$497.48

NOI:$10,090.00

Total Cash Needed:$16,430.00

Basically, I'm paying about $500 per month for 'rent' living in Denver. That's CHEAP! On top of that I'm living in a large master bedroom with a large private tiled bathroom and a walk-in closet. In addition, currently about $450 per month goes towards principal on the mortgage. So that is still my money, turning $500 expenses into $50 per month expenses in the long term. After the tax write-offs, I technically make money to live in this house. There are actually expenses that come out of my pocket every month but all the equity and debt pay-off has not been realized yet. Speaking of equity, I have to mention the appreciation in the Denver market right now. It is incredible. My neighbors have been selling their properties lately for $340-355,000. That's a huge capital gain since I bought this one at $298,000 12 months ago. If I count that appreciation, my unrealized gain for this property is higher than a 400% return on my money. Here are a few pictures of the property after I moved in:

The rental property I own near Kansas City needed some work before I could rent it. I closed at the end of Dec, 2016 on that rental. I spent some cash on repairs and a tenant moved in on Feb 1, 2017. I bought that house for $91,000 and it rents for $900 per month. My expenses on that property including repairs/vacancy/management is about 700 per month. So the 'in my pocket' cash is around $200 per month for that property. Having just two properties gives me so many options in life. My living costs are basically free due to these two investments. Purchasing two properties in one year at 28 years old was an incredible accomplishment. I hope to continue growing.

I've thought about refinancing my FHA off the house in Denver and purchasing a duplex in a similar area to start another house hacking adventure. I think the new duplexes in this area are going for about $350,000 per side so I'd be looking at roughly a $700,000 purchase price. That would be a $24,500 down payment plus closing costs. It seems my largest limiting factor will always be capital so I'm trying to find my next steps. Another option would be to keep purchasing rentals in Kansas City, which are much cheaper but require the same amount of upfront capital due to the FHA loans I would use in Denver. Let me know what you guys think my next move should be. What would you do in my shoes? I'm open to any thoughts or constructive criticisms.