Plan on action? What should I do?

Question

Hey guys - I am a 25 year old Realtor. I bought a house 9 months ago for 183k, just sold it for 255k. Closes oct 20th & its passed inspections. Thus being said - I now have money to play with. Should I buy a turnkey property with 20% down and just put it on Air bnb and rent a place for a year? Or should I owner occupy something turnkey with a 5% down, live in it for a year then air bnb? I don't want to live in a flip again it was bad for my productivity at work.

What would you do with 70k and no place to live yet?

Nathan Gesner · Answer

I would start by sitting down and thinking about what you are trying to achieve. Without knowing where you want to go, it's hard to ask for directions.

Are you looking to build financial independence? Do you have no idea and just like to buy/sell and see what happens? Do you want to be a multi-millionaire by the time you're 40 and retire to a beach in Florida? Maybe build a nice business that supports you while you focus on building a family?

I believe the smartest way to grow for a young, single person is to house hack as many times as possible. You can be financially independent in your early 30s and making some serious money. All it takes is a little knowledge, sacrifice, and hard work for the next 6-8 years.

Jonathan Klemm · Answer

Hey @James Robert - You have an awesome problem on your hands!  Which city are you in?   I see a lot of Chicago people chiming in, but I didn't catch it in your post?

I'd definitely go with a 5% down house hack - no questions asked.

I feel your pain not wanting to live in through a flip as well, been there and won't do that again either.

Charles Granja · Answer

I would be careful with the current market dynamic but if you are going to invest both are viable options. I sold one of my properties recently and have been debating whether I want to house hack here in Chicago or start an Airbnb in MO. The great thing about house hacking is if city regulations allow it, you may be able to Airbnb it.

Eliott Elias · Answer

Action. Planning will not get you far if you’re not boots on ground and do not understand the playing field. Get out there and make mistakes

John Warren · Answer

@James Robert congrats on the first win of many. I always would look to house hack if you are in that stage of life. If not, then I would look for a solid rental property. To me, AirBnB sounds like another stressful job, but I guess a lot of folks really like it. Just make sure you know which lane you want to stay in (realtor, AirBnB, landlord, etc)

Dallas Regimbal · Answer

@James Robert Owner occupying and only putting 5% down and then moving out after a year and repeating will allow you to maximize your returns and get you to financial freedom faster. I would recommend that no matter the direction you go be sure the numbers on the property work as not only a short term rental but a long term rental as well. The reason is that the laws and regulations for STRs are subject to change and you want to be sure to minimize your risk before purchasing. I also agree with some of the others suggestion of looking into house hacking as it can be a great way to scale quickly but overall just be sure the numbers work for you and your long term goals.

Joseph Cornwell · Answer

What market are you in? Based on the limited information I would definitely house hack. Its the best way to maximize your capital, reduce expense, and grow potentially tax free equity.

Eudith Vacio · Answer

Where are you located? Totally agree with everyone else if I had $70k, I would house-hack, get back into the realtor business if that's what you missed, and then when the time is right, airbnb your place for additional income!

Jake Fugman · Answer

@James Robert  Congrats on the margin!  Assuming you are able/willing to live in a similar neighborhood/market with $200-250k/door inventory - I would go for FHA financing (3.5-5% down) and secure a $400-600k 2-4 unit multifamily and house hack.  You can likely still AirBnb at least 1 of the units while living there then if you want to move out after 1 yr the building should slightly cash flow - even if you convert all units to long term rentals.  I would focus more on the value on later on when you cant leverage owner occupancy financing and longer.

Plan on action? What should I do?

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