Starting Out- Moving forward

[Evan J Metz]

I am a homeowner in St. Marys, MD. I bought my home in 2019 for 272k. It is a 3bd 2ba a couple hundred feet from the Potomac River. For the first three years two of my childhood friends lived with me paying $500 each in rent leaving me with only $400 to cover. Since, they have both moved out and now I live with my girlfriend and two children. I refinanced in 2020 during Covid when the rates were at an all time low to secure a 2.25% interest rate. As of right now the LTV is 73% giving me just about 90k in equity. I have a few questions moving forward.

1. Continue to save my money until I have enough for a 20% down payment on a property which would most likely be a semi-turnkey SFH due to the lack of MFH in my area. Let this property cash flow and save to repeat the process? I am comfortable investing longer distance but would really prefer my first investment to be semi local so I can gain the experience and knowledge of managing a property.

2. Rent out my current home at $2000/mo generating $625 in cash flow and use an FHA loan to buy the next property (which I could afford to make down payment on right now), inhabit that home for a year and then look for my next deal and rent the home out, but now I cant utilize another FHA loan so I would have to get creative or have a decent amount of extra cash to use as a down payment for the next home.

3. Pull out a home equity loan on my current home to fund a down payment on an investment property that could have some work put into it. Have the home reappraised after it has been refurbished hoping to refinance depending on the current rates and putting the profit toward the original home equity loan hopefully paying it off or substantially down.

4. Rent out my current home and then use an FHA style loan for a new home that could accommodate a tenant and, house hack to substantially offset the cost of my mortgage. I am not very keen on the idea of house hacking but if it the best option for me moving forward then that is what I will do.

All of this being said, all of these options seem like slow progress to me. I understand I will not get wealthy over night but all of these options I have listed really only allow me to obtain one new property per year. I am open to and eager to hear other creative ideas on how to make deals happen. 

Also I understand that there are much stronger markets than that of southern Maryland, but like I said i would prefer to at the very least start this journey locally. I still have a lot to learn but feel confident in knowing my market and area well- another reason I would like to start here.

This is my first post here on the BiggerPockets forum. I am excited to be a part of the community and really looking forward to the advice I will receive back from not only more experienced investors but anyone with advice or ideas. 

[Gregory Schwartz]

I vote for #2. 

I understand your concerns about the slow progress, but rest assured that there may be unforeseeable factors that could accelerate things beyond what any analysis or spreadsheet could predict.

My advice is to stay involved in the BP community, continue saving for potential opportunities, and most importantly, continue educating yourself on real estate investment.

In my observation the "accelerated growth" we see or hear about are actually proceeded by years of preparation, study and slow gains. From personal experience: 

2016 Found out about BP and started saving

2017 Started making offers

2018 First investment property

2020 Second investment (house hack)

2023 Purchased my 24th unit. For the most part people only see the growth in the last 3 years not the 4 years proceeding that.