First-Time Active Military Homeowner/Real Estate Investor: Sell Fast or Rent?

Question

Hello! My name is Hayley! I'm 26 and I bought my first 3 -bedroom, 2-bathroom home May 2023 for about $219K ($1580 monthly mortgage). I have just recently deployed to Europe for 9 months. During the 3 months in between, I was able to add some simple fixes (i.e. new floors and better lighting) and I contacted a rental management company to help rent out the place. Fortunately, within 3 days, I found a nice couple to rent out the house for a year for $1800 per month (not including utilities).

Goals: To create a well-balanced rental property portfolio within 5-year: to eventually make a $30K profit from current house - -> buy a duplex and house hack for the next few years- - > triplex or more small single-family homes??

Questions:

- I am worried about whether I made the best choice in a house (should I have waited for a cheaper house?). Should I have made the rent higher? - Should I rent my house out for the year lease and then look to immediately sell to buy a cheaper house or continue renting long-term and increase the rent?

- I am interested in refinancing my house but I have no idea when I should or if it would be beneficial.

- What is the best way to plan for a second rental? I already have my mortgage, student, and car loans.

- Is there anything that most people don't think about that comes back to bite them later on?

This is the first time reaching out, but I would absolutely love to get some advice! I feel like real-estate is becoming a passion, but I don't really know anyone who has any expertise in real estate or desire to gain financial freedom.

David M. · Answer

@Hayley Clark1. You do the best you can with the information or offers on hand... Whether you sell or keep the property is really part of your investing strategy including what is the best return and/or least stress...2. To plan for the second rental, definitely figure out how much more you can finance, and how best to improve that.3. honestly, tons... Like with most skills in life, you have to "live through it," either through your experience or others.I hope that quick bit helps at all.... Good luck.

Hayley Clark · Answer

Hi Rene!! Thank you for the advice and speedy response. I actually do pivot towards the “hold forever”philosophy, but I don’t really know another way to get enough profits for a 2nd rental. I also am worried that making costly repairs for my house. Everything works fine right now, but house was built in 1997 and some systems are outdated. They also recommend roofs need to be replaced every 10 years and that’s a huge expense that I am not sure I want to be around for. Definitely made sure to get a house within a 15 min radius from FT. Stewart. Renting it out while I am deployed is how I am planning to cover the entire mortgage. I haven’t really figured out what to do when I get back. But I have 9 months to figure it out and I’m hoping to find a friend or acquaintance I can room with maybe.I am so glad I met another military member here! Did you eventually buy a residence in another location? I would definitely like to connect offline however the site will not let me post any personal details.

Rene G. · Answer

Hayley,Where are you going to live when you get back from your deployment? Also, when are you up for PCS?When I was stationed in AL, but I didn't want to purchase there. I knew two guys who would buy using their VA loan in AL, they both had the intention to sell for a profit later, but that didn't always work out...I remember two guys specifically — one profited and the other had a loss. Looking back, I think it was due to the house's location. The one buddy who made a profit was in a really ideal location... Only problem was, that his BAH didn't cover the entire mortgage and had to come out of pocket to afford the mortgage while he lived there. However, that other buddy who got the "deal" (i.e. cheaper house where he made money after his mortgage with his BAH), he had a big loss when he PCS-ed...The lesson here is location, location, location. It's the most important, I'd almost want to say, it's more than getting a deal/cheap house... When, you asked, "Should I have waited for a cheaper house?" And again when you asked, "Should I rent my house out for the year lease and then look to immediately sell to buy a cheaper house..."NO! Cheaper is NOT what you want lol When you look to purchase a house, I recommend buy with a "Landlord" perspective. Meaning, you don't buy looking for cheap, you look for what will make a good rental. I also, like to approach things with a Forever Difference perspective. Buy stuff that you want to hold forever...Kinda like that famous Warren Buffett quote, where he says his favorite holding period is forever. This idea helps you seriously consider what you buy, so you don't end up with cheap crap, asking what to do after the fact. You know?...I have so much more to say and my heart goes out to you as my fellow military patriot. If you'd like to connect offline, I'd be happy to share how I've been able to manage my rentals from Iraq, I'm actually here in Iraq now.

Jenni Utz · Answer

When you bought the home, you bought it as a primary residence which normally means you put a lot less money down (and if you are in the military-may have used a VA loan for no money down) AND probably have a great interest rate. This is one of the best ways to begin your real estate portfolio- buy a primary residence to live in for a few years, and then instead of selling it, turn it into an investment property as you purchase your next primary residence. Based on your numbers, the property seems to cash flow with the rent you are charging, which means you are in the positive every month. Hopefully you included the utilities as tenant responsibility, so you don't have that expense.As you are getting started and money is tight, I would use the same method you just did. Buy a home as primary residence and live it, then when you are ready to sell you can convert to an investment.

Rene G. · Answer

No problem Hayley, awesome stuff...I built a Rental Repair Forecaster with automatic formulas that change color depending on the year and depending on the life expectancy of the item. I use that forecaster to anticipate major repairs ($10k+). I'd share the link with you, but BP might block me/remove this post. You don't have to worry about the major repairs IF you plan accordingly and know the math. My forecaster makes it really easy so you don't have to think about it. It comes in handy when you have multiple properties. So you can track everything at a glance.Yeah, I bought all my rentals in Central Florida, from Tampa to Orlando.I sent you a private message. Let me know if you get it.