Could use some honest feedback!

Question

This post has 2 major questions that could use your honest feedback!

Situation #1 : Earning more to buy more real estate.

Currently working as a customer success manager with a really great company, But I desire to earn more and create finacial freedom!

I would like to start my own small business to allow me more capital for investment opportunities, while also leveraging my current property to aquire more real estate.

The company SweatyEquity, Has two paths I could see myself headed.

Option 1: Start a property management company

Option 2: Start a Hardscaping design company that also does snow removal.

Those who have navigated either or, would you recommend one path more than the other. Ideally I'd be on the business side, As my strong skills are system development, Customer service and marketing.

Situation #2 What to do with my current property?

Purchased my first property via a conventional loan last January. 210k

3 Bed, 1 Bath. 1,868 SQFT with a garage. Basment is finished with a den that could be converted into a bedroom (just needs egress window) and has a shower that could be turned into a full bath.

Due to recent sales in the neighborhood, my comps now value me closer to 260k to 310k. The homes in a great neighborhood, Seems to have a strong rental market, and homes are selling quickly for over asking.

My rental concerns are, outdated systems, old roof, windows would need to be upgraded and the home has a slight slope. (From inspection, no concerns found)

Option 1: Throw some lipstick on it, find a good CPA, sell it and roll the equity into the next property.

Option 2: Invest some money and sweat equity into the property to sell for the top value. Wait 2 years to avoid short term capital gains tax, then sell and roll over into the next.

Option 3: Fix up property, have a reappraisal done, Then pull out a HELOC loan and BRRRR.

Option 4 : your better advice?

Thanks all!

Timothy Moore · Answer

@Devin Olson I think it's great that you're looking to put more time into building your future wealth and income. The choice between both options will depend heavily on your set of skills and market. I own a management company and I can tell you, as with most businesses, it's a very time intensive endeavor before you can expect to see any sort of returns. Most markets have licensing requirements (broker's license in MI or working under a broker) and you have to get insurance given significant liability and exposure. While it may not be too difficult just to manage a few properties in nice areas, it can be very time intensive to get the right team and support set up for efficient operations, leasing, maintenance, and turnovers. Honestly without being coupled to a real estate profession that benefits mutually with the management company, I'd advise against it. Landscaping / snow removal can be a good business if you know the work and are willing to get the equipment. It's very simple to scale at your own pace and schedule around other work (snow removal isn't as flexible). Ultimately though you should assess your current skillset and do a side business that is the most efficient for you personally so if you're really good at customer service, it may not be labor work. It might be getting a real estate license for part time realtor work, insurance, mortgages, etc. For your house, this may depend on your personal preferences of staying or moving but given the 3 options, I'd recommend prepping it for sale in spring, focusing primarily on cosmetic value add items rather than your outdated systems, provided they are still functioning. You should be able to sell after 12 months of holding without short term capital gains tax (confirm with your CPA) and then you can roll these proceeds over to the next property, buy two, or even house hack and grab a 2-4 unit ideally. It sounds like there are multiple capex items that will come up in the near future if you hold the property and if you're serious about REI, you'll likely be able to leverage your equity in a better way by transitioning it from this home into more rentals but that would be assuming your valuation is accurate.

Travis Timmons · Answer

Not sure where you are living now or if you have collected a spouse, kids, or dogs; however, if it is just you live in the non conforming basement "unit" and rent out the upstairs. If you have a primary, sell it or make that you next rental property. As for the side business, be honest with yourself. Is there a real opportunity there? There are many situations where getting a job delivering pizza, bartending, or some other part time job solves the income problem. It's just more of a pain in the a$$. Starting a business also sucks. It gets romanticized, but you work for free a lot in the beginning hoping that it works out. I also was pretty lazy (not saying that you are...just my story) and once upon a time thought that the problem was a job that I did not like. I thought that starting my own business would motivate me. It didn't. I kept being lazy for the first 6-12 months until my back was against the wall and finally decided to grow up and do what I needed to do to build the future that I wanted.I've started 4 businesses (the same business 4 times bc I was stubborn and stupid enough to keep at it) and own a few rental properties. If you think that I could be a resource, please send me a DM. I'd be happy to help and have nothing to sell.

Alecia Loveless · Answer

@Devin Olson I’d do option 3. I don’t think youll make enough selling it to get into another property in this market. I also think with just one property you probably have enough knowledge to start a property management company just yet. I think if you live in an environment with different seasons a landscape company is your best bet. You can build up a clientele and get plowing and yard maintenance clients and grow rapidly.

Devin Olson · Answer

The first part has me curious. What value would make it worth selling in your opinion?

Devin Olson · Answer

Sent a connection request. It's incredibly humble of you to be honest about being lazy. and has me taking a few steps back to assess my own drive if starting a small business. I loved being a real estate agent, but didn't comment enough to door knocking or cold calling.

Devin Olson · Answer

Thank you, I deeply appreciate your breakdown. And will be considering all of your advice moving forward. 🤜🤛