Beginner looking for Real Estate Investing Advice

[Garrett Borth]

My wife and I are a young couple and both have high paying jobs (Registered Nurse & Engineer). We were fortunate to graduate college with no student debt and are great at saving money. A little over a year after beginning our careers (Sept. 2021) and not knowing anything about investing, we bought a 3bd/2ba house for $500,000 with 20% down and a 3% interest rate resulting in a mortgage of $2160 (including taxes & insurance). Over the last 2 years we've become more and more interested in real estate investing with the specific goal of becoming financially free. However, with current house prices near us and high interest rates, buying a cash flow positive investment seems impossible where we live (Kitsap County, WA). Even our current house at 3% interest with a $2160/month mortgage could only rent for around $2800/month. We currently have $70k set aside ready to invest and about $118k of equity in our house. According to Zillow our house has appreciated $50k over the last 2 years.

A few beginner questions:

After estimating vacancy, maintenance, and capex expenses, it does not make sense to rent our current house, do you agree?

Should we sell our house and move to a more favorable market for cash flow? If so, where do you recommend?

Should we keep our "relatively" low mortgage/interest rate for our area and start investing out of state?

What strategy would you recommend we start with: Long term SFHs, house hack with a small MFH, BRRRR, or other?

We are both excited to start our path as real estate investors and appreciate any input or advice you're willing to share, thank you!

[Noah Laker]

What's up Garrett, welcome to BP! I'm a real estate broker and investor, and I manage 100+ STR/MTR properties.

Congrats on being so nicely positioned in a tough economy and for getting into this space. Financial freedom is within reach if you put the work in.

Firstly, are you planning to move from your current home? Don't make a decision on your primary without factoring in lifestyle preferences. If you're planning to move anyway, you could rent it, but the capital might be better utilized elsewhere, so don't rule out selling and reinvesting. Primary home capital gains are non-taxable up to $250k or $500k for married filing jointly. At $2800/month for that property, you might consider reinvesting or just using a HELOC so you can keep that low interest rate while enjoying the equity you've accrued.

I'm in Sacramento, it's the perfect balance between appreciation and cashflow. I manage properties in several metros but my money is only spent here. 

House hacking is a classic method. Highly recommend. I've done a few and helping some clients do the same right now. BRRRR is a bit more advanced and in this market it's tricky at the "Refinance" step.

Anyway, I hope this helps and please feel free to ask any other questions.