What would you do...? (Advice Welcome)

[Kerry Smith]

Hello everyone! Before I start, I'd like to say thanks to the BP crew and the tremendous community you've built here! Honestly, the last 4-weeks on the site has been nothing short of life changing...

I am 36 years old, and active duty military. I have been in the military for 18 years, and I am 6 years from being eligible for retirement. I could stay in for another 12 years to reach 30 years service, which would result in approx $6000/mo Net Retirement Pension. My wife, who is 32, and I are setting the stage to begin our real estate investing business. We have a couple of things going for us, and a couple of things working against us. I would like to garner your feedback to help me finalize our business model. Here is the background info:

Family Composition: Two adults and two children (1yr & 3yr), with one more on the way! Currently living in Germany, and we own two rental properties. One in Colorado Springs, CO (Property #1) and one in Sanford, NC (Property #2)

Real Estate Education Level: Low - We're new to Bigger Pockets, listened to 1/2 of the Podcasts (Awesome Josh & Brandon!!), Read Rich Dad Poor Dad, and 1/2 way through the Millionaire Real Estate Investor. I am starting my BS in Real Estate through Marylhurst University next month.

Income:
Net Earned:
$55,200/yr ($4600/mo)

Capital:
Mutual Fund - $35,000 ($1800/yr in dividends)

Passive:
Property #1(Colorado Springs, CO) - 3br/2ba // Owe $160,000 // Recently Appraised for $190,000 // $1250/mo Rents // $900 Mortgage Payment (+$300 Cash Flow)
HELOC $25,000

Property #2 (Sanford, NC) - 3br/2ba // Owe $180,000 // Estimated FMV is $200,000 // $1100/mo Rents // $1400 Mortgage Payment (-$300 Negative Cash Flow)

Note: Both properties are former primary residences. Property #1 has rented like clockwork since 2006. Property #2 is currently being rented to a family member at a discount. This will likely change in the next 12-months, and the maximum projected Rents on Property #2 are $1400/mo.

Expenses:

Auto Loan: $13,000 ($327/mo payment)
College Loan: $25,000 ($255/mo payment)
Credit Card: $4900.00 ($165/mo payment)
HELOC on Property #1: $25,000 ($70/mo payment)

Note: We currently reside in military quarters free of charge.

Assets:
Property #1
Mutual Fund

Liabilities:
Property #2
Auto Loan
College Loan
Credit Card
HELOC on Property #1

SHORT TERM GOALS:
1. Snowball or Flip a Property to payoff Credit Card, Auto Loan, College Loan, and HELOC in that order.

2. Acquire enough buy-and-hold properties to replace Earned Income ($4600/mo).

LONG TERM GOALS:
1. Acquire enough buy-and-hold properties to have $10,000+/mo Passive Income.

2. Become a Millionaire Real Estate Investor!

That is a general overview of our financial situation and goals. We are in the infant stages of developing our business plan, and trying to determine what our best course action is. We would definitely like to purchase more buy-and-hold property either in the Colorado Springs area or near Raleigh, NC. We do have an excellent property manager in Colorado Springs at our disposal.

We are definitely open to the idea of flipping a property to help payoff the College Loan, HELOC and Auto Loan. I am in North Carolina until May, and could potentially make a flip happen while I am here. Beyond that however, we will be back in Germany, and we are unsure if we can pull off a flip while living overseas.

I am curious what your advice might be? Part of me wants to jump right in and use the Mutual Fund/Capital to flip a couple of houses, or use as down payment on some buy-and-holds that actually Cash Flow! However, the Dave Ramsey side of me wants to payoff the Liabilities first...

What do you think?