Closed on my First Property at 23-Years-Old - Seeking Advice

[Michael Moreno]

Hi everyone! My name is Michael and I am seeking advice on how to go about my first purchase.

I bought my first property as a primary residence for $258,990 with an FHA loan at a 4.875% interest rate. It's a one-story single-family residence with 3 beds and 2 bathrooms with only me living there. I was not able to buy a duplex, triplex, or quadruplex since the mortgage would've been more expensive, but it was my first idea. I have been prepaying $1000 for the past four months since I closed on it. My strategy with this is to build equity as quick as possible so that I can apply for a HELOC, Home Equity Loan, or do a cash-out refi to buy my second property (investment property) if rates end up falling in the future. I would also save a huge amount on interest and pay the loan off in 12 years if I continue this strategy. If I were to buy my second property in the future, I would ideally like for it to be a duplex, triplex, quadruplex so that I can move into one of the units, rent out the others, and also rent out my first property fully.

After doing more thinking and math, my other strategy is that I could go invest that $1000 into the market (which makes me a higher return than 4.875%) as well as rent out the two extra rooms that are currently not to aid in paying off my mortgage.

I am wondering what y'alls thoughts are on these two strategies? Also, please be completely and brutally honest with me because I really want to be a successful real estate investor. My dream is to own many long-term rentals. Please feel free to also connect with me on my LinkedIn (in my profile) so we could discuss more!

[Travis Timmons]

First step - get two roommates to rent out the bedrooms that you are not occupying. I'd furnish them and put them on airbnb and furnished finder for a minimum 30 day stay (unless you want to do short term rentals by the room). Start with that, don't pay extra on the mortgage, pile up cash for the next one. If your goal is to get into the next house/2-4 unit, save for a down payment rather than throwing money at the principal to eventually borrow against it via HELOC. You're in the scaling phase, not the paying down principal stage.

Beyond that, work your a$$ off and save every dime that you can. If it's not food, transportation, housing, or ABSOLUTE necessities, don't spend money on it. And do everything you can to make extra money. You have to think long term and delay gratification. My 20s were a blur. I didn't go out with my buddies, go on trips, buy a new car, or do any of the other admittedly fun stuff that my peers were doing. I did nothing but work, but now I'm financially independent at 41 with no job. It was worth it. It completely and absolutely sucked, but it was worth it.

You're in a good spot, but it is going to take longer than you think it will. Slow and steady still wins race. Feel free to send me a message if you think that I can be a resource. I have nothing to sell and would be happy to help.