Seeking Advice on Expanding My Real Estate Portfolio

[Noah Margate]

Hello, BiggerPockets Community!

I’m looking for guidance on progressing my real estate investment journey and would appreciate any advice from experienced investors. I am inexperienced so please be mindful of that. Any information that you need to help guide your advice for me, just ask. Here’s a bit about my current situation and goals:

Current Rentals:

• Number of Properties: 1
• Type of Property: Single-family home (we lived in it and turned it into a rental when we moved out)
• Location: Corpus Christi, TX

Investment Goals:

• Short-term Goal: Acquire more properties and build an equity-heavy portfolio to have leverage if needed.
• Long-term Goal: Build a portfolio that provides enough cash flow to cover all living expenses.
• Focus: Expand my portfolio, preferably to at least 10 properties in the next 10 years.

Financials:

• Current Monthly Cash Flow: Close to breakeven (potentially negative by $20, factoring in reserves).
• Future Investment Budget: No savings at the moment. Bought the first property for $182k, currently worth about $245k, with a mortgage balance around $163k.
• Financing: Unsure about options. Should I save for a conventional loan, get a HELOC, or do a cash-out refinance with my first property?

Experience and Knowledge:

• Experience: A little over a year owning my first rental.
• Expertise: Still learning about all aspects. I have a real estate license and want to focus on single-family homes (4 units and below).
• Mentorship: Not working with a mentor or investment group.

Challenges:

• Current Hurdles: Unsure what to do next to expand my portfolio. Considering saving up for a 20% down payment but wondering if there are faster or better ways.
• Guidance Needed: Financing options based on my situation.

Strategy:

• Current Strategy: Buy and hold.
• Open to New Strategies: Yes, interested in fix-and-flip and short-term rentals, but I have no experience in these areas.

Market:

• Market Selection: I want to invest locally in Houston. Current rental is in Corpus Christi.
• Considerations: Debating whether to sell the Corpus Christi property and reinvest locally. Current interest rate on the property is 3.375%. Average price in West Houston is around $314k, but wondering if I should look for something in the $250k range. Is selling my property the right move if my goal is to expand my portfolio?

I would appreciate any advice on the best steps to take next, especially regarding financing options and whether I should sell my current property to reinvest locally.

Thanks in advance for your help!

[Dave Foster]

@Noah Margate, you only have to have lived in it for 2 out of the 5 years prior to selling it.  So you qualify right now.  You would get the full primary residence exclusion (up to $250K of profit if single or $500K if married).  Any extra profit above that.  Or any depreciation could be deferred by also doing a 1031 exchange.  You would qualify for both.