Seeking advice for starting out in real estate investing

[Marc Uber]

Hey everyone! New to this and looking for some advice. Recently started a new chapter in my life and just found bigger pockets, building passive income and the FIRE movement. Hoping to replace my income over time with multifamily units and utilize house hacking. Running the numbers in St. Pete has been tough and seems like nothing will cashflow.

Just looking for some advice to get started. I am in the process of selling a house and should have ~$250K to utilize once it sells…

One idea is to build an ADU at a family members house to get started with only some of the money and hope interest rates and prices continue to fall. While building the ADU, keep waiting for an opportunity to buy a multifamily property. If the ADU finishes before finding a property, I'll plan on living there till I can house hack in the future property. Thoughts? Should I just focus on single family homes initially? Should I look for invest properties outside of Florida to avoid high insurance costs? Since I am selling a primary residence, I don't think I can utilize the 1031 to save money on taxes. Also any property I buy will most likely be of lesser value but is there a different tax saving strategy to utilize?

I have time and the ability to fix up properties so not looking to buy something that is turnkey. My current job I work remotely but have two children that need to stay in the area so outside of St. Pete is possible but I won’t be able to dedicate as much time to it.

Thanks! Looking forward to any help and advice.

[Jana Crum]

Hey Marc, welcome to the world of real estate investing! From my experience with my investments & my clients, a great real estate investment portfolio starts with the end in mind. What's driving you to want to invest in real estate? Since you are looking for passive income from a rental to aid in your income once you hit FIRE & retire, I'd focus on building a portfolio that begins to build on that cash flow to replace your W-2 salary. 

Since you have two children who need to stay with you in St. Pete, I'm not sure if building an ADU is the best use of the proceeds from the sale of your home. Building an ADU to fit all 3 of you might end up being more than $250k. It might be best to divide your cash from the sale into a down payment for a new primary residence and a down payment for a cash-flowing property in the area.