Boston newbie investor looking for some direction

[Brad M.]

I'm new to BP and thought I would share my situation to see if anyone has any words of advice for a beginner. I own two properties, 1 primary and 1 rental. The rental was my primary until my wife and I needed more space for a baby. We had the means to hold on to it. I’ll preface by saying I want to be a buy-and-hold investor. It’s a numbers game so I’ll cut to the chase…

Age: 30

Location: Boston, MA

Rental: 2 bed, 1 bath condo in South Boston, MA

Purchase Price: $370,000 in 2013

Current Mortgage Balance: $300,000

IR: 3.875%

Type: 30 yr fixed

Rent: $2,600/month

Current Home Value: est. $475,000 (South Boston market exploded after we purchased)

Primary: 3 bed, 3 bath single family in Wilmington, MA

Purchase Price: $535,000 in 2016

Current Mortgage Balance: $420,000

IR: 2.75%

Type: 7 yr/ARM

Available Cash:

$60,000

$40,000 – will be available in August 2017 (Stocks vesting)

With all that said, I'm having trouble figuring out where to go from here. Boston is extremely expensive. Even though my condo's value increased by 25%, it's not cash flowing as well as you would think. Not only is it expensive, but most homes were built over 100 years ago so they can be maintenance money pits. Do I focus on paying the mortgage off on the condo first before getting another property? Do I leverage the equity with a HELOC to get 1 or 2 more properties this year? Or something in between? All I know for sure is I want to be a buy-and-hold investor. My end game is to get to around $20K net/month in rental income and then retire but of course that is subject to change. What's the best way to do that?

Any tips at all would be much appreciated!!!

[Brad M.]

@Mike Hurney Thank you. I after hearing some suggestions I think I want to hold onto the condo. If I wanted to get that same condo now, I would have to pay $500K and still might not even get it. We had to put in 8 offers on other properties before that one stuck back in 2013. Not sure if that is a lot or not for an investor but for a first time buyer, it was discouraging. If I wanted to do it again, the level of competition is the same except I would have to pay $100K more. 

I will try to maximize the property the best I can with upgrades because if the play is to hold, then the upgrades with payoff in the long run for sure. Thanks again for the response. 

@Bill F. I don't plan on quitting my job anytime soon. The reason I'm 30 and have 2 properties worth over a million is because of my job. All I hear is I need to save enough for retirement but with real estate, I like the idea of having assets that will generate retirement income, rather than worrying about saving enough.  With that said, my play is appreciation and accumulation for retirement. I'm only interested in the Boston Market, and towns/neighborhoods within a few train stops from downtown. 

So my next question is I see two approaches...

1) All cash approach, payoff my mortgage completely before I get my hands on another property and so on

2) Leverage equity to get my hands on more property and so on.

If my end game is generating enough income to support retirement (or even retire early) is one method better than the other? Paying down my mortgage will take years but when it is the cash flow would be rent - taxes - maintenance which would be around $2,000+/month. But if I can get enough property on the books now with 30 years fixed mortgaged, in 30 years I'll be 60 years old and have all these properties paid off. I can't decide with is a better strategy. I'm sure a BP guru has made an excel sheet to calculate this.

Thanks again for your time and I appreciated your input.