I've Hit the Wall (Looking for Insight on Next Moves)

[David Johnson]

I'm a relatively new real estate investor (under 5 years) and own two single family homes in the Washington, DC area. I'm currently looking for next steps to grow my portfolio, but my inexperience is limiting my vision. I feel like there are probably basic things I can do to move forward, but I'm ignorant of what they could be.

A little about my current situation:

Both properties I own are currently rented to section 8 tenants and have a combined cash flow of $1764 a month. Each property was acquired at approximately $250K and $270K, respectively, and they have experienced a substantial amount of appreciation over the last 4 years or so due to major development in the neighborhood. One was recently appraised at $400K, although I feel like they could both sell for at least $450K. Long story short, I have a pretty good amount of equity in both properties, since the outstanding loans on each of them stand at about $185K and $210K, respectively. 

I also have about $250K in stocks that I could liquidate, but the catch is that I'm unable to get financing because my debt to income ratio is too high. 

So, what can I do? I feel like my ability to maneuver is limited because of the financing issue, but I also feel like I should be aggressive and pursue more opportunities. Let me know what you think.

[Taylor Shapiro]

@David Johnson nice work on the rental properties! Seems as though you have a firm understanding of how to underwrite the smaller buildings and pull the trigger when you have a good deal in front of you. You're already far ahead of most "relatively new" investors. 

What do you need? What do you enjoy? When I started investing I needed cash now, which was why I began flipping first. Now that I have some capital to play with I've begun looking into larger apartment buildings as I enjoy the asset class and see the benefits of owning units. This came about through reading articles and books, watching youtube videos, listening to podcasts, etc. Figure out what you'd like to get into next.

You have equity in your units and equity in your stock portfolio. You have options!

-How are your stock returns? Sell and buy another duplex, triplex, quad?

-Sell stocks and pay down current mortgages if risk averse

-Sell everything and buy a larger buildings

-Read up on other strategies that excite/interest you

Keep it up!