Moving on from a Single Family home

[Jason Baldwin]

I wanted to play a quick game with everyone. Leveraging your expertise, I'd like to understand how you approach the situation I'm about to describe.

Long Term Goal: Build RE portfolios using a buy-and-hold strategy by building up 40 units in the next 6 years.

Situation: Small family owns their first single-family home which was purchased 2 years ago.

• Purchase Price: $320,000 (FHA, minimum down)
• Oustanding Balance: $300,000
• Appraised Value: $370,000 
• Mortgage: $1,950
• Est Rental: $2,300 (no expenses considered)

Considerations:

• The basement may have been finished without permits, professional plumber, or electrician
• The yard is large and potentially hard to maintain
• An additional $2,000 is needed to prepare for rental or $10,000 in renovations before selling 

Therefore: What would you do as a starting investor in order to reach the goal stated? Would you hold onto the house? Would you sell it? 

Thank you in advance! Looking forward to your responses! If I can provide additional information to help you make an informed response, please let me know.

[Neil Goradia]

@Jason Baldwin, I am a firm believer in getting rid of problem property. If it's not easily fixable then it's will drain your time and money for a long time and is not worth it. I don't know where your property is, but in general the market is very hot right now and would be a great time to 1031 into a different property. I still own the first property I bought in 2007 and had to make many major repairs over the years. I definitely regret not selling it sooner, but at this point I'm so heavily invested I have to wait it out. If you want to hit that goal you have to keep your money moving. Try BRRR strategy, or, flip/wholesale to build up cash reserves and take down new deals with cash. As always, make sure you buy right.