Game Time! What would you do?

[Chris Tolstoy]

Hi All!

My wife and I are anxiously waiting for our SFH rental property to close mid-Sept. We've had this property for over ten years and plan to take the equity (via 1031 exchange) and invest into a larger project(s). It's taken us a while to make it to this point coming out of the recession and knowing the markets are at an all-time high, we want to ensure we align everything as best as possible before our next move. I'm going to outline some of our goals and areas we are looking for advice below. Would love to hear your feedback on pieces on any or all of it.

Life Goals-

-Own 15-20 doors by 2021

-Become a success story within the BP family

-Quit our JOBS by 2022 (w/passive income from investment properties and our real estate business)

Financial snapshot for our purchase-

-$91k (1031 Exchange money)

-134k (Cash and LOC)

-Total=$225k to invest

We are on a tight timeline with the 1031 money, so would appreciate advice on our overall strategy

Strategy-

As a seasoned investor, if you were in my shoes and with our goals in mind- what would your strategy be? Please keep in mind that we will have a 45-day window to select at least one property with a value of at least $265k.

1) BRRR (to continue equity growth)-This seems like a great strategy, but I'm concerned with interest rates continuing to rise

2) Invest it all in one property

3) Find multiple properties

4) Other- please explain

Return-

There seems to be a lot of different ideas out there when it comes to returns. What type of annual return should we be targeting with this amount of money?

Location-

What are your top two favorite markets and why

Lending strategy-

If we are unsure about the type of property we are seeking, what would be your strategy for lending? Should we find conventional and commercial financing simultaneously?

Any additional advice you have for us beyond these bullets will be happily accepted.

Thank you all so very much for taking the time to read and respond!

Best,

Chris Tolstoy

[Kyle McCorkel]

Strategy - BRRR is the superior strategy. Who cares about the interest rate if you can find a loan product with a fixed rate that allows you to cash flow?

Return - You can get outstanding returns with BRRR (possible for infinite returns) but I say at least 15% cash on cash.

Location - there's a lot of good markets, check your local market first, then look into the Indianapolis, Memphis, St. Louis type markets

Lending - Find a good local portfolio lender.  Ask around BP for referrals.  

With your $225k to invest, never tie it all up on any one property.  Maybe half at most.  Then you can use the other half if another deal comes along.  Using that rule, I'm assuming you can't go bigger than 1-4 unit properties.

Only other question is do you have a personal finance plan in place to continue "adding fuel to the fire" i.e. can you add $1K, $2K, $3K a month from your J-O-B's to the $225K RE investment pool? Because even if you do BRRRR's most of the time you can't get ALL of the money back.

My personal strategy is I have an investment pool which I add to every month from my J-O-B.  My RE goal has been to keep buying properties that cash flow while keeping the investment pool steady or rising with additional "fuel" from my J-O-B.