Bought my first househack, what do I do now??

[Jeremy Mangen]

Hey there! I'm a new investor and I just threw my savings and capital into my first house hack here in the Twin Cities. It's a non-conforming triplex where I will be living in the top attic unit that's not legally a unit and renting out the other two legal units. I should be living for free and cashflowing ~$300 on this first deal. I truly couldn't have done this without a wonderful investor friendly realtor and the help of the local REI meetups and of course the BP Podcast.

Now that I'm significantly reducing my monthly expenses (currently paying $825/m on rent near Downtown Minneapolis) and making money and learning how to be a landlord, I think I'm getting myself off to the right start as a real estate investor. I'll be making an extra 1100-1300 a month plus continued raises at my current job, so I'll be able to save and pay down a lot of debt pretty quickly. 

The obvious next step is to pay off all my debt, including school loans, car payment, credit cards, medical... 2017 and 18 were rough years for me. But I'm not content with just sitting and paying down debt. I'm a very driven and action oriented guy. I tend to move fast and take massive action to prevent myself from getting into analysis paralysis, self doubt, or boredom. So sitting around for a year just saving and paying down debt sounds like a horrible idea to me, though it still will be a big part of my plan. 

I'm trying to figure out how to use leverage to continue to drive my investments. I have a few ideas but I'm looking for input.

1. Take out an unsecured line of credit and use it to purchase some more investments and use the BRRRR strategy to keep scaling up.

2. After 6-9 months of managing my new rentals, look to join a property management firm in some capacity, working part time so I can learn the ropes with the end goal of starting my own property management firm. I'm considering starting my own PM firm because I endlessly hear about how horrible most of these firms are and I truly believe I can do a much better job than many of them, but first I have to learn the ropes and test it out to see if I actually enjoy it as much as I think I will.

3. Try to find a more established local investor and link up and see if there are areas I can help provide value to them. 

4. Get my real estate license and explore the option of making money that way. 

5. ??????

Essentially I'm a new investor who has just tied up his capital and is trying to figure out the best, most efficient way to scale up from here. If truly the best option is to sit on my laurels and use my extra income to pay down debt and save, not investing again until 2020, then I'll find a way to make it work. But I like action and tend to believe there are better options out there. 

This is going to come up and it's important I outline it, so here's my why/goals.

Put simply, I'm an entrepreneur, everything in my personality draws me to being my own boss and taking risks and playing the business game. I have to be able to provide for my future family above and beyond the average, I can't handle just living a life of "average." I will not be the old grandpa living in a nursing home because no one else can afford to care for me. And I owe it to my friends, family, and community to live up to my potential and contribute my talents to the world. The classic Cardone, "Success is my duty" mindset, combined with the idea that I help no one in life by simply being mediocre, and finally my happiness is only truly found in struggle and challenge, I'm never happy when I'm dormant. Which is why I'm afraid of being dormant for a full year. I'm not looking to be a mom and pop investor. I'm looking to build a lot of wealth. I've set some scary goals for myself, following Cardone's 10X rule, and I've always been a big dreamer. I'm looking to run a huge REI business. But talk is cheap and I'd rather do the thing then talk about it. Which is why I'm here on the forums, cause ya'll are extraordinarily smart and I know many of you have gone through similar periods and can help me figure out which actions to take, rather then just reading books and listening to podcasts (which I've done a TON of).

How have you handled that "first investment" hump? Knowing the majority of investors have 1 or 2 properties and either very slowly or never really scale outside of that, how do I avoid getting stuck in that trap? 

Any advice/tips are greatly appreciated and feel free to correct any assumptions as much as you want! I'm still new, young, and dumb with a lot to learn. Thanks!

[Tim Swierczek]

@Jeremy Mangen great post! It feels like we know you because of all the info you provided including motivations and your general attitude toward life.  I generally agree with your mindset but will challenge you on one tenant, and that is that paying off ALL of your debt is the obvious next choice.  In my eyes it is not, that is not to say that I see no reason to pay off your debt, but I certainly do not think its a no-brainer, and I guarantee that it will slow your real estate growth if you do.

I'd love to meet with you over coffee & talk strategy PM me if that interests you.

My quick thoughts on your questions are as follows:

1. Take out an unsecured line of credit and use it to purchase some more investments and use the BRRRR strategy to keep scaling up. ~Why would you ever do this and pay off cheaper secured debt at the same time?  This could be a good strategy, but not in conjunction with paying off your cheap car loan to take out expensive debt.

2. After 6-9 months of managing my new rentals, look to join a property management firm in some capacity, working part time so I can learn the ropes with the end goal of starting my own property management firm. I'm considering starting my own PM firm because I endlessly hear about how horrible most of these firms are and I truly believe I can do a much better job than many of them, but first I have to learn the ropes and test it out to see if I actually enjoy it as much as I think I will. ~This is generally a great idea, because of the sheer volume of tenants, and issues that you will see at a PM firm will put you years ahead of other investors.   I would not just do it to start a PM company.

3. Try to find a more established local investor and link up and see if there are areas I can help provide value to them. ~ Another awesome idea, you can find these investors at Meet-ups and REIA's all over the cities

4. Get my real estate license and explore the option of making money that way. ~Most likely this is a better way to make money than starting a PM company but in my opinion, you would be better served to work for a PM company for a few years, and then consider this.

5. ?????? ~Network like crazy, meet-ups or REIA meetings.

Good luck

~Tim