Don't know how to begin!

[Pedro Cruzfeliciano]

Hi everyone,

I’m here seeking some guidance in regards to investing in rental properties. Currently I own two homes, one located in Killeen, TX and the other one in Raeford, NC. I purchased both of them while being in the military with the purpose of using them as my primary residence and not to generate cash from them. Both homes are rented out but are not generating cash flow. The home in North Carolina has built around 60k equity. The home in TX has around 15k in equity. At the moment I’m contemplating selling the NC house and use the equity to purchase a cheaper home that can generate some cash flow. Likewise, I’m a bit unsure and undecided if that would be a good move to make to begin investing in rental properties.

[Ali Boone]

Hi Pedro. Maybe what you can do to start is start shopping around for new potential properties so you can see what numbers you might be looking at. Once you have a feel for what you could buy if you were to sell, you might have a better feel as to whether you should do it or not. I don't know necessarily that prices are going to be getting higher anytime soon, so it could be a good time to sell the properties you have if you're thinking about it.

I'd say just run different numbers scenarios and see what you come up with and go from there. Exploration phase.

[Matt Brown]

@Pedro Cruzfeliciano

What's your bottom line strategy and niche you're going for? Those homes might not be cash flowing, but nonetheless generating equity over time, which isn't necessarily bad if you cash flow zero. Take a look at your strategy and niche, see what you're trying to do, identify how your two properties can enable that strategy, then execute.

[Kevin Hunter]

@Pedro Cruzfeliciano, I agree with Matt above.  I would start with identifying your strategy.  Do you want to generate cash flow and supplement your current income?  Are you looking to replace your current job through purchase and management of properties locally?  Are you looking for long term wealth through asset accumulation?  Is it a combination of these.  No one will be able to tell you what the right answer is without understanding some of your near and long term goals.  

Either way, it looks like you have purchased smartly and are off to a good start.  Keep us in the loop!

[Nathan Gesner]

@Pedro Cruzfeliciano you're making a smart decision. What you bought to occupy may not be the best for an investment and cash flow.

I would look at selling while the market is hot then look for a multi-family that increases your rate of return. Find a good property manager that can handle things while you're deployed or after you move.

[Carli Cummins]

Hi Pedro,

I live in the Fayetteville/Raeford area and it is presently a seller's market! You might want to reach out to a local broker and have them run comps/DOM to give you information to make a more informed decision.