Starting out my Real Estate Journey

[Jabbar Adesada]

Hello everyone, I am a young service member that is eager to jump into real estate. I am currently in the planning stages of my journey and hoping for someone to guide me in my way of thinking to achieve financial independence before 30 through buying and holding rentals (I am 19 now). I am located in Beaufort, SC. My first plan is to buy a property once every 1.5 years, that I will put $25k down on, that cash flow between $200-$300. Than at year 5.5 I'll have enough money saved up through cash flow, investments, and savings to do a BRRRR with my own money and scale using that strategy to hit my goal faster. OR I can just save about $125k and in 5 years BRRRR using my own money and scale that way. What are some better ways I can go about? Financial Independence to me is $125k in annual cash flow

[Jon K.]

@Jabbar Adesada This is some excellent forward thinking. You've clearly defined your goal and defined two plans that have a reasonable chance of leading to achieving that goal.

Between the two, if you go with the first option you'll have cash flow and experience on your side as you begin to BRRRR. Hopefully your turn-key properties will have appreciated a bit in that time though that's not something you should rely on.

That being said, you don't need 125k to begin to BRRRR if you carefully utilize leverage. There are commercial lenders, private lenders, hard money lenders and even conventional lenders that can loan you money to purchase and rehab a property. Loans cost money, so you do pay for the privilege of using their money to run your BRRRRs vs paying all cash but it allows you to implement the strategy sooner. I am not saying that this is the right strategy or plan for you because I don't know your tolerance for risk among other things. But it is something to consider.

You may also want to consider house hacking. Using VA loans (assuming you can obtain them due to your service) which I honestly don't know a lot about other than that they supposedly have great terms and rates you could buy a primary residence to live in with very little money out of pocket, rent out the other rooms for about a year or so while you pay down your loan balance to 80% using your roommate's rent money so that you can refinance to a conventional loan (which frees you up to obtain another VA loan) and then repeat. Buy another house to use as your primary residence with another VA loan and move in there to do it again. I'm making some assumptions here about VA loans that they function like FHA loans but you could do the same thing with FHA loans.