Sold my first rental property, huge profit, next step?

Buying & Selling Real Estate
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Sold my first rental property, huge profit, next step?

James Honeycutt
Investor · Colorado Springs, CO · Member since 2021 · 6 posts · 12 votes

5 years ago I purchased my first home using the VA loan (no money down). Lived there for a year, then rented it out for 5 years. The market in Colorado Springs, CO skyrocketed so I sold it. I now have, after taxes, about $175k cash all profit. I also have one more property I plan on selling soon, which should sell for another $175k profit, leaving me with over $300k which is absolutely incredible for me and I am so excited about it!

I want this to be just my first step in reaching my goals of financial freedom.  I am moving April 2022 with my wife to Greensboro, North Carolina.  I plan on using that money to buy a few rental properties (with minimum down payments) and to have money left over to start flipping homes.  I think I would genuinely enjoy hiring contractors to fix up a home in a vision I see fit; and of course I would enjoy the profit off the sale of those flips.

I have a decent job working as a government contractor in the IT field, but I have a dream to be able to leave that work and go all in with real estate someday.  I'm 35, no kids, no bad debt, and my wife works a decent job as well.  I'm going to North Carolina with $300k to start this new adventure.  

I would love to hear ANY advice to help me on my journey.  My end goal is to be wealthy enough to have nice things and for my wife and I to not have to work a regular job anymore.  I would love to get big into flipping homes while having rental properties.  

Thanks everyone! 


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Matthew CrivelliBusiness Member
Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
4y

Sounds like what you been doing is working out well, why not stick with the plan? Buy up rentals with as little down as possible, monthly cash flow coming in, let the assets equity continue to grow then refi or sell the property down the road. $300,000 is 20% of 1.5 million. So you should be able to buy close to 1.5 mil of assets with only 300k. The beauty of real estate. 

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  • Graham A. Galvin
    Rental Property Investor · Waxhaw, NC · Member since 2015 · 19 posts · 4 votes
    4y

    @James Honeycutt congrats on your success. Do you know where in NC you want to settle? I moved to Charlotte in 2007.

    1Reply
  • Matthew CrivelliBusiness Member
    Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
    4y

    Sounds like what you been doing is working out well, why not stick with the plan? Buy up rentals with as little down as possible, monthly cash flow coming in, let the assets equity continue to grow then refi or sell the property down the road. $300,000 is 20% of 1.5 million. So you should be able to buy close to 1.5 mil of assets with only 300k. The beauty of real estate. 

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y

    You are on the right track, my friend, congrats!

    I would take it slow and easy....get settled in your new area, buy something and do what you want (BRRR, STR, ETC) and then get you next one, and the next.

    As you know if you've been following this forum, then you know that STRs are capable of a much higher ROI.....so I would check into areas around your new home and see if you can do the STR thing anywhere local where you can self-manage...

    2Reply
  • James Honeycutt
    OP
    Investor · Colorado Springs, CO · Member since 2021 · 6 posts · 12 votes
    4y

    @Graham A. Galvin I am moving to Greensboro, North Carolina.  Market there seems hot there right now, I am worried when I buy things may drop in price quickly.  But I won't let that stop me from buying. 

    0Reply
  • Levi BennettPro Member
    Real Estate Broker · Charlotte, NC · Member since 2014 · 285 posts · 248 votes
    4y

    I live north of Charlotte, NC and I've been working with investors here for several years. I've heard about every strategy in the book. I'd love to set up a call and figure out what fits your investment style and figure out a game plan from there. Looking forward to having you in our state! 

    1Reply
  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    4y

    Way to go! Have you looked into BRRR's or STR?

    1Reply
  • Doug Spence
    Investor · San Diego, CA · Member since 2016 · 1k+ posts · 975 votes
    4y

    @James Honeycutt Congrats! I would start connecting with as many people as possible in Greensboro to include agents, property managers, contractors, lenders, and fellow investors. 

    Remember though, real wealth is built over the long-term with the buy and hold strategy, not flipping! I would consider keeping your IT job until you can live off the money you make passively from the rentals. Flipping is great to keep up your income, but its a job. 

    1Reply
  • Chris Mills
    Investor · Northern VA · Member since 2020 · 124 posts · 87 votes
    4y

    @James Honeycutt Congratulations on a job well done. Sounds like you're making all the right moves. I have a lot of family in the Triad area and know it well. I've been visiting my whole life and seen it's trends. I like Greensboro and Winston a lot for investing.

    @Bruce Woodruff gave good advice to take it slow. Learn the market, make good contacts, and don't rush into anything you'd regret. Plan for the long game. 

    Also, you may want to ask your CPA what to expect as far depreciation recapture. If it's significant it can really blindside you. 

    Feel free to reach out any time you'd like to chat offline. I'm always happy to help.

    3Reply
  • Bud Gaffney
    Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes
    4y

    @James Honeycutt 1031 exchange

    1Reply
  • Christian HansenPro Member
    Rental Property Investor · Cary, NC · Member since 2014 · 120 posts · 89 votes
    4y

    @James Honeycutt  Hi, congrats. I was about to mention what @Bud Gaffney stated. Its probably too late for your first sale but before you close on the second sale consider doing a 1031 exchange so you don't give away as much of your profit to your employer(Uncle Sam). Especially since you know you are planning on buying "like kind properties" aka other rental investment properties. It's not complicated and well worth it. Greensboro does seem to be growing, I'd advise buying decent properties, B-class they will stand to appreciate more and will have less headaches. For 1031 reach out to @Dave Foster he is an experienced 1031 intermediary with a solid co. behind him, he's helped me before with this and is still my go-to source for 1031 questions. Good luck.

    2Reply
  • Jason Allen
    Real Estate Agent · Greensboro, NC · Member since 2019 · 24 posts · 19 votes
    4y

    @James Honeycutt

    I did this same thing!

    I sold a business in Southern California and moved to Greensboro this year to be hands on in real estate. Now working as an agent specifically with investors, and expanding my own portfolio and business ventures.

    I love it here!

    Would be glad to connect any time!

    2Reply
  • Scott MoorePro Member
    Real Estate Agent · Greensboro, NC · Member since 2019 · 6 posts · 3 votes
    4y

    Hey @James Honeycutt, I'd like to be the first to welcome you to Greensboro! I have four rental units in Greensboro and looking to continue expanding. The market is pretty good in the area and people are moving here from all over due to the cheaper cost of living and honestly great location (close to the mountains and coast). The market is pretty hot here and there seems to be a lot of investment coming in. 

    I'd recommend that you reach out to @Jason Coleman, he is a local Realtor in the area focusing on rental portfolios and he has been awesome in helping me get started and knows the area and Real Estate Investing really well. Also, feel free to reach out to me if you have any questions about the area.

    1Reply
  • Ryan Johnston
    Lender · Charlotte, NC · Member since 2019 · 67 posts · 72 votes
    4y

    @James Honeycutt Welcome to the triad, James!  I'm a mortgage lender (licensed in NC, SC, and GA), but also an investor.  I live in Charlotte, but have 3 short term rentals in my home town of High Point, NC, just south of Greensboro.  Happy to help with any lending, investing, or general questions you may have about the area.  Cheers!

    1Reply
  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    4y

    @James Honeycutt, I appreciate @Christian Hansen's shout out.  Congrats - you're in a great position.  FWIW - next time the 1031 exchange would have allowed you to use those tax dollars to add to your purchasing power in NC if it would have been in place prior to the close.  That's the beauty of it.  You're using tax deferred dollars and making money off that for yourself.  

    But having $175K after taxes ain't shabby either.  Like Christian said - 1031 the next one.  You're on your way!

    I would absolutely do a 1031 on the next one if you're continuing to invest.  Maybe use the after tax money for a new primary.  And use this next sale to purchase your first rental there - tax deferred.

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  • Peter MckernanBusiness Member
    Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
    4y

    @James Honeycutt nice! Good come up for sure and this is a great way to put you into the planning mode before using it right away. I would look at what you want to do, STR, BRRRR, or etc. Then see what you are most thrilled about, take that cash and invest it while saving some as an emergency fund/retained earnings for those rainy days.

    Connect and meet with as many people as possible in those markets to really get to know that! 

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  • James Honeycutt
    OP
    Investor · Colorado Springs, CO · Member since 2021 · 6 posts · 12 votes
    4y

    hank you everyone for the responses!  Sounds like networking is the #1 lesson learned here, which I will do!  I may reach out to some of you individually as well since you have been so nice to offer help.

    My goal is to not have to work a regular 9-5 job as soon as that can be possible, which may very well still be years away. But I do believe with proper saving, re-investing, and using real estate in ways that you all mentioned above, I can achieve that goal!

    1Reply
  • Colin SmithBusiness Member
    Realtor · Colorado Springs, CO · Member since 2013 · 987 posts · 447 votes
    4y

    @James Honeycutt, I would agree with most of what has been said above already. Ultimately you do need to think about what your short term and long term goals are. 

    Having this cash on hand is a great way to start down the fix and flip road but this is absolutely a job and you're replacing your 9-5 for a 8-8 job being self employed. If you're looking for passive cash flow / mailbox money then long term buy and holds are going to provide the most passive cash flow. That may the long term goal and you start with flips now if your time can afford it. 

    Have you thought about what those short and long terms goals are? Are you looking to do it in the market you're from (Colorado Springs) or going to (Greensboro)?

    1Reply
  • Jane S.
    Flipper/Rehabber · Colorado Springs, CO · Member since 2016 · 499 posts · 167 votes
    4y

    Its legal to rent out a house that has a VA loan? And not live there?

    0Reply
  • Colin SmithBusiness Member
    Realtor · Colorado Springs, CO · Member since 2013 · 987 posts · 447 votes
    4y

    Yes it absolutely is with the exception of the first 12 months. Please verify this information with your lender but people do rent out properties all the time that are backed by VA loans.

    1Reply
  • Paul MoorePro Member
    Commercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votes
    4y

    @James Honeycutt. Congratulations on your success and thank you for serving our country. If you are an accredited investor, I recommend finding a great syndication or a fund to invest with. That will allow you to focus on your family and your job for now and build up cash flow and equity. Check out Left Field Investors to get some ideas on screening good syndicators and deals. I would split that money up into several if I was in your shoes.  

    If you are not an accredited investor, I know of two locations within about three hours of you that have fantastic vacation rental cash flow available. I know people on the ground in each of these locations and I recommend that you check them out. Cash flow could be ~ 60% of your equity annually (not 60% of home price of course).  

    I recently wrote a Biggerpockets blog about this topic. I think it's called "Why I passed on a 60% ROI Deal" or something like that.

    Feel free to reach out to me through my company website if you want to connect briefly on this. I might not be on private messaging for a few weeks during the holidays. Good luck!

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  • Maurice D.
    Coppell, TX · Member since 2015 · 485 posts · 310 votes
    4y

    Great move!  I am actually doing nealy the same, selling one property I have in Colorado Springs, and one in Virginia.  with the cash, I can do fix and flip and start buying rentals in my area (Dallas) for holds/airbnb.  The 1031 idea is good, but cash gives you a little more flexibility in terms of timing,value, or foreclosure auctions etc.

    1Reply
  • James Honeycutt
    OP
    Investor · Colorado Springs, CO · Member since 2021 · 6 posts · 12 votes
    4y

    @Jane S. You absoultely can,  but only after ONE YEAR of living in the home.  After that one year, it's free game.

    0Reply
  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    4y

    Congrats on the success. The comment on $1.5M in assets stemming from $300K is pretty amazing and fairly true. If you can find/buy/create a few deals and hold them as rentals you'll be set. Even when the markets dip you should have at least 20-25% equity depending on the deals you can buy. Probably more if you buy distressed value add. 

    Last time I checked Greensboro isn't San Francisco, Seattle, or NYC. That market doesn't ride the peaks and valleys of a real estate cycle. 

    1Reply
  • Ryan ThomsonBusiness Member
    Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
    4y

    @James Honeycutt nice work man! That's exciting stuff. You are aware of 1031 Exchanges for that second property you are going to sell right??

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  • Account Closed
    New York, NY · Member since 2021 · 13 posts · 3 votes
    4y

    Hi @James Honeycutt 

    How much of that $300K do you plan on using for reserves for new property as well as in case the flips take longer and/or go over budget? if you use 1031 to purchase flips, I believe a 1031 "improvement" exchange could benefit you with a trusted contractor and diligent agent working for you to meet the time constraints. 

    0Reply
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