My strategy for buying my second property

[Account Closed]

Firstly, let me start this story with a brief background. I have been in real estate for 15 months now, and I love it. I actually decided to get into real estate because of the experience I had with an agent. They were so motivated and proud of what they had done, I thought I had to get in on it. It was by far the best thing I have ever done. I joined a real estate team and ended up buying a home about 5 months after, and made the move 30 minutes from my hometown. Shortly after that, my wife and I had our first child ( a true blessing). I was considering my first purchase being a multi family home but decided against it. I have bit myself for it ever since, and I'm convinced that this time will be different. I read the book Rich Dad Poor Dad and it changed my life, I had already been thinking about real estate investing but this really pushed me in the direction I needed. My whole life I have been looking for the answer to how to enjoy life and be "free", I started studying highly successful people and it seemed like the common denominator was passive income, and it seems like real estate is how everyone does it.  Rental properties are my main focus, but I like the idea of flips but at this time what I'm looking for is passive income. I read Brandon Turner's "The Book On Rental Property Investing", which prompted me to join one of the free webinars. I sat in on a few other webinars after that (not BP).  I then read the book on "Real Estate Investing With Little To No Money Down", another GREAT book I got a ton of information from. I'm so grateful for this last year of intense real estate investing study, and cannot thank BP enough for the books I have read and the information I have acquired.

I'm now looking to purchase my second property. My first property I bought for 130k with an FHA loan and collected my own commission so I was in the house with very little money down. This home with taxes and insurance cost me roughly 900 a month (870 to be exact). I pay 450 bi weekly to save on interest payments. The home will probably rent for $1,150.00 a month. I have figured the numbers for my home, and I don't think this would make the best rental. The home has a fairly new roof and a brand new(2016) HVAC. I can probably sell the home, and after commission come out about even or rent it for around $1,150. We love the home we are in but my passion for having rental properties is pushing me to move. I will owner occupy my next home with a 5% down payment conventional loan while renting my home out. I've gotten the approval from my lender that I can start looking now because I have 60 days to occupy the property and that will line up with my 1-year mark of being owner occupants of the FHA loan. Luckily with the conventional loan, there is no time frame on how long you must occupy the property, so I could move back into my house after some time and rent the home out. The market is super hot right now, so I'm keeping my options open for Multi-Fam, but might consider going SFR again. I would like some insights on what everyone else thinks my best move is, since we do like our current house and would like to stay in it if we could, but like the idea of buying a nice rental living in it for a brief period of time and doing it all again until I have a few properties under my belt. I know that many investors start out house hacking, and I will certainly be using this to my advantage since I don't have mass amounts of capital at this time and can collect my own commissions.

I guess a few questions I have are as follows...

-Would you rent the property that I currently have a mortgage on that would bring $250 after paying my mortgage? I know that does not leave much room, but I have to lease it for at least a short period of time before moving. Could this become a long term or should I rent for a short period of time and sell?

-Would you invest SFR or Multi Family?

-Are there any tricks that Im not aware of that would help me in my situation?

I look forward to seeing your responses! This is my first big post but am looking forward to giving back some of the things I have learned in Real Estate so far!

[Paul Hitchings]

Keep the home.  Invest in multi-family. Get a partner to help fund the next deal. Rehab your home and get an appraisal in a year or so and pull out equity to help fund the next deal.

Selling your home will not make a ton of financial sense at the moment and you haven't even begun to reap the rewards of home ownership.  Making a dollar will be harder tomorrow than today, and even worse, the dollar won't even be worth as much. So buying will become harder and renting will become a necessity. The market simply cannot keep up with demand, especially short spikes.  So even if demand is lackluster at the moment, give it time. Rentals will never go out of style in medium to large cities.  "But I want to sell it to get into another type of investment"  I know, but if you own it just a bit longer, you can leverage it to buy another investment anyways AND the more you own, the more the bank will let you get creative with your funds.  Just my 2c. Once talked to a tax professional who owns 150 homes. Buying and holding made sense for him. I often wondered if his tax knowledge led him to this conclusion... I met another guy who sold about 140 home during the peak of the market to start a foreclosure software company, which is only possible if you are a tech guru...so I vote buy and hold and buy and hold and flip and rehab and buy and leverage and partner and market and rinse and repeat :)