What would you do in my situation?

Question

Hi BP community!

I am looking for some advice. I am a newer investor located halfway between Raleigh and Fort Bragg, NC. My wife and I currently have two investment properties and our primary residence.

House 1 is located in Fayetteville. It is a 4 bed 3 bath that I purchased for $145k. Mortgage is $920, it’s currently rented for $1,700 and is worth approximately $200-220k.

House 2 is located in Spring Lake. It is a 3 bed 2 bath. Purchase price 93k. Mortgage is $500, it’s currently rented for $1,400 and worth approximately 145-155k.

We have about 90k in savings but would like to keep at least 30-40 in reserve after our next investment. I am 28 years old, active-duty military and my wife is finishing up grad school this winter. I have read several books from BP and am an avid listener of the podcast so I am familiar with most of the common investing strategies. In general, properties to the south of my location tend to be cheaper while north of me are more expensive to due the Raleigh/Durham area expanding south. I feel a bit conflicted about what my next step should be. Do I continue buying mostly turnkey single families? BRRRR? Multifamily? Should I target cash flow or appreciation primarily? I would appreciate any thoughts and feedback you have for me, thanks!

Martin LaBelle · Answer

Hey @Logan L. congrats on your move to investment while AD. I know the Fort Bragg area well and my wife and I have been investing here about 15 years. I'm liking your two positions here, from a financial perspective, however I'm slightly concerned about the Spring Lake location. At the entry price you mentioned, you may have seen all the short-term appreciation you are likely to. The rent is fabulous, however I'm sure you are already feeling the upward pressure on the rental market reduce.

Also, I'm spending some money looking for off-market deals, and may have some surplus in the near future, so let's connect.

On a closely related subject, I'm really interested in the ways fellow veterans find their way into the business and would enjoy chatting sometime.

Taylor Bennett · Answer

I think @Doug Spence advice was good. What is your goal with your next property (and the next) - I see investors flip back and forth with holding some and flipping in the mix to gain a larger one time sum of return too. I do agree with you with the prices of entering in each market. I am mainly in Fayetteville, my boyfriend is active military as well, and the purchase prices are lower and work great for rentals with the base being here. Raleigh is a higher purchase price but sometimes can hold a bigger return for flips. This is just the strategies I have seen so far.

Doug Spence · Answer

@Logan L. Congrats on your significant progress so far, especially while active duty. It seems like you're in a great spot and you have options.

What goals do you and your wife have for the next 5 years? 10 years? Once you know where you want to be, it will be much easier to devise a strategy for how to achieve those goals!

Good luck and keep us updated on your journey.

Logan L. · Answer

Hey @Martin LaBelle, I would be happy to connect and share some ideas!

Logan L. · Answer

@Paul Vail, I actually just learned about I-bonds from a friend and I’m very interested! Yeah, the multifamily route has always been very interesting to me. I think I will keep an eye out in both Fayetteville and Raleigh and jump on the best deal I can find.

Logan L. · Answer

@Seth Young, I want to get to a place in my career where I have the time to be a bit more hands-on but as for now, I would prefer a more passive investment. I have a very busy and unpredictable work schedule, a newborn, and I’m in grad school so time is precious right now.

Logan L. · Answer

Thanks @Doug Spence! I know that I need to develop more specific goals. My approach has just been to buy more properties without a real plan in place. I guess our ultimate goal is total financial freedom. Within five years my wife plans to own her own counseling practice and I plan to be working as a Nurse Practitioner. Meanwhile, we both want to build up as much passive income as possible so that we have the option to retire whenever we’d like, spend a lot of time with our family, and I can train jiu jitsu and go elk hunting whenever I want haha.

Ke Nan Wang · Answer

@Logan L. Congratulations on your success and thank you for your service.

I definitely agrees with @Travis Timmons that "Nothing is as easy as folks on here make it sound." I'm a huge proponent for master one thing first then branch out. If early retirement and financial freedom is your goal, I'd just keep doing what you have been doing and recreating that success. I think a good question you can ask to narrow down your real estate passive income goal is to take a look at your currently monthly expenses. I'd ask myself am I happy with my current life style or do I want to live it up more? How much more? Once I have a monthly expense, I can calculate how many rental properties I need to own in order to get the cash flow to pay for that expense so I can retire. The next step would be setting the goal of how many properties I'd like to acquire in a year to reach my goal in the timeframe I set.

I think I'd set a five year goal and reevaluate after five years or whenever I reach my goal, whichever happens sooner.

Seth Young · Answer

@Logan L. It depends on how much time you have to allocate towards investing. Do you want to be more passive on this property or take an active approach?

What would you do in my situation?

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