What would you do next?

Question

My wife and I own and manage all of our real estate investments which currently consist of 11 Single Family Homes.  One of which serves as our primary residence.  I am fully employed in the tech space with a six figure income.  My wife runs the day to day of our investments and I handle the bills and paperwork.  We have two children, one 14 and one 7 months.  Big gap I know, but he is quite the blessing.

Our strategy is rent by the room.

For the next 3 months to 15 months, we are not actively investing unless a deal just happens to fall into our lap.

We have 10 loans.  One DSCR, One VA, and Eight Conventional loans.  One house we own without a loan.  It was purchased off market as a cash only deal.

We cash flow 15k a month after all expenses and have 100k in cash. We have approximately 1m in equity across all properties.
We are taking the time off because we just closed on our new primary residence and converted our old primary to an investment property. We agreed to wait till after Christmas before starting back up investing as that would give us time to put the house together and have a celebration and have a good Thanksgiving and Christmas with family and friends.

We believe that we are at a point in our investing where it is becoming too much work for us to handle and we need to update our day to day (Hire & Train Staff), transition to something else (Apartments with a Management Company) or a Combination.

If you are still investing in real estate and have overcome these hurdles, are you happy with your decision?  If you could do it over again, would you change anything?  If you were in our shoes, what would you do?

Thanks for your input and we wish you all the best of deals and success in your real estate investing journey.

Michael Smythe · Answer

Keep your day job as long as possible and keep building your portfolio.

Start hiring out what you don't want to do - sooner you start this the better for long term

You do NOT want to quit your day job for another job managing your properties. That's not really financial freedom.

Jaron Walling · Answer

@Shawn Morrow It's sounds like the REI already retired your wife from the 9-5 grind.

"I am fully employed in the tech space with a six figure income." - How long do you want to stay at the 9-5? How much time do YOU want to contribute to the business? Those are the bigger questions. If I was in your shoes I would quit my job in 2 years or less. My 9-5 does not provide the satisfaction that REI provides, but we don't have anywhere near the cash-flow or equity to quit (wife included).

Alecia Loveless · Answer

I have 7 properties and 20 operational units and 5 new units that are being renovated to go online ASAP once they become available.

I do 95% of my own management with my contractor doing the other 5% as needed. I work a 3rd shift full time job that does allow me to have the flexibility of being able to tend to real estate things during the day on an as needed basis.

This past tax season my accountant of 26 years told me it was time to get some help so I’ve hired a bookkeeper, I’ve started the process of working with a financial planner, and I quit my part time job that was an additional 16 hours each week that is allowing me to spend more time focusing on my properties.

My ultimate goal is to get to the point of being able to quit the W-2 in the next 3 years and focus full time on the real estate.

In your position with the family and the new home I absolutely think it 100% makes sense now that you’re in a great financial position to make some sort of transition over to a property management situation. The more time you can spend with your kids the happier they and you will be.

Personally I really do enjoy the small sized apartments from 2-10 units or whatever breakdown you have in the market you are considering investing in. We don’t have many bigger apartments in my area but I do have one 8 unit. Where I’m at now for not much more than the cost of a nice SFH I can buy a 3-4 unit building and get higher cash flow. I don’t know how much higher the price of entry would be for you into multis in your selected market.

I think transitioning to apartments would be a great move for you and one that would allow you to gain more equity and cash flow. Everything I read says they’re harder to sell but in my market they move fast at top dollar so it depends on your market and how well you maintain them.

Best of luck!

Brett Merrill · Answer

@Shawn Morrow I have a similar amount of units and a very similar life/financial set up. We are at the same crossroad. However, this is a good thing. I'm sure you ran your #'s with the expectation of future management. I take pride in managing my properties and have always had the best experience with tenants, little to no vacancy and expedited repairs. I am working now at finding a management company that will allow for negotiation to still allow me to have the control and oversight that I fell comfortable with. I would work on using this time to transition from being a full time manager/book keeper/etc to being a full time investor. I feel that this is the only true way to scale. My actual career is very flexible so I'm not ready to part ways with that yet but I will be starting with finding great people to start taking over the management and daily operations that have been cutting into my time. While this will cut into my cashflow in the short term, it will certainly result in a greater ROI with the time it will allow for me to scale by business.

Ragan Manning · Answer

@Shawn Morrow sounds like you already have an extensive portfolio, congratulations on your success! Since financially you’re were you don’t have to worry then taking a step back makes since. I would take this time to get a team in place so when y’all are ready to hit the ground running again, you’re not as involved with the day to day. Stop working the business and start running the business. Higher people to work it so you can be the great investors y’all are and scale the business. (REI Bookkeeper, REI CPA, property management, CFO, etc) Like mentioned above, short term it will cut into profits but long term, you’re setting yourself up for a bigger success. Good Luck!

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