Have a few properties, don't know what to do next.

[John Balzowski]

My first post on BP, I've been a lurker for a long time.

I sold my e-commerce company last year and have been doing some real-estate investing, I've bought and fixed up several personal homes over the years and have always wanted to get into real-estate investing.

I live in CA, and I bought my first investment property in Temple Texas at the beginning of the year.  I bought an enclosed trailer, loaded up my tools and drove out to Temple to re-hab the house.  I worked 57 days straight, about 12-15 hours a day remodeling the whole house, I did 95% of the work myself.  I paid 116k cash for the house, invested about 30k and have it rented out for $1,350/mo.

I bought another one while I was out there and went back at the beginning of April to do it all over again.  I again spent about 2 months working 7 days a week until I finished it.  I paid 160K cash for that one, spent about 30k again and have it rented for $1,895/mo. 

I also own a commercial warehouse in CA, I used to run my business out of it and now lease it to the new owners of the business.  I have an SBA loan on that one and it only cash-flows me a few hundred dollars a month.  I bought the warehouse in 2019 for 400k, and it's now worth about 720k, I owe about 320k on it.

My intent was to hold the houses I bought in Texas, and I'm satisfied with the return I'm getting on them for now.  My idea was to establish myself with some paid-off, cash flowing properties to make leveraging them for more investments a lot easier.

I'd like to flip some houses to generate some cash, but  even knowing what I know I'm struggling to see how to make money doing so.  I bought both of these houses cash, both were off-market wholesale deals and I did nearly all of the work myself.  With all that considered, if I had just been trying to flip the houses I don't see much profit in either one once I pay commissions to sell.  I see so many people flipping houses while contracting out all of the work and making decent profits, even when financing the deal.  I don't know what I'm missing here, am I simply in the wrong market to flip?

I've considered the Flip System guys, many people scoff at the 19k fee to get in, but if you look at the whole thing like buying a franchise it's actually not a bad setup if the deals really do yield what they say they are averaging.  

I still have a lot of cash on hand but don't want to keep putting it all out there, and I just feel stuck where I'm at not knowing what direction to go in now. 

[Drew Sygit]

@John Balzowski what no ones mentioning is an investor should understand Property Classes.

The numbers you've done in TX, appear to be for Class B properties. Could be CLass A, but you didn't share what the ARVs are.

Most investors finance 75-80% of a purchase or do a cashout refi to BRRR it.

Class A properties are almost impossible to cashflow with, especially with +7% mortgage rates.

Class B, you're lucky to cashflow these days, but can do it if you buy wisely.

Class C is what many investors are focusing on currently as they can cashflow from day 1, even with +7% mortgage rates.

The challenge is most investors targeting Class C for cashflow, don't take into account the corresponding lower-class tenants and all their associated challeges. Then, when their unrealistic expectations aren't met, they "freak out".

DM us if you'd like to know more:)