Seeking advice on expanding

[Axel Scaggs]

Hi, I’m looking for advice from the professionals who have already achieved what I’m looking to accomplish. I would like to own 4-6 properties in the next three years. In this market, is it wise to invest in real estate right now?

Here’s a rundown of my current situation:

- Own an S-Corp (landscaping) generating 70k a year

- 160k in available cash funds

- Credit score around 720

- Zero debt

- Own one property valued at 365k, 30% equity

- Property is rented by the room generating $400 a month after mortgage and taxes

- Additional 590sqft house is being built in rear of property for 60k. This cost was already deducted, leaving available funds at the aforementioned 160k after the build. Should rent for $1000-1200. Undecided.

-I live in a modest apartment in the center of the Denton square

- Denton Tx is a college town and there are many renters, especially college students

My question is, if you were in my situation, what is the best first move here? Traditional mortgage, DSCR loan, brrr method? I’m wondering if the brrr method is even feasible in the current market? Anyway, I don’t know if this is a dumb question or too vague, but I’ve really enjoyed the Bigger Pockets website and all the info on here. Let me know if you guys have any suggestions!

[Tyler Hodgson]

Hey Mike,

You're in a great position to start expanding, and your goal of owning 4-6 properties in the next few years is definitely achievable. Here are a few thoughts of mine, based on your situation: 

DFW Market: Overall, the DFW area remains one of the strongest real estate markets in the country. Even with some of the uncertainty in the broader economy, there are still pockets around the DFW metroplex that offer great opportunities for rental properties. While Denton is a solid market with steady demand from students, don't hesitate to explore other areas within DFW for potential deals.

Financing Options:

1. Conventional Mortgage: Since you have a good credit score and zero debt, you're well-positioned to keep going with traditional mortgages. As long as you're able to qualify for conventional loans, this will likely be your best option. The rates and terms are usually more favorable than DSCR loans, so I'd lean toward conventional financing while you can still qualify.
2. BRRRR Method: The BRRRR strategy can be powerful, but it might slow you down a bit due to the current cash-out refinance seasoning periods, which can be as long as 12 months. If you're looking to scale quickly, this could become a limiting factor. However, if you can find properties where you can add significant value, this method could still work well in the long run—it's just something to be mindful of in your overall plan.

With $160k in available cash, you're in a great position to start purchasing your next property or two. You don't need to tap into your current property's equity and that property sounds like it will be a nice cash flow cow once that ADU is completed!