Home Improvement vs Investment Properties

[Nick Hulme]

Trying to find a way to expand our real estate portfolio while also improving our own home.

My wife and I lived with family for 2 years, which allowed us to save quickly. In 2024 we bought two homes - a duplex rental in Utah and a primary residence in Santa Cruz County, California. The duplex is cash flow positive, but not by much. We bought it because it is in a great spot for long term appreciation and rent growth.

Our new house in Santa Cruz County was a deal we couldn't pass up on. It is on 1.2 acres of property in a very nice neighborhood and it has an RV pad that we can rent out for $1500-$2000 per month. The only problem is that the house is old (built in 1957) and small (1039 sqft). We will have lots of renovations and additions to do over the years, so I'm worried that it will be hard to save up for more rental properties.

Any suggestions?

[Caleb Brown]

Definitely a personal preference. I think having a balanced budget would be ideal where you allocate money into buying another property and money set aside for renovations. I would also weigh if you plan on staying in the home you are in now for a long time or move in the next 5 years. If you are going to move then I would do as needed renovations and not go crazy. Buying more properties when you are young is definitely the smart plan, it snowballs and grows the sooner you start. Maybe you go hard in that for the next 5 years then dial it back. I would still set aside money for renovations that are need based if you do that and use the rest to invest.