100k and under SFR, or Multifamily

[Eric Rattler]

Hello everyone, Not sure if this has been answered before, but as I begin to embark on my journey to creating passive income and long term wealth, I am constantly going back and forth about which method to pursue. I plan to utilize my VA loan to acquire my first property. I will be purchasing in the Gulfport MS area. As there are many properties that I could purchase for 100k, then later refinance out of my VA loan into a conventional loan in order to reuse my VA Loan to continue owner occupying a SFR then refinance out to keep repeating over and over again. is this a good strategy? seems like people prefer multifamily due to the amount of doors. I also couldn't help but notice the market for houses around the 30-50K range and how lucrative this could be in my hometown of mobile AL. With my current salary I should be able to buy 3-4 of these types of properties a year. I have however seen that banks don't like these small loan amounts, what's my alternative? Save more myself until I can make an offer or search for alternate financing? I have been studying Real Estate and the potential it allows for me to provide a source of income for my children as they grow older. I would definitely be grateful of any advice provided. Thank you for reading!

[JJ Harris]

Hi Eric, good luck on your search in Gulfport, I live and invest full time in gulfport and the surrounding coastal counties and would like to add my 2cents. really inexpensive properties with amazing cash flow always come with a caveat. We have a lot of homes from Mobile to Diamondhead that are less than 70k and will probably cash flow, at least initially. In my observation, they are often past the peak of their useful life span. Homes in that category are usually trading among investors only. A home built in the 50s is going to come with above average maintenance and it's hard to continue cash flowing when your maintenance costs exceed %10 of gross. I've found lots of 3/2 built around y2k NORTH of I-10. There is good appreciation left in these homes and there is growth in that direction. The retail priced, SFH market growth south of I-10 is at a much higher price point. I've got several SFH in Orange Grove and D'Iberville and St Martin, and they aren't home runs cash flow wise, but they do have REASONABLE cash flow, are dependable homes that people WANT to live in and they are appreciating. Since ONLY investors trade multi door properties, I don't find that the same analysis applies because you will always be selling cash flow, and not the property itself. For SFH I always consider that I'll be selling to a real family, and our first rule of investing is to be aware of at least one exit strategy.