Taking the next step

[Mike O.]

I just recently purchased my 4th rental (all townhouses) and was looking to go a different route on my next purchase, Here are my current #'s.  Townhomes 1-3 are in the same neighborhood and have a value of around $290k each. Townhome #4 is worth around $240k. TH#1 is rented to my mom which is why the rent is only $800. I have $450k available cash. Im looking for more of a long term investment and really don't know what way I should go with it. I have thought about possibly trying a commercial building or high end cabin and rent it on VRBO. Ive spent time looking at vacation rentals in Florida but Im not sure if I want to have an out of state rental.  There are not any multi family units where I live and apartment complexes are way out of my price range. Anything besides what I am doing now would be out of my comfort zone but I feel I need to try something with a bigger risk bigger reward. I appreciate any advice or direction on my current situation. 

TH #1Rent-$800 mortgage $500/month($104,000 owed) HOA $230/month taxes $200/month

TH#2 Rent $1800 mortgage $1000/month ($193,000 owed) HOA $230/month taxes $200/month

TH#3 Rent $1800 mortgage $850.month (1$185,000 owed) HOA $230/month taxes $200/month

TH#4 Rent $1500 mortgage $660 month ($86,000 owed) HOA $250.month taxes $180/month

With all the #'s added up its +$2,070/month 

[James Hamling]

@Mike O. without a doubt DONT sell, no sense in that what so ever, you loose the goose to get just 1 last egg doing that. 

There are a few good opportunities at hand, first of all what is your current mortgage rates at? The first step before getting into commercial properties is making yourself known and attractive to those who finance commercial deals, those $$$$ relationships make a giant difference in the commercial realm. It may be time to refi out to a commercial mortgage to start building that relationship. 

Next, I get the sense that your feeling apprehensive about going and starting a totally different thing, that's smart. Vacation Rentals are NOT the same as standard rental housing, nor is either like section 8, being good at 1 does not mean success will be had in the others, if anything it means the odds are greater of failure at the others because it's a different thing. I would advise against starting a whole different venture until your insulated from loss's with current holdings, and $2k a month is not there, it's a darn good start but not there, a $20k loss on something could still cut too deep for comfort. 

That said, there is some ways to better scale what your doing now, to make a better COC rate of return, and to get things set so you can more easily dip toes into the VRBO waters free of any blowback from loss's in such. Fact is in Covid-world you need to be ready to weather 3-6 months of $0 revenues and all expenses with a Vacation Rental because it's a very real potential.

I know, everyone is gonna cry "but the cure is almost here", yeah, and so is Jesus, and loosing that 10lbs from 19 holidays ago, and one and on and on. This counting chickens before hatched nonsense is the most epic setup for failure and it bewilders me how mass delusion of such has taken over. 

In addition to the mass delusion, thinking that in a SELLERS market a person can just get C4D financing on a "good" buy is complete horned-cow-excrement. Why would a seller take $100k on C4D terms vs accepting the $100k cash offer at hand? "Oh, because of tax...." yeah, BS! That's informercial BS! Those of us ACTUALLY in the market know to get C4D terms, which gives more risk to seller, that means buyer will have to "pay" for such. That is bad advice by bad actors who only care about selling programs, books, commissions etc vs telling real actual factual reality and sound advice.