Taking the next step: My standing and future plans :) Please Review / Comment

[Aron Rogerson]

Thanks for stopping by to read and advise further regarding my investment strategy/ next steps :).

My Current situation:

I currently own three Single Family rental properties:

a.Property A: Owe $45K, valued at $150-160K, great condition, cash flow is beyond great for this property. Current cash flow is very positive.

b.Property B: Owe $90K, valued at $135-145k, great condition as well, Current cash flow is ok.

c.Property C: Owe $67k, valued at $145-155K, recently acquired, installed a new kitchen and made other repairs. Current cash flow is very positive.

Tenants are great, I truly try to work with them when needed and (knock on wood) they appreciate my services as well. Overall cash flows are approx $1700-1900/mo after expenses/fees/mortgages/taxes/insurances etc.

My long term Financial Goals:

To leave my current job and manage the investments or at least work part time while managing the investments. My goal is to have $4-5,000 net income per month (Taking a 2K loss now and then is ok), if I had 6-7 extra property A’s or C’s (As listed above) I can surely meet this goal, but I would rather concentrate on larger consolidated returns and calculate a pathway to long term support.

If anyone has any counter suggestions, please let me know. I was thinking of taking my equity (from A & C) and purchasing more single family homes as this seems to be my area of expertise. But the stress of finding, funding & repairing more properties is a little crazy as I rely on bank financing for 70-80% of the home value. Also is there a rule (In Florida) that caps you at 5 income properties as an individual investor?

Would I have to get a commercial real estate license after owning 4-5 rental properties?

My future plans:

For my next step in the real estate world, I truly wish to jump to the next playing field by either going towards multifamily (Route A) or NNN Leases (Route B). I know the latter will require a great deal of funds but its not ruled out from my side. My timeline is set for 1 year or so, it all depends on how I approach the investors. So far its me and my father, he can provide approx 200-250K cash as well. We would need another investor which should not be hard to find if the deal is good.

General Questions about taking the next step:

1.Funding my next investment: I sit on some equity, especially with House A and C, but I do not want to sell the properties, a full equity extract would be great but I do not want to be 1:1 for mortgage payment vs. rental income as I want to leave room for issues/repairs. I was thinking of extracting some of the equity as a down payment on my next venture (With some of my cash), but are there any possibilities to forgo extracting equity and selling i.e. Equity Lines of credit? I can surely place a lean on the properties.

What would be the smartest move for someone like me in terms of taking the next step? I know its hard to advise, but what would you do in my shoes? As mentioned above, my father can join me with 200-250K and we can surely secure an investor as well.

I look at it as two avenues:

1. As a single investor, continue down the path of 2-3 more single family rentals, hold them, gain more equity, then jump to MF or NNN leases? The team of repair men/women who help me do a good job of effectively updating/repairing the properties for ''rent ready'' state, also I have a great grasp on what it takes to enter and operate with positive cash flows. My only hurdle is constantly securing an investor loan from the banks. I barely got the loan for House C, but I am sure I can do it again. I appreciate the process and especially the people who help me, I like single family homes as the deals move faster and costs/risks can be calculated allot easier.

2. Extract Equity, team up with other investors (i.e. my father and another person) and tackle a MF or NNN leased building. My only gripe is that we would be able to place 20% down, so if we go after a $3M MF, we would only be able to put down $600K initially as we do not want to tie up our funds.

I have specific questions for Multifamily and NNN leased buildings, I will post these in the commercial side of the forum.