Is My Current Path OK?

Question

I'm 23 years old and I have purchased 2 Brand New homes. 1 was built in 2019 and the other was built in 2020. My mortgage payment on each of them is around 1k a month but they are both renting for 1,800 a month. So I am profiting around $800 a month from each of those. The income seems great but I hear lots of talk about how it better to buy older homes and fix them up and then rent. I understand that gets more equity with the forced appreciation but I'm not too concerned about the equity as I don't have any intention of selling. I am planning on getting my 3rd property soon as want to know if going the same route I have been a good idea.

Let me know your thoughts

Thank you

Let me know your thoughts

Thank you

Sterling Clifton · Answer

@Kris L.

I’ve taken those into consideration as well. However, for vacancy, the properties being so new they look a lot better than majority of the other rental properties around therefore, they get rented very quickly. Each of them had about 30 applicants within 48 hours of being posted. Also, me and my wife have been managing the properties together. Also, as far as damages they are new so no major expenses should be a problem at least for the next couple years but I’m sure I will come across some more minor things here and there.

Kris L. · Answer

@Sterling Clifton

Well, to be honest you will only be profiting $800 a month if you never have a vacancy, you aren’t paying a property manager, and nothing ever breaks at the house.  I’m guessing those aren’t realistic, and that you are probably only profiting 200-300 a month long term, though being a new house, it might be a while for maintenance issues to appear.  Overall, it seems to be a decent strategy, and sticking with might be a better option for you.

Sterling Clifton · Answer

@Suzanne Sevier

My goal is to get at least 4 to 5 single family homes and then get into duplexes, triplexes or fourplexes. Even when looking into those multi family homes, working with a local company that builds them appeared to me as a better choice then purchasing old ones. Mainly just because there’s not many in my area and in my area everyone is really into the new modern style look of things; having a nice new fourplex built would bring in really great cash flow and not many capital expenditures for the first couple years.

Suzy Sevier · Answer

@Sterling Clifton Great start! If you find a deal in an older home where the numbers work, go for it. What is your bigger goal for real estate? You may want to sell all your properties one day to get into syndication and then the equity will be something you want.