SEEKING LIFE GUIDANCE...from all of you

[Account Closed]

Hello Fellow BPers,

Just need some reassurance, constructive criticism, or to be told I'm an idiot.

Currently I own 2 rental properties, here are the breakdowns,

3Bd, 1 Ba Located in Ogden Utah:

Market Value 320k

Amount left on loan 59k

Currently rented and cash flowing 1200 a month

2Bd, 1 Ba Located in Wake County North Carolina:

Market Value 185k

Amount left on loan 105k

Cashflow 800 a month

Currently living in North Carolina and plan on staying here, sick and tired of making 16 bucks an hour cooking, I have 2 kids and just found out we are having a 3rd so I put my two weeks in and want to dive more into real estate. I know how to run heavy construction equipment and cook at a high level so I can get another job tomorrow if I need to but I want to make a run at real estate full time. My question is if you were me would you sell my Utah house and take the roughly 250k and buy more rentals in North Carolina? Utilize a HELOC? Sell both houses? I am open to anything and everything as far as ideas go. I have done all the renovations to both properties myself and plan on doing all the renovations myself until it doesn't make sense anymore. Thanks in advance I'm just in a limbo and need some numbers to reassure me I can do this.

-Bryan

[Nathan Gesner]

I would have stuck with the W2 job. I understand you're trying to get into investing full-time, but you're not even close yet.

You claim to be "cash flowing" $1200 on a 3bed/1bath in Ogden. I just checked and a 3bed/2bath is available for $1,800. Even if yours rented for $2,000 a month, you have a mortgage, taxes, insurance, and you should be setting aside money to cover maintenance, capex, vacancies, etc. I don't think you're cashflowing $1,200 a month or $800 a month. You're probably closer to $500 - $600 cash flow with both properties. If you don't have a hefty reserve, you could easily be wiped out with one bad tenant. It's not hard for a tenant to cause $10,000 in lost income and damages. What would happen if you got hit with that and your baby was born the same month?

Question: why are you cooking if you're qualified to run heavy equipment? A heavy equipment operator can earn 50% - 100% more than a cook. 

If I were you, I would seriously study what real cash flow is. https://www.biggerpockets.com/...

I would consider getting the best-paying job you can and socking away every dime possible for the next nine months. If you can seriously live off your $2,000 cash flow then you should have no problem living off it now and putting away every penny earned at a W2 job as a heavy equipment operator. Then you'll have money to invest.

Finally, you should sit down and really consider what you need to live with a family of five (or whatever). I suspect it's far more than $2,000 a month and I suspect you don't actually make that much from your two rentals. You should stick with the W2 job until you are at least close to earning enough from your cash flow to meet your living expenses. Then you can make the leap into financial independence.

I don't think you're there yet.