I am starting over at 49. I have a small lump of money to invest and want to start building my real estate investment portfolio. I am currently renting. Should I start with an STR, or house hacking? Any opinions or advice is welcome!
Start with house hacking. At 49 you probably don't want to deal with roommates, so look for a 2-4 unit. This way you can live in 1 unit, have some privacy, and rent the other units out to cover some (or all) of your mortgage.
It would all depend on your goals. I would highly suggest lining those out, so you have something to work towards. STR is the fastest way to build a real estate portfolio, but depending on what you have on hand house hacking may be a better option for you.
Start with house hacking. At 49 you probably don't want to deal with roommates, so look for a 2-4 unit. This way you can live in 1 unit, have some privacy, and rent the other units out to cover some (or all) of your mortgage.
Start with house hacking. At 49 you probably don't want to deal with roommates, so look for a 2-4 unit. This way you can live in 1 unit, have some privacy, and rent the other units out to cover some (or all) of your mortgage.
I agree with Scott, the surest way to jump-start is to do house hacking with a duplex, triplex, or quadruplex. Granted it depends on where you live and how much you can afford. If it doesn't cash flow don't even bother unless you can get a killer on the discount price.
Start with house hacking. At 49 you probably don't want to deal with roommates, so look for a 2-4 unit. This way you can live in 1 unit, have some privacy, and rent the other units out to cover some (or all) of your mortgage.
I agree with Scott. Start house hacking for the fastest jumpstart and to really get yourself in there. Try to get a duplex, triplex, or quadruplex. Granted, it depends on where you live and how much you can afford. Don't bother if it doesn't cash flow unless you can get a massive equity position with a discounted price. Run your real estate empire like a business. Set quarterly metrics to get better and 1-year, 3-year, and 5-year goals.
Agree with house hack, especially if you can segment off a self-contained unit in a basement or wing of your house. Rent it out as a budget STR or MTR for 1-2 people and you can easily cover your mortgage if you buy right.
If that's not practical for your situation a 2 bedroom STR is a good start as well. You can learn the game with low overhead/startup costs, and you have several exit/pivot strategies if things don't go as planned.
For both, location and unique amenities (walkable, views, easy access to fun places etc) is crucial. Be mindful of local regs as well.
Do you want to be passive or active/ STR's self management is active and has a LOT Of tax benefits. Are you looking for tax benefits? Do you want to use the properties yourself??
I personally diversify- I have 5 STR"s that give me good cashflow but even better tax benefits and long term wealth. ANd then I have turnkey done-for-you long term rentals in high cashflowing markets that are very passive.
Start by defining your goals. Are you buying for appreciation or are you looking to generate cash flow? Do you want to be hands on or hands off? Do you feel ok about sharing your property with others? There are so many options for investors. I'd recommend you really start narrowing down your goals so you can focus on a particular strategy because it's really easy to get distract with all the possibilities. Good luck to you!
As the others have said, depends on goals. I find for most of my clients in the beginning stages, the house hack strategy build wealth faster and provides a solid foundation.
2-4 units multis or even an STRs with ADU/DADU to rent house if you prefer to have your own private home.
Such good advice! I am investing in real estate to grow my nest egg for retirement. I want to eventually have a portfolio with STR and LTR. I am self employed and I'm able to be actively involved in managing things.
@Andrea W. If it were me and I was starting again, I'd start with a combination of small multi-family 2-4 units and scale into larger multi-family. I worry about booking trends on STRs across the country. They are still above 2019 levels, but not in 2020-2022 territory and prices are still sky high. You have the advantage of having a W-2, where if you chose conventional financing is an otpion.