new investor looking where to turn next

[Adam Glouner]

Greetings Fellow Investors! My name is Ryan. My wife and I purchased our first investment property right before the new year. It is a single family home and we are positive $550 on cash flow. It does have potential for a lot of added value, but it's hard to rehab the house with the family living in it. They have been there for 12 years and do not plan on moving in the foreseeable future. This makes it hard for us to follow the BRRR investing strategy, and after our down payment we have about $8,000 left over to start for a second one.
Any advice on a next move? What creative possibilities are out there? Thanks so much

[Nick Robinson]

@Adam Glouner
I agree with @Joshua Noth if you have a stable long-term tenant that is paying you on-time and not destroying the property they are worth their weight in gold. Especially being your first rental and being cash flow positive $550/mo is great. A couple things to think about if you remove this tenant to renovate how much will that increase rents? For a SFR it would have to be a substantial increase to kick a quality tenant out. When factoring in your costs remember it is not just renovation costs, but you are losing money for the monthly mortgage during this time as well, along with locating a new tenant. The new tenant may not be as "easy" as these long-term tenants, and it could potentially increase your expenses monthly. When you finish your renovations make sure you are using a conservative ARV for your property. I see post all the time of people expecting these huge ARV numbers after renovation, but SFR do not work that way. It is based on comps. You can always raise their rents yearly and as their rent slowly increases, they may want to move out and then you can do the renovations, or you just keep increasing your cash flow. I would also suggest that before you bought the property you knew there were long-term tenants. You should have thought about what you wanted to do before you bought the property and run your numbers and see if it made sense to renovate it immediately or just collect cash flow and renovate sometime in the future.

The last thing that I would make sure you are aware of is about 3 months ago the Eurodollar yield curve inverted, US treasury yields are getting flatter and the current TIPS data did not look good.  Add in the Ukraine situation and a possible attack by China to reclaim Taiwan.  This would be a time to be more conservative and see how everything shakes out over the next couple of months.  The newer you are to RE investing the more at risk you are and right now there are a lot of different factors that would make me more conservative.