Newer investor….What would you do?

Question

I’m about to be in the process of refinancing multiple properties due to a recent divorce. I’m planning on taking out a HELOC, as well as pulling out the equity from the other properties.  I have a very high paying side hustle, I’m a homeschool mom, and don’t have the time to find my own deals. I own 3 short term rentals in the panhandle of Florida as well as a small mobile home park. They all cash flow very well.  I live in Texas, but I frequently fly back-and-forth to Florida to keep an eye on my properties. I don’t know a lot about buying from wholesalers, and I’m not super confident that I know how to run the numbers to make sure I’m getting a good deal. I learn fast, but I really can’t take on a lot of added stresses at the moment but I need to put this capital to work. What would you suggest in my situation? Investing in a syndication? Becoming a lender? Sell a property or two since the market is so high?  Staying in my wheelhouse of short term rentals because that’s what I’m comfortable with?  Am I able to ”sit on this money” until I find an investment without penalties from taxes? How do I go about finding a good wholesaler in the area I’m looking at? what resources\books would you recommend that would explain the basics and what I need to know?  The properties I have now were all acquired the traditional route with a realtor on MLS.   I hope this makes sense, as I’m sure there are other single moms on here and/or new investors that still have full-time jobs and busy schedules.

Dave Foster · Answer

@Brittney WIlliams, Selling properties now will either

1. Add to your stress if you do a 1031 exchange because of the time constraints

or

2. Create a taxable event from the sale.

If you like the properties you have right now and are looking to take a deep breath from life events and then grow again in your wheelhouse you're on the right track with the cash out refi and heloc. You can sit on those funds as long as you want until you find a good property.  With two differences

1. The interest on the cash out refi is accruing from the day you access the funds

2. A heloc or loc on one of the investment properties doesn't cost you until you access the money.  You just need to stay cognizant of the fact that helocs and locs can be withdrawn at will by the bank.  And they will shut off your money if they sense any adverse movement on your balance sheet or threat to their bottom line.

Brenden Mitchum · Answer

Hey @Brittney WIlliams

Wow, lots to unpack here!

First, I agree with @Steve S., if you have a good bit of capital and little to no time, passive investing in a syndication might be the way to go. You could even 1031 some of those properties into a syndication, although I've heard this is more complicated than if you simply rolled it into another active investment.

If you don't like that plan and don't have something better to roll your money into (likely true in this market), I'd say hold onto those STRs and MHP since they are producing cash flow.

I'm surprised you're not confident in running the numbers seeing as you own several performing assets..But, there is tons of information out there to help you improve your analysis skills. Search through the video archives here on BP or attend a deal analysis webinar. I can also link you to a great analysis webinar series @Mitch Messer did if you'd be interested!

Being confident in your deal analysis is essential when working with wholesalers. While you hone this skill, you should also be combing your target market(s) for wholesalers. You can do this by joining facebook groups or attending local meetups. Check here on BP, meetup.com, and local REIAs for events. It sounds like the best thing for you would be to make one or two solid connections with small, independent wholesalers and let them find the deals for you.

Hope this helps a bit! Please, feel free to reach out anytime if you have other questions or just want to chat!

Steve S. · Answer

@Brittney WIlliams Sounds like you are pretty busy and already have some active investments that are doing well. I stopped doing active real estate and have gone to the passive side by investing in commercial syndications. After vetting the sponsor, the location, and the deal, I wire my money and look for the next good syndication. I am able to diversify by asset class (multifamily, self-storage, MHPs, etc.), by sponsors, by geographic location, and by yield play vs. value add.

There are some great passive investing books: The Hands-Off Investor (Brian Burke) and Passive Investing in Commercial Real Estate (James Kandasamy). Here are some podcasts that can help you get started, find sponsors, and hear from experienced passive investors: Passive Wealth Strategies for Busy Professionals, The Real Estate Syndication Show with Whitney Sewell, and Passive Investing From Left Field.

Mitch Messer · Answer

Hi @Brittney WIlliams and congratulations on your enviable success with short-term rentals!

I would strongly encourage you to make mastering deal analysis your VERY NEXT move: Not knowing how to determine and interpret your financials is a grave error I myself made back in 2007, and it cost me to the tune of millions of dollars!

There are plenty of no- and low-cost resources available to learn how to analyze a rental deal.

Brittney WIlliams · Answer

@Brenden Mitchum yes I would love to see that analysis webinar

Paul Moore · Answer

Hi @Brittney WIlliams. Many good thoughts above. I would add this: check out this website to get reviews of many passive syndicators: The Real Estate Crowdfunding Review. This is a site where you can view reviews on many different syndicators. The site is for accredited investors only. Good luck!

Anthoney Hanks · Answer

Welcome to BP @Brittney WIlliams

Newer investor….What would you do?

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