Scaling My Rental Portfolio

[AJ Satcher]

Hello Everyone!

So just a few weeks ago, I closed on my first owner occupied real estate investment. This is a SFH that I saved for in a year and was able to come up with the 3% + closing costs (about 15k). The plan is to live in it for a year, rent it out, and then repeat the process.

I am currently 24 so by the time I'm 27, I'd ideally have 3 properties or 5 by the age of 29. One might say this is good or one might say there is room for more depending on who you ask.

My problem is just that. I do feel like there's a better way. Being able to get this high priced asset for only 3% down is great, but it leaves little room for cash flow given that I am in fact leveraging so much debt. Speaking of debt, I feel like I'd run into the issue of banks/credit unions not wanting to lend to me any longer due to a high DTI.

With all this being said, I am trying to formulate my plan for the next deal in a year and would like some advice. With how my wife and I save, we are able to put away 20-30k in a given year, which to me is just slightly not enough to do bigger deals. It's very frustrating that after a long and hard year of sacrificing our funds that we come up just short of enough! Is wholesaling a good idea to learn to start adding to our savings? Are we okay just continuing on the track we are currently on? Ideally I'd just like to get to a point where I have more funds to work with and to do more than just a 3% owner occupied, live in it for a year (slow/not attractive). I really want to do a BRRRR!

Let me know what you think! The advice is really appreciated

[Shamar Gregg]

@AJ Satcher

I would say first figure out a strategy and then lay out the right foundation. Based on your circumstances, you're definitely eligible to complete a BRRRR. If you go to a hard-money lender for example, you can put 20% down as a first-time investor and complete a fully funded rehab. Once your rehab is done, you can refinance the deal and take the initial downpayment amount out and maybe even some more if you got the equity (point of a BRRRR). Best part? You can do it again and it doesn't affect DTI because the properties can be purchased under an LLC (not on personal credit).

Hopefully, this was helpful. There are numerous ways you can go around initial limitations.