Fastest wag to build passive income?

Question

Hi all, Looking for your advice as my husband and I get ready to launch our real estate investing to the next level. We have recently decided to sell our home and move into a flip property we rehabbed. This decision was reached to allow us to reduce our housing expenses and pull the equity out of our current home to use for new investments (and to avoid the capital gains on the eventual sale of the flip). Once our home sale goes through, we’ll have approx $75k in equity to use. We also have a rental property in Oregon that is cash flowing and has approx $100k in equity. I work a FT W-2 job and my husband has a self employed consulting business. Assuming we just have the equity from our current homes to work with, what strategy would you employ to maximize passive income? We are interested in the BRRR strategy but housing in our market is quite expensive and In short supply so we’re considering sellIng our Rental and doing a 1031 Exchange to invest in a less expensive market like Indianapolis. Does this seem prudent? Would you invest in multiple single family units or try to find a multi unit property and acquire more doors all at once? I realize it all depends on the deal and the specific market, just wondering where you guys would lean given the resources I have to work with. Feeling a little uncertain with all of the options out there but we’re anxious to get started and grow our passive income! Thanks for any and all feedback.

Marisa R. · Answer

@Lauren PerryHey LaurenI am finding it difficult to buy true cash flow properties, as many markets have risen considerably.I started in Atlanta in 2011 when distressed SFH were selling for $35,000, today average value of $170,000. This market will be difficult to cash flow today, and competition for multis is insane.I am currently playing in the Detroit market where I believe I will repeat what I achieved in Atlanta, and continue to grow passive income.You may find my post on....."Detroit the come back kid" worth reading? Don't know? It will come down to your risk profileDetroit wont be for everyone, however what I am seeing is a market that is starting to boom. Appreciation will be a given as long as you buy in decent neighbourhoods. Also got to understand the true numbers, no fluffing the fluff. Get the ground work right and I believe not only will you achieve passive income but you will also see appreciation, already happening.All the bestMarisa Rowe"Hard Work Never Killed Anyone, but why take a chance

Caleb Heimsoth · Answer

@Lauren Perry. By far the fastest way to earn passive income is to inherit 10M dollars. Take this and go buy treasury notes. Now you earn 300k per year passively. Boom goes the dynamite

Corby Goade · Answer

@Lauren Perry you mentioned that you are tempted to tap in to 100% of that equity. Understandable, but keep in mind, as soon as you shift that equity to a new property via a 1031, you will be in the exact same boat. I am not trying to sway your decision, only you know what's best for your situation, just that if you are driven to use all of the equity, that feeling may not go away once you move it. Maybe your goal is to keep rolling 1031s until you are a billionaire, which is just fine too. One other thought- the PDX market is crazy, great appreciation, solid rents. In the midwest, it's highly unlikely that you'll see appreciation anywhere near what you have seen in Portland. You would be trading appreciation for higher cash flow, which is great if you need it, but the appreciation is what builds wealth. Sounds like you are getting cash flow and appreciation right now, which, in my mind, is exactly what investors should strive for. Food for thought. Best of luck!

Shawn Ward · Answer

In most markets that can legally have STRs and that the local government embraces, you can get up to 50% more in rental income vs traditional rentals. All the best!sjw

Corby Goade · Answer

Why not just move the equity you have around? If the Oregon house is cash flowing and it fits your goals, I don't see a need to sell it. I've done exactly what you are proposing, just moving equity around and BRRRing, even before that was a thing. The key is to force at least 25% equity as quickly as you can so that you can get all of your cash out and move on to the next deal. Good luck!

Jay Hinrichs · Answer

I think they are in Eugene which is 90 miles from PDX.. but I like your train of thought..

Jay Hinrichs · Answer

YUP you hit Atlanta perfectly !!

Kyle Kadish · Answer

@Lauren Perry great questions, and good position to be in. While I am a huge fan of 1031 exchanges and many of my clients use them, @Corby Goade has a strong point on keep the cash flowing property in Portland. Yes, the market has risen, but it is close to you and easier to manage with your full-time job. Every other market (Detroit, Indianapolis, etc) not only is remote from you, but has different dynamics on rentals (is the greatest opportunity a SFR, or duplex, or 3-/4-family?).

Courtney M. · Answer

I would definitely focus on a BRRRR strategy myself so you could keep pulling out your money out of your deals. That's my goal for next year, find and complete a BRRRR and keep that money rolling.I invest out of state in Michigan, although not in Detroit. I invest in the suburbs like Livonia, Westland, Redford, etc. Solid middle class markets, less risky. Those markets have been on the rise but you can still find decent cash-flowing deals if you put in some time.

Sam Shueh · Answer

Airbnb ?