Quote from @Richard Capers Jr:
Quote from @Paul Tan:
Finally got my headshot uploaded so I no longer have to lurk around the forums! XD
What are your thoughts on Starting Small (Cashflow) vs Going Big (Equity)?
Since I will invest in the Augusta, GA, I'm trying to figure out what strategy to take for the next 3-5 years. Here's the facts:
- I'm pre-approved for $330K but I can push it to $450K if I really need
- $10K-$20K Saved for down payment. $10K Saved for renovations
- Saving $800-$1400 every month
- I have access to the VA loan
(*preferred) Strategy #1: $100K-$200K purchase. ~$1000 Mortgage. Rent for ~$1000. Rinse/repeat once I can ReFi for 75% ARV. 1031 in 5 years.
Strategy #2: Buy a SFH in a subdivision for $300K+, waiting until I have enough cash/equity and buy again. HODL.
Here are my pros and cons for each:
### $100K-200K ### <-- More Active Investment
Pros
- Higher Price to Rent Ratio
- Fast turnaround to purchasing next property (6 month before ReFi)
- Value Add repairs can improve house value a lot
- 3-4+ purchases in 5 years = More Learning Opportunities/Networking
Cons
- Higher Risk of Bad Tenant
- Maintenance Repairs
- Lemon Purchases
### $300K+ ### <-- More Passive Investment
Pros
- More equity to draw from down the road
- Good Neighborhood
- Family Tenants are safer
Cons
- Higher Operational expenses (Taxes, Insurance)
- HOA Limitations
- Typically recent builds/renovations so not much room for Rehab
- 1-2 purchases in 5 years = Fewer Learning Opportunities
I know that there is no one solution. Also, specific advice depends on me providing more details. But I always like to hear more new perspectives! So hit me with everything you've got!
I'm in the Augusta market as well. Why don't you put nothing down with your VA loan? Then in a year or so use the loan again for another purchase? There's a potential to use the maximum eligibility with these 2 purchases but you can House Hack them and increase the cash flow vs market rates in the area.
Save your cashflow and your down payment money then with the 3rd purchase go for a FHA loan 3.5% down with the amount you made. Move every 12-18 months until you are tired of doing it.
All these folks are very savvy in their analysis and recommendations. All of you guys are a gold mine.
Having said that, if I were you, I would stick to Richard Caper's and Erin Chuch's advice. They are spot on.
You have the resources in place, now you just need to decide!
Start with the end goal in mind, take action, and follow your strategy.
