After further research, I’ve decided to delay the real estate investments a bit and max out the 401k company matched contributions. I will delay the real estate investments until 2023. This way I can save up 50k before I begin investing.
For those interested, here’s my plan on achieving 15 properties in 5 years (kind of). I was thinking of year 1 as the first year I start investing and not so much 5 years from now.
I think of brrrr as 2 deals a year. Giving myself 6 months to refinance each deal. Also, I want to invest in single family homes in New Britain, CT. After buying and rehabbing, the cost should be no more than 200k. For each deal I would of course run the numbers to make sure it makes sense.
Year 1: House hack in Naugatuck, CT (about 35 mins from my job) with a 203k rehab loan. If I’m able to wrap the closing cost into the loan I should be able to house hack for 10k leaving me with 40k. Later that year I’ll invest in my first brrrr deal with a private money lender. I’ve already spoke to 2 that are willing to work with me. It’ll be expensive since I don’t have experience but they’re more focused on the deal itself. Since they only require 10% of the cost, I’ll spend 20k and have 20k for reserves. By then end of the year I’ll refinance the property. I would have rental income after the rehab, my personal income, and 20k reserves in case it’s not a “perfect” brrrr (and other costs).
Year 2: Buy two more deals (similar numbers) using the brrrr strategy (one after the other appraises and I’m able to refinance).
Year 3: Refinance out of the 203k loan and house hack a new property. Brrrr my way into 2 more deals. Total of 6 rental properties.
Year 4: With income saved from my job, cash flow, and taking a loan out against my 401k if needed, I’ll buy a second “rotation” of brrrrr properties. Meaning I can obtain 2 properties, brrrr them, and obtain 2 more. Total of 10 properties.
Year 5: Similar to year 3. New house hack, brrrr into 4 more properties. Total of 15. Also, instead of turning the old house hacks into rentals, I could sell them. I would have lived in them for 2 years which gives me the tax benefits. And I could use the capital to fund more deals.
This sounds far fetched but at the same time it sounds simple enough for a person that willing to put in the work. I’m still inexperienced so right now this is just a dream I’m working towards. I will always make sure to get the comps, run the numbers, and be as diligent as possible. Plans can change of course. I know I’ll have to adapt to a lot of situations as they come. As of right now this is where my head is at. I’m motivated and dedicated to accomplishing this goal. And please, let me know if and why this is unrealistic!! I probably won’t listen haha but I want to know the reasons why it wouldn’t work so I could figure out a way around it.
