Hi all!
My wife and I are getting ready to move from Rhode Island to Cleveland, Ohio in the coming months. We met while we were getting our teaching degrees, but nowadays she's at home with our two feisty (OH SO FEISTY) redheaded daughters and I'm the director of a middle school. But I am burned out on public education and I really don't want to start over in a new school in Ohio. The way schools (and my experience) work make it that I'd very likely take an enormous pay cut, and we're struggling to support our family on my salary as it is! So we're really considering starting real estate investing instead as a way to support our family. We know it'll be a slow process, and one or both of us might need to teach for a few more years after the move as we transition, but it's our hope and dream to spend more time with our (I can't emphasize this enough - feisty, feisty, zesty-level feisty) little redheads. So, the sooner the better! I think that's probably true for many of us, right?
After reading the Ultimate Beginner's Guide and the Book on Rental Property Investing, I'm feeling a little stuck about what strategy to pursue, at least initially. In the Ultimate Beginner's Guide, Josh and Brandon say that a deal needs three things - hustle, knowledge, and money. I'm new to all of this, so I don't have much knowledge (though I'm working on that!) and I'd like to keep the hustle on the low end because, again, the whole point is to be with my daughters while they're young. But what I do have is money.
My wife inherited money that we could take 200k-400k out of while still remaining diversified. It would still be a big risk for our future, but we could do it.
So how can I use the power of that money to make more money?
I considered buy and hold first. We could use the money to buy a few rental properties, and then using HELOC or home equity loans to buy more. But I honestly think I could get maybe 3 properties with cash and then, what, maybe two more with the loans? If the ones we paid cash are cash flowing, on average, 600-800 dollars a month, and the ones under loan are cash flowing 200 dollars a month, we're only talking 26-33k per year (and that's before taxes). But then I'm stuck after that - how do we acquire more property? The goal is to work on this and not have a job, so we won't have any W4s to get traditional mortgages off of, right? So we're stuck. Even if one of us did get a teaching job, we're probably only looking at 50k a year, which probably won't support a good loan, or, if it does, not more than one. Do I have that right?
Okay, so next I thought of private lending. Lend the money out to house flippers like a private hard money lender. But I have no experience in banking and I'm not even sure where to start reading about that (no handy Bigger Pockets guide - dang). What information I can find suggests working in the industry 3-5 years for experience before starting on your own, which isn't an option (I doubt I could even get a job with my teaching background, so that would mean going back to school before getting a job. Yikes!)
Right, soooo now I'm thinking about partnering with a more experienced flipper. If I could find someone with the experience willing to do the hustle, I could contribute the money. We'd work together to find the right property (leaning on their experience of course, but I'd want to be involved), I could contribute buying the property in cash and rehab costs, and the partner could lead on the rehab and sale. Then we'd take the money I spent out of the sale and do some kind of equitable split of the profits.
Do you all think that strategy makes sense? Do people do that? Brandon mentions a similar deal in the Ultimate Beginner's Guide, where some friends put up the money and he rehabbed and manages the property and they split the profits, but from the way he writes it sounds like a rare kind of deal. Would I attract valuable partners, or would it only be inexperienced flippers with no money yet interested in that kind of deal?
I'm sure I'm making all kinds of mistakes and have false assumptions. I'm very new! I want you to tell me why I'm being a dumby. I can take it! Am I guilty of trying to get rich quick, or is this reasonable to strategize around? Should I run away and just teach like a drone forever?
I know this has been a long post, so I can't tell you enough how much I appreciate the fact that you even read it. Thank you so much. I can't tell you how much I appreciate this community already.
