All Forum Posts by: Noah Margate

@Noah Margate. If the property is already not generating cash, it wouldn't be a bad idea to find better cash flowing investment properties. If you decide to sell the property you would be able to do a 1031 exchange. It sounds like you might not qualify for a 121 exclusion, where you would have needed to live in the property for two out of the five years of owning it. A 1031 would allow you to use the taxable gain on the property you would have to pay, to purchase another or multiple investment properties. In your case maybe multiple properties if you want to be even more diverse. 

What about house hacking?

Noah,

Real estate investing is an exciting venture, and I’m thrilled to hear that you’re beginning to build your portfolio. As someone who works with a private lender catering to many real estate investors, I’ve seen firsthand the importance of thorough market research in achieving success.

The potential for investment properties can vary significantly between markets, depending on your investment strategy. For instance, markets with low property values and expenses are often ideal for cash-flowing long-term rentals, especially in areas where many residents are unable to purchase homes. Conversely, if you're interested in short-term rentals, I recommend using tools like AirDNA to identify markets with high potential, based on the market score of the surrounding region.

Additionally, understanding your financing options is crucial. Take the time to research the best ways to finance your investment properties to align with your long-term goals.

If you have any questions or need further advice, I’m here to help. 

Hey there!

It sounds like you’re in a solid starting position with your first rental and a clear vision of where you want to go. Based on what you've shared, I can definitely relate to your goals, as I specialize in helping investors like you scale their portfolios with strategically selected properties.

Financing & Expansion Options:

Given your current financials, here are a few paths you could consider:

1. HELOC or Cash-Out Refinance: Tapping into the equity of your current property could give you the liquidity needed to acquire more rentals. A HELOC might offer more flexibility if you're planning to purchase multiple properties over time, while a cash-out refinance could provide a lump sum that you can deploy immediately.
2. 1031 Exchange: If you decide to sell your Corpus Christi property, you might explore a 1031 exchange to defer capital gains taxes. This could allow you to reinvest the proceeds directly into one or more properties in Houston, which seems to align with your goal of expanding locally.
3. Leverage New Construction Opportunities: I work with Neu Real Estate Group in Indianapolis, where we focus on high-quality duplex builds that are designed with strong rental returns in mind. These kinds of properties can be a great way to balance cash flow with long-term appreciation, especially if you're looking to diversify your portfolio geographically. Even if you’re focused on Houston, the same principles apply—finding areas with promising growth and strong rental demand.

Strategic Growth:

Since you’re considering building up to 10 properties in the next decade, you might want to look at markets that offer both affordability and growth potential. In your case, staying in Houston or exploring surrounding areas could be smart moves, but don't overlook other regions where new construction might be booming.

Consider a Mix of Strategies:

While your primary strategy is buy and hold, it could be worth looking into markets or property types that might give you better cash flow opportunities. For example, a mix of long-term rentals and perhaps a few duplexes or small multi-family properties could help stabilize and grow your cash flow while you build equity.

Selling Your Corpus Christi Property:

With a low interest rate like 3.375%, selling might not be the best move unless the equity can significantly jumpstart your portfolio in Houston. If the Corpus Christi market is still appreciating, holding onto it while acquiring new properties might provide you with a balanced mix of appreciation and cash flow.

Final Thoughts:

If you're interested in learning more about how to strategically grow your portfolio, especially with new builds, I’d be happy to connect and discuss further. I’ve been working with other investors to help them navigate similar challenges, and I believe there are some great opportunities out there for someone with your goals.

Feel free to reach out if you’d like to dive deeper into any of these ideas.

Best of luck on your journey!

Ryan Cheek

@Noah Margate, if I get seller financing, I don't have that mortgage show up on my credit report, I can negotiate the interest rate with the seller, I do not require an appraisal, origination fees and other "junk" closing costs.  In addition, older sellers like getting a down payment and receiving the mortgage payment as their income.  Lastly, they don't get a hit on their taxes until they receive their money, which is a benefit to the seller that is easily over looked.  Younger folks want their money back, in my experience.  So I have excellent experience with tired landlords. 

Even if your wife doesn't want to do that, it is the best strategy.  Could you agree to do 5 houses, staying 2 years in each (which would be better for your capital gains taxes)? 

When you ask for equity in the short term, there is one way I have been able to do that...and it is direct mail to distressed home owners, such as those in pre-foreclosure or late on property taxes.  I hand wrote letters to properties in distress.  

I have houses in a small Texas town, and they cash flow nicely.  I also have houses in a beach side Florida market, and they appreciate nicely.  The cash flow houses help me to hold on for the long haul, while the appreciation houses enable me to buy more houses.  I would not sell the Corpus house, since the interest rate is low and I would expect the cash flow to be solid.  If you find the house is a dud, sell it. 

Please ask questions.