Good afternoon,
I have made numerous financial mistakes and I'm tired of it. I want real estate to be part of my investment portfolio and I think I have an interesting way to do it... Please critique my plan.
I currently have three houses:
House A - primary residency, $180,000 in equity.
House B - rental property, $30,000 in equity, breaks even on rent
House C - Beach house, for me. $18,000 in equity, and I owe $180,000 on it.
(Special note, I am in the process of opening a large business through the SBA and they are going to put a lien on the equity of House A, so if I sell House A, they said I have to take that equity and move it to another property and they will put the lien on that property, so I cannot like use that equity for anything else, although I wonder if a home equity would work?)
I am sick of being a consumer. I look at my house, and I've spent so much money on stuff in here, and it's very nice, but just all so unnecessary. I have one child, and I don't need a big house for just the two of us. Yes that could change later, but not at this moment. So my plan is to sell house A, and move the equity to house C, which would pay off house C. So I would go from having three notes (A, B, C), to having only one note (B). House C, I just bought, is a < 1000 sqft beach house, it's very cute and simple, and the furniture I'm putting there will all work as furniture for a simple AirBNB/VRBO.
I made an offer on a beach front lot in the same neighborhood as C, and am examining the feasibility of building a small beach house (D) there. My plan would be to live full time in C, and when D is complete, move to D, and rent C out as a AirBNB/VRBO. The income from C would more than pay the mortgage on D because C would be paid off by then.)
Then it would be repeating this, just develop a beach house after beach house, and put them all on AirBNB/VRBO.
(By selling A and paying off C, that gives me like $5000/month to play with)
My fears:
1. All eggs in one basket - we know that coastal areas get hit by storms, so it worries me to have my vacation rentals in one area, because one storm could wipe them all out. I think after I have D built, then house E would be in a different beach community a couple hours further away.
2. I'm looking at < 1000 sqft beach houses, so it does start to feel a little cramped to live there, but the beauty of it is to get rid of all the garbage possessions we have that hold us back.
3. I do have a serious girlfriend, and right now my house A is very close in proximity to her, and house C is 55 miles away, which will make it harder to see each other. But she knows this isn't about her.
My loves:
1. When I sell A and pay off C, I essentially have no bills. Yes, I owe on B, but that's paid by my renter, and at any time I could sell B and have no note there. This puts me in position to "coast retire", meaning I would still work, but it's just to save money or make more money, but not just working to pay stupid bills.
2. I love the beach, and that beach front lot is heaven, it's literally road, then my area, then a dune, and the beach. I will be able to walk from the house directly to the beach with nothing but mother nature between us.
3. I love the simplicity of it all. The camps I like are simple and clean. They use nicer quality premanufactured cabinets, granite, etc, but not like over the top. All my friends have these almost million dollar houses that they have to work for the next 30 years to pay off. I don't want any part of that.
What do you think?
(I have owned an AirBNB in this area before, and it did amazing, I just had too much work stress at the time to deal with it.)