What should I do? I live in a town that is NOT affected (much) by the housing market. About 125,000 in population, with a MAJOR highway corridor being built and 4 yr university is now here and several big factories moving in because of it. It’s the 2nd/3rd fastest growing city in the state and is predicted to double in population in the next 7-10 years.
Rent houses stay vacant for about 1-2 weeks. Even in the “hood”, you can rent something pretty quickly. I can pick up a few houses and small complexes using the 2% rule. I’ve never been a landlord, and plan to hiring a PM.
I make about $200K/yr from my job (this won’t last forever, but a good 2 or 3 yrs left), great credit, about $750K in assets, $200K in cash, and NO debt.
My question: Should I just pick up as many SFH as possible (assuming the 2% rule) or go after complexes? If complexes, which ones? Big, med, small? They may not fall in the 2% rule though, maybe 1.7% or so. I see a lot of growth, but not sure how to capitalize on it.
Maybe it’s not even real estate that is the key, maybe it’s something else. I don’t know. Please advise and let’s assume my population growth turns out as expected.
Congratulations on your great success to date. Your net worth of nearly a million dollars puts you in the top 3.5% of all Americans.
To determine how you should proceed, you need to define your goal. If your job will be ending soon, is your goal to replace your current income within 3 years? If so, you probably will be forced to buy mostly apartment buildings or complexes. If your goal is to take maximum advantage of future appreciation, SFH houses often appreciate better than multis. So, if I were you, I would determine your goal and then work backwards to determine your plan.
Although you are in a very good financial position, you are also in a very dangerous position. Your number 1 goal is to not lose your money!!! Since you’ve announced on the internet that you have a million dollars, you can count on every scammer on the internet trying to get your money. I would strongly suggest that you spend some time educating yourself before you do anything. Additionally, you certainly should join your local REIA and make friends with the SUCCESSFUL investors there.
You have a great opportunity to do great things - don’t blow it!
Mike - Thanks for the heads up. I’m very careful with my $$ perhaps too careful at times. I’m only 30, but I invest like I’m about to retire tomorrow. I think my goal is more long term than anything. My 200K+ job will be more like 100-125K/yr in a few yrs. When a town grows, I just think real estate will be prime. Also, I grew up there so I know pretty much every inch of the place.
On a side note, I will do some complexes to help out the local lower income families. I know this is not how to do business and I will focus to break even on these deals subsidized for the city. Why would I do this??? Because, my family immigrated to this country 25 yrs ago and we lived on Section 8 (not sure what it was called back then) and food stamps for a few years. We didn’t stay on it very long, but it helped us get started. I remember moving from the ‘ghetto’ to low income, to working class, then finally to middle class.
We’ve moved on…but we haven’t forgotten.
On a side note, I will do some complexes to help out the local lower income families. I know this is not how to do business and I will focus to break even on these deals subsidized for the city. Why would I do this??? Because, my family immigrated to this country 25 yrs ago and we lived on Section 8 (not sure what it was called back then) and food stamps for a few years.
That would be a HUGE mistake. Why would you buy complexes with the idea of breaking even when you could buy Section 8 housing and make a profit? You would be helping the same people either way. In addition, you are likely to find that most Section 8 tenants are not the upstanding citizens that your family is. Many of these people are simply LAZY - they don’t work and have no intention of every working. Your family used Section 8 as a leg up and they were successful. Most people use it as a hand out that never ends and are just plain LAZY. Don’t confuse business with charity.
If you are makeing investments and planning on breaking even you do not have to worry about scammers you will LOSE $ NATURALY. YOU ARE NOT READY YET.
I sold a great business to my employees and over 3 years watched them destroy it because they where happy makeing the money they made as employee's and for some sick and twisted reason did not want to make more. So everyone lost in the end.
If you want to lose the money you have made do what you are talking about. If you don't change your lazy money attitude you will not be able to help more people becuase the money you have in your break even stuff won't grow. Don't do it , Don't do it , DON"T DO IT.
Oh and one more thing did I mention DON"T DO IT.