Should Kim, an entrepreneur, invest in index funds or rental properties?
Should Nick, an MBA student, househack into a more-expensive home with stronger cash flow, or a cheaper home with more budgetary wiggle room?
Should Kelly, who is getting married soon, sell her current home and use the proceeds to buy multiple rentals? Or should she use her current home as a rental property?
Should Trayci and her sister invest in rental properties or bare land?
I answer these four questions in today’s episode.
We’re a weekly show, but on the first Friday of the month, we air a bonus episode. This is our December 2018 First Friday Bonus Episode.
Enjoy!
Kim asks:
My husband and I were recently able to clear all of our consumer debt with the sale of one of our properties, and also have more than six months of an emergency fund saved.
We’re in our late 20s and are both self-employed with successful businesses doing what we love.
We’re looking to start a family soon in Phoenix.
We have one rental property that rents for $2,000/month. Our goal going forward is to buy 4 more rentals with 50-100 percent down. We’d like this to be a significant source of income.
We want to offset this with a $1 million nest egg invested in index funds.
We want to have both rental properties and index funds for financial independence purposes so we can have an option to choose our path in the future, since time is on our side.
We’re having a hard time prioritizing which we should be doing first: invest in index funds or rental properties? Should we save, save, save until we hit our savings goal in index funds first, then buy properties? Or should we buy properties first, save our excess funds, plus the rental income into index funds?
We aren’t sure what should come first or if it should be a mix. Please help!
Nick asks:
Right now, I just finished my first BRRR deal, and it’s cash flowing nicely at $250/month (very conservatively) and I’m having trouble repeating that process because I can’t find another deal that works under the BRRR method.
I’m 25 and I’m living with my parents while I finish my MBA. I was thinking of moving out into a house-hack. Right now I have two deals on the table:
- One that’s $70,000
- One that’s $150,000
The one that’s $150,000 is going to work better – I’m going to cash flow more, and it’ll probably be easier to get tenants in there once I move out. The one that’s $70,000 will be an easier financial hit to take if something goes wrong.
I was wondering what your thoughts were on this, given that I want to keep the house in my portfolio and that I eventually want to retire early and move to a country like Colombia. What are your thoughts?
Kelly asks:
I’d like your help in getting a rental property portfolio set up.
I’ve owned my house since 2013 (I bought my first house at 25) and I’ve lived in it since then. During that time, I’ve done some renovations and I’ve also rented out one of the rooms, which has helped pay for a majority of the renovations that I’ve done.
There are still a few things that need to be resolved, but I’m ready to move on to the next phase of my life. I’m getting married this year, and that means that I either need to let go of this house, or make it my rental house.
I originally bought it for $110,000, and it’s estimated to be at $160,000 – $170,000.
My question is: Does knowing the history of the house (all the repairs that have been made) make it a better rental, because there’s less risk? Or is it better for me to maximize my portfolio and buy multiple houses with the return that I could get out of this house?
The things that still need to be resolved are that the house needs new pipes from the city to the house because the water pressure is being impacted, and it will deteriorate year after year. Also, one of the hot water heaters isn’t up-to-code due to a “homegrown renovation” of converting the garage into an extra room in the house.
What should my next steps be?
Trayci asks:
My sister and I are looking into buying our first property. We’re not sure if we want to buy land or maybe a duplex that we could get started on (start small, and then go bigger from there).
Do you have any recommendations on how to get started? We’re in Portland, Oregon.
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