My first post in this informative and helpful forum.
Quick Background:
I’m 34 years old, single, and have never owned a home by choice because I like to travel abroad. I have perfect, and current credit. I have up to $23,000 available for a down payment.
Question:
At 34, when can I end up with positive cash flow of about $1,000 per month? (I know this depends on several factors.) I want to buy 2 or 3 houses, and then rent them out. My parents have been doing this for years.
Cap Rates & My Concern:
I am worried that in the Kitsap County, WA area (west of Seattle) that I may have to feed to mortgage and live in the house until a renter could cover the mortgage and other costs.
I want to retire in South East Asia by the time I am 55.
(I know many people living off of positive cash flow here in their 40s.)
Thanks in advance for the help. I am hungry to learn, and willing to do what it takes.
Buying a few rentals is a lazy mans way to Riches. I believe their is a book written with that title. At todays low rates and your great credit you should be buying several houses. I actually like duplexes for better cash flow. Try a 10 or 15 year loan and hold until paid for and there is your retirement. Find a good deal about 15 to 20 % below market and then another. Borrow all you can and save your cash to feed them if you need to for a few years. I hate that idea but in higher value areas that have rapid appreciation you may not be able to start off with positive cash flow. I like lower income blue collar areas.
You can be more aggressive and buy 10 or 12 units over the next year or so. Be carefull and not get too over extended without positive cash flow. Keep in mind vacancies and repairs too things that I overlooked when first starting out. I am reading a good little book now called Dont Worry Make Money. You can do the same.
Ted jr gives great advice again I turn 30 this month and own now 73 rental properties and manage over 200… Plus find all the deals my rule of thumb is never buy a rental without walking away with at least 15% back at closing so for easy math 200k purchase I will not buy unless there is a check waiting for me at the title company for at least 30k
A question I have for reoconsultants is: Once you have more than say… 5 or 10… do you hire someone to manage your properties? How much is a good price to pay for someone to take care of your properties and find renters for you without you having to do anything so that you can be free to go look for more properties?
Hey with 20 g in the bank you are already ahread of the game. Im in the Financing part of the business so im always working with numbers. Basically with the piggy bank you have saved you can do a whole whole lot.
20 g in the bank can generally give you at least a years worth of mortgage payments in most places. So basically look for good rentals with positive cashflows.
Dont use any of that money to buy those properties. get 100% financing on everything. and add 3 - 6 % of your closing costs to your financing. We call this sellers conseccion.
Just use that money you have as back up in case you have issues with the property or tenant. keep doing that for every deal you come accross.
get extra monies by doing a heloc every year that your property goes up in value and use that to finance new properties.
Keep doing that until you have a decent cashflow which would only depend on the frequency that you buy ure homes and the cashflow you get from them. =)
With a 20 year horizon to work with, you can exceed your cash flow goals with just five properties. Buy one property a year for five years. When you turn 54, sell two of the properties and use the net proceeds from the sale to pay off the mortgages on the remaining three.
Three free and clear properties should be more than sufficient to meet your cash flow requirement of $1000 per month when you retire to SE Asia.
Like you I am in the beginning stages of buying my first investment property. My first advice is just to focus on buying that first house. Plan and have the guts to do it is 80% of the work. Your good credit is the the other 20%.
Your posting begs the question, why not ask your folks for advise. You have the mother load starring at you.
Good luck