My business/ career plan. Please give me your opinion!

General Real Estate Investing
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Hello everyone…Well first off im 20 years old and have been studying about REI for about a year now, I have Steve Cooks course “Rehabing for Big cash” and have learned alot from it. Ive also read almosst every Article on this web page. I guees you could say that I have two “mentors” being my fiancee’s dad who is a “buy low, fix up, sell high” guy and my uncle who is a more advanced as he does it all: Rehab/Rentals/ Lease Options/ Owner finance/ developments. I have an LLC set up and a small line of credit at a bank and im closing on my first ever rehab project later this week, and plan to start having work started first thing next week. (My dad is my partner just fyi, and hes a very succusfull business man as he owns a produce company that is rated in the top 10% in imports of mexico produce to the USA, so i guess you could say I got a good partner who knows how to run a business.) I have also just signed up for a online real estate course as i think that having a RE license will be a huge plus for me since I plan to buy and sell alot of houses for the next 30+ years. Im also in my 2nd year of college, and engaged to be married in 2 years. Needles to say im pretty busy for a 20 year old IMO. Ok enough about me and my personal life and all that. Now on to what my plan is and was wanting some insight/suggestions/coments from fellow REIs.

PHASE 1:My plan for the next 2 or 3 years is simple : Just buy, fix and sell. Just cashout and make atleast $15k profit on each deal to build company capital, I want to do about 15 to 20 rehabs over this 3 year span.

PHASE 2:aftr the first 3 years of rehabing and cashing out I want to get into the buy and hold game. I want to obtain roughly 20-25 houses over another 2 to 3 year span. And get tenants in them and have each property cashflow about $100-$200 a month. I havnt decided if I should hire a Propery Managment Co. to do this or not.

PHASE 3: With my 20-25 rental propertys in place, I want to start as Apartment Guru David Lindhaul calls it the “Chunker strategy”. Start Rehabing and cashing out again and with the profits that I make on these rehabs go and start quickly paying off my 20-25 rentals thus leading to my mortgage payments being lower and my cashflow being higher. Basically just take the money I make rehabing and cashing out and i guess you could say "turbo pay down"my mortgages on my properties.

PHASE 4: As soon as Ive got all my 20-25 properties paid off completely I want to take everysingle on of them and sell them at owner finance to the less fortunate that do not have good enough credit for the bank to give them a loan on a house. I could set a fairly high intrest rate on each one and I think that it will cashflow me about $ 300k- 400k a year depending on how much these propertys appriciate and such.

My ultimate goal is to get my brokers license and own my own realty company someday with my hopefully $300k- $400k a year coming in from my owner finance deals, just do more Rehabs and flips just for somthing to do everynow and then. (Although im sure being a broker and owning a reality company might keep me busy enough). I guess thats about it, as far as my plan. Anyone have any opinions? Id really like to hear some feedback from everyone who is willing to chime in! There is just somthing about real estate that excites me, I really cant see myself being a Doctor or a Lawyer or Manager of a reasturant or anything like that. In my opinoin its all boring, the only think that I really dont think is boring is real estate. Especially buying a house that is in bad shape and turninig it into somthing that is beautiful. So once again, whats your plan? Whats your opinion on my plan? Give me some feedback guys! Im looking forward too it!

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Excellent plan! If you stick to it, you’ll be a very successful person. I do have a couple of comments:

  1. $100-200 per month cash flow may or may not be a good deal. In my experience, you need to have a positive cash flow that is about 1/2 of the mortgage payment. Otherwise, you do not have a sustainable rental business model.

You need this level of positive cash flow to offset major repairs and other unexpected business expenses (lawsuits, legal fees, occasional severe damage caused by tenants, periods of unusually high vacancies, etc). These expenses can be substantial and are not covered by the normal “maintenance allowance” in your cash flow analysis. This is one of the things that the gurus don’t tell you!!! So, base your cash flow targets on a percentage of mortgage payment instead of an arbitrary number.

  1. I would carefully consider selling your houses on a lease option instead of a land contract or owner financing. With a lease option, you can quickly evict non-paying tenants. When you use land contracts or are holding the mortgage, you must foreclose in many/most circumstances. Foreclosure is a much more lengthy and expensive process. Most of the people that you “sell” a house to (with lease-option, land contract, owner financing) will not follow through and buy the house. They will either default or simply want out of the deal.

These are just a couple of things to think about. Overall, YOU’VE GOT A GREAT PLAN!!!

Good Luck,

Mike

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Lease options are also subject to foreclosure proceedings if the lessee can prove an equitable interest in the property. I know from personal experience because several years ago I was a lessee and was able to establish just that. I exercised my option and had missed no payments, but the owner decided to sell the property to a friend instead. I sued, and he tried to evict me unsuccessfully.

Once you do acquire the property there are ways to manage it to avoid maintenance and repairs, property management expenses, and vacancies. There are also ways to insulate yourself against creditor claims and civil judgments; litigation in marital dissolution; Probate actions…and even state and federal income tax liens.

You have a great plan. Just make sure you do your research on the best ways to manage your properties after you have acquired them. Best of luck to you. I admire your planning. Not many young people understand its importance.

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Manager of a reasturant or anything like that. In my opinoin its all boring,
Be carful the things that are boring can keep you out of trouble. Remember real-estate is a business. The boring stuff is what makes you money, not the pretty rehabs. If managing a business is boring then you may want to re-think what you want to do.
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Thanks for the replies, Bluemoon I can assure you that managing a Real Estate business is not going to be a problem for me. Real Estate actually interests me, im always on this site or flipinghomes.com or dealmakerscafe.com ect. No other career intrigues me as much as real estate does, I think that the skys the limit in real estate.

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and who said the youth of america has no “goals” in life?!? :wink: good luck w/ yourself!