Just curious what you all think is a sound plan for a first year investor. First, let me tell you a little about my situation and the market in which I’m investing.
My wife and I have great credit and very good income, and I’ve been trying to get her to give me the go ahead to invest in some property for as long as I can remember. Finally, she has agreed that it is the way to go. We close on our first two SF homes later this week, and I already have one lease optioned and the other has several qualified prospects for renting/leasing/lease option. The price range for these homes, in Ohio, is $40-$50k. These first two are on a $0 out of pocket program with cash back. PCF is about $150 per house on each. I already am in contract on the third, and I just started about a month ago.
My question is, if I’m thinking 10-15 SF homes in the first 12 months as an investor, is that realistic and intelligent? I’m looking for opinions from experienced investors. By the way, I am open to financing the deals creatively in order to get to that number, even if the initial cost is a little higher.
I’ve been investing for a little over 8 years in the north Dallas market. I own about 40 sfh’s, all producing 200+ cash flow before maintenance in mid-low income areas. I’d say you have an aggressive goal, but it can definitely be done. The better question is, to buy that many that fast, are you making good decisions? Be careful with your Carlton Sheets course telling you it’s okay to spend more up front to buy quicker and not spend pocket money.
BTW, I’m glad you mentioned a wife. With that Brad Pitt quote as your signoff, I wasn’t too sure about you, son.
Thanks Bill. I’m using the same parameters that you mention as far as cash flow, etc. If I can pull cash out and still get monthly PCF of $150 or more, all other things being in line with a “good deal”, I do it. The goal may be adjusted, more due to time constraints than not being able to find decent deals.
Oh, and hey, what do you have against Brad Pitt? He’s very dreamy you know.
I think that your goal is very achievable. I am working on a very similar plan - 10 houses per year for 5 years. Twenty months into the plan, I’m already at about 25 rentals and well on the way to meeting my goal of 50 properties (to start).
I also do cash back at closing, but I make sure that I don’t borrow more than 70% LTV on any deal. In this business, you need both cash flow and equity. So, my suggestion is to be sure you’re keeping equity in every deal. Also, I’d recommend that the positive cash flow from each property is at least 1/3 of the mortgage payment (1/2 is a lot better). Using this ratio will provide you with a sustainable business model and protect you when a high number of vacancies occur.
Finally, join your local REIA and learn everything you can about being a landlord. On the job training is not the way to go!
