Finally got started

[Cheyenne]

My plan (goal) has been to buy an investment property a year for about 10 years. That way (if I'm forced to be a pilot until) I'm 65 I will/should have them paid for or close to being paid off when I retire. My theroy is, based on todays numbers, that 10 properties generating an average of 700/mo/a piece will net about $7,000/mo as a retirement paycheck. Hopefully, I can be immune from inflation because I can adjust rent as required.

I have had to deal with some major hurdles due to the nature of the loan required to finance an investment property. I was lucky in that all my projects around my current place almost doubled the value. That paint, fence (3 acres) and the inside reno's I've done have paid off making this dream attainable. It provided the equity for the down payment.

I was also lucky that the rates are so low that my down payment only up'ed my morgage $108 and extended it a year. The refi also saved me 2.5 points

I just got news my offer was accepted on my first duplex! I was able to keep it about 20K under my max budget which makes it instantly cash flow right at $500/mo. I decided to keep my realitor/property manager on for a while as I have no experience as a landloard (and figured her 10% into the budget). She has managed this unit since it was built in 1993 and it has a SOLID rental history. Add on a couple of fresh one year lease agreements and I'm a happy camper!!!!

Now, I'm off to the races on my flip/foreclosure plan to round up the cash for the next rental unit(s)!

 

[rjmore]

Sounds like a good plan. There are pros and cons to having them paid off eventually. The main con is asset protection. A fully paid off property looks mighty nice to an attorney that is suing you. Don't forget to account for HOA, maintenance reserves, and vacancy in your cash flow numbers as well. A lot of folks forget about those particular numbers. Additionally, rentals tend to need rehabs beyond the usual make ready about every 5-7 years. If the same tenant is in there you might be able to stretch it out further.

Good luck with the plan! If you have any questions or concerns as a first time landlord shoot me a message. I own a flipping/rehab company with several rentals and am a partner in an apartment complex. I don't have all the answers but I might be able to help.

 

[SlumTodd_Millionaire]

Same here. Property management is my business, so if you need any help, feel free to ask.

 

[amorris311]

I have two rental properties and my biggest suggestion to you would be set up a LLC to protect yourself.

Congrats on the new venture. It's quite exciting and intimidating the first time. It gets easier with time.

 

[Cheyenne]

Sounds like a good plan. There are pros and cons to having them paid off eventually. The main con is asset protection. A fully paid off property looks mighty nice to an attorney that is suing you. Don't forget to account for HOA, maintenance reserves, and vacancy in your cash flow numbers as well. A lot of folks forget about those particular numbers. Additionally, rentals tend to need rehabs beyond the usual make ready about every 5-7 years. If the same tenant is in there you might be able to stretch it out further.

Good luck with the plan! If you have any questions or concerns as a first time landlord shoot me a message. I own a flipping/rehab company with several rentals and am a partner in an apartment complex. I don't have all the answers but I might be able to help.

Thank you. I have some guidance and can always use more I guess I forgot to add that the $500/mo is going directly into a business account to build the mx funds, etc. Once the MX account is built I plan to roll any access cash directly back to the morgage. That is most of the reason this project has taken so long. It is hard to find a place that is turn key and can at a minimum sustain itself and something that is affordable enough for me to "eat" in case the worst case happens. I bought this place right, I didn't steal it, I got it right.

I plan on covering the added $ on my morgage but other than that my plan is to keep all the money the duplex generates with the duplex. I know I can do almost any repair except major electrical but as of now I would be happy to keep the MX fund at 5K. I also have a plan to cover things that I know are coming, such as roof, dishwashers, furnaces, water heaters. If I know the roof needs done in two years I want to add the cost on top of the 5k MX before using the money for the extra on morgage. Of course, this is mostly a theroy as I do have reserves, just not all the reserves yet. I bought a warentee (against everything I stand for) to midigate some risk as we spend the next few months building the MX funds. (If it makes it 4 months without any major repairs the MX fund will be topped off)

I am comfortable with the plan so far. I know I'm going to learn a lot but I hope I dont learn too much! I quietly hope that based on this specific property my MX numbers are way too high. But that will take years to know for sure.

I think the key is buying right. Slums attract slums etc. My goal is to keep this and all future properties as stand alone investments financially speaking. I think every one of them needs to instantly cash flow. I don't want to flip rentals, I don't want to do any major repairs right off the bat. I want them turn key, middle/ upper class rentals. The flips are a seperate business plan. As I learn I think that's the safest way to proceed.

Thanks though and I'm certain I'll have a question here soon

 

[Cheyenne]

I have two rental properties and my biggest suggestion to you would be set up a LLC to protect yourself.

Congrats on the new venture. It's quite exciting and intimidating the first time. It gets easier with time.

Thank you, That was step 1 for me. Did it last year when I started looking to buy.

 

[SlumTodd_Millionaire]

FYI, a lot of our investors actually setup separate LLCs for each property. It's a pain in the ass to do it yourself, but if you have an accountant, it can be worthwhile to prevent litigation regarding one property from impacting other assets. As always, consult an accountant or attorney for your individual situation.

 

[amorris311]

http://bizfilings.com/

Really easy and fast.

 

[CoffeeIcePapers]

My dad has 6 condos that provide him a decent revenue stream. He said it is a pain in the ass when you get a bad tenant, but that only happened once, as he goes out of his way to screen them.