Slum lord or Wait.

[Chase Spitzer]

I am 25 with 3 rentals and a home my father lives in.

My first two rentals are kind of "slummy" not a part of town I would live in, but not great.

Property #1 - I paid 12k for one and it rents for 300 (paid cash)

Property #2 - I paid 18k for another and it rents for 450. ( paid cash)

A family friend was helping me get in the business by selling me these two properties. I then rolled all that income and my own savings and put 25% down on a "nicer" home in much much nicer area.

Property #3 - I paid 54k it rents for $750

For what I make at my day job and these other properties it will take me another 7-9 months to save up the 15K needed for another down payment on a 55-60k house. I like having the nicer property and gaining equity, but the cash flow is not as good.

So do I buy more 30k houses that rent in the $550 range? This will increase immediate cash flow, minimize down payment, and allow me to acquire a couple more homes. Obviously more to manage, more turnover, not as good of an asset. I could easily afford the down payment on another cheap house immediately and start generating income.

Anyone else been in this position starting out?

[Aaron Montague]

With your start you can also consider taking a look at the neighborhoods as a whole. With low pricing as you've indicated, you could purchase a large number of properties within a very short distance of each other. If you improve the entire area you could bundle the complete portfolio and sell it for a substantial profit.

The general theory behind this is that if your neighbors have nice places, the rest of the folks on the block will want to up their game.