First Timer: My Goals + Buy two $100K homes, or one $200K home?

[Nicholas Budincich]

Hey what's up community!

New to this real estate investing world. Starting to learn things, listen, read, calculate, etc.

I wanted to just sanity check some logic with someone who can help me understand a bit - if you're willing! :) 

(Part 1) My goal and my plan to operate towards it  (work in progress) 

My goal is to invest in an income property within my budget (ideally <$70K all-in), with a home that appreciates in value at an average rate (~2%), with positive cash flow (>$0, ideally >$100), and ideally with an opportunity to refinance after some time (1 year? 2? 5? not sure) and make more use of my money.

I was thinking a single family home, but open minded to a duplex or maybe 3 or 4 doors. It's my first purchase and I'd rather start a bit smaller and simpler to get my feet wet and try it out. But I also need to learn a bit more about the "side effects" of doing a larger door count.

Thinking North Carolina (outskirts of Raleigh area), or maybe Tampa FL. I live in NYC for the next 12 months.

So my plan is: Get to know those markets so I have some understanding of what's up. I built my own calculator (checked against the one here on BP) so I understand all the math and can play around in the spreadsheet and tweak quickly. Learning a bit about mortgage rates and lending, and have been talking to some various people in my network about different facets (... it costs $6300 for gutter system replacement... check the city zoning website to see if there are restrictions... don't make it too complex of a decision just find a home that has a good lifestyle... etc).

Next step is to...

• - "analyze" (plug in the numbers to see what home price, rent income, and a few other numbers will make for a positive cash flow and acceptable cash/cash ROI - or Cap Rate or NOI) ←- spelling this out specifically to create transparency into my understanding of this.
• - ...a "bunch" ( 20 to 100 )
• - of "deals" (homes listed for sale already)

... so I can get a better feel for the different factors and how they interplay. 

Wasn't planning on getting into the BRRRR game - specifically not wanting to buy something that needs considerable up front cash to fix up, thus killing the "rehab". But I'm keen to refinance and repeat!

The ask: If you’re amenable, would you sanity check my thought process here? Anything to call out or address that’s flawed or could be improved? Is my goal-defining missing something? (Honest feedback welcome, nothing is sacred, just trying to learn!!)

(Part 2) Two versus one property

Given my goals above (excluding the "simplicity" note), does it make sense to get two properties or one? Assuming I do one deal and then some months later find and execute on the 2nd. And assuming the two properties are approximately equal in market value to the one larger one. And same market.

Two properties

PROS

• - Two streams of income
• - More experience
• - Higher overall cash flow? (“depends” - but I’d guess higher on average – example: One 3bed/3bath home for $2K/mo - versus a 2/2 and a 2/1 may have 1400 and 1100 respectively = $2500/mo total)

NEUTRAL

• - Appreciation is probably about equal (I think)
• - Percentage based costs are probably about equal, or relatively not making a meaningful difference.

CONS

• - More "friction" costs (closing, cash for updated appliances/paint/prep)
• - Two sets of tenants that could cause problems
• - One house means only one opportunity to screw something up and lose money

The ask: Given the above goals, what do you suggest? Also, is there flawed logic or missing pieces in my Pro/Neutral/Con breakdown? (Probably is…)

Thanks a million!!

All good things,

Nick Budincich