Down Payment strategy - Buy and Hold Rentals

[Cody Richard]

Hi, 

Are there any negatives to using my capital in securing a secured LOC for the down payment as opposed to dropping all i've got to closing on a deal? Secured rates are 3.25, cash flow will cover the LOC payment and clear it in 2 years. I've still got my cash and can move on to the next.

I don't seem to understand how people move beyond 1-2 properties without acquiring capital through alt means. For example, I have 100k. Costs 50k closing/down for property 1 and 50k closing/down for property 2, this nets me, let's say, $500/month/property. Long term the investments make sense but bringing in $12k a year with 3% growth annually, leaves around 8ish years to recoup my cash and get into another deal without setting money aside and saving left/right to have cash on hand for that next deal. People say just find a partner like these people are knocking on doors asking if anyone wants to take their money for investments but they seem very uncommon in the grand scheme of things. I understand many of these people selling now are just cashing out on the historic RE price growth over the past couple years. 

I've spent hours going one property after another using rental analysis tool and rental property tool at current housing, condo, multi prices only to find anything that doesn't have 3-5 people jammed into a dilapidated shed to have negative cash flow or minimal CF with extremely risky variable expenses. I'm only looking in my market at the moment (Houston) where I see people mention the great opportunities they keep finding but I'm curious if it's all just flippers attacking the mass gentrification of Houston proper. 

What is some advice for a noob on buy and hold rentals from someone that is having success in the Texas markets? It certainly feels like 85% of this group are flippers or rehab cash out guys and this just doesn't apply to myself.