New to real estate

[Dillon Ellis]

Hey everyone! Southern California RE investor trying to build up my portfolio. I recently traveled to southeast Tx about an hour east of Houston and started checking out what the market offers. I've been looking at single families for a couple months with an agent and found a home in a decent neighborhood that's tenant occupied for $1500. It’s a 3 bed 1 bath 1420 sq ft going for $150k which I got under contract for $132k. I would be paying cash, using most of what I have set aside for an investment. I don't bring in enough monthly to currently qualify for a mortgage but am seeking cash flow. I will be cash flowing nearly $600/month after all expenses. This area has a large oil industry and multiple large hospitals so I think the rentability is good. I'm currently under contract and still on the fence if I should stay in the deal. Does anyone have any thoughts on this scenario?

[Nathan Gesner]

Read a few books on real estate investing to learn the power of leverage. I like the Unofficial Guide to Real Estate Investing. Here's a very basic explanation to get your juices flowing:

Assume a house costs $200,000 and rents for $1,500. The market appreciates 3% per year.

Pay cash for one house and rent it for $1,500. After five years you'll have earned $90,000 in rent income and gained $34,000 in appreciation.

Buy four houses with $50,000 down on each. Mortgage payment is $1,000 on each house, so you're earning $500 per house or $2,000 a month. After five years you'll have earned $120,000 in rent income and gained $136,000 in appreciation. You've earned $132,000 more by splitting your money and leveraging it.