New Investor, How to get the Ball Rolling.

[Adam Eckhoff]

Good Morning,

My name is Adam Eckhoff, commercial appraiser in New Jersey. I'm looking to purchase my first rental property; however, I'm posting to hear your thoughts on this one. Quick background, purchased my first home with my wife at $360,000 (value increased to $550,000 (wow great investment!). Let's say i have $100,000 ready to invest.

Single-family residence or duplex. Let's throw a hypothetical situation in the mix and say that either one that I purchase, it will generate a realistic $150 to $250 per month. That being said, it will a very long time to save up and purchase a second property. How do I get the ball rolling where I can purchase another property. It appears that the "buy-and-hold" method does not seem possible... Maybe the BRRRR method?

This is what I'm thinking - "wow I just purchased my first duplex bringing in $200.00 per month! wait, now I have the headache of being a landlord and managing the property. Dang I should have just kept my money in the Index fund..." "Well, I just dropped all my money on the property, now I can't purchase a second one until I save up another $50,000 (that will take a very long time with the $200/mo. income). This seems pointless!"

Thoughts? 

Regards,

Adam.

[Scott E.]

Investing $100,000 cash into a property that generates $200 per month in cash flow is a bad plan. That equates to a 2.4% cash on cash return.

You need to find a place to park that money that will generate you a 7%+ return (with a $100k invested, that is cash flow of minimum $580 per month).

The icing on the cake with rental property is principal pay down, appreciation, and tax benefits.

You're right though... buying multiple rental properties is much more challenging than the gurus make it seem. It takes time.