Buying First Rental Property. Thoughts?

[Jason D.]

Hey all, my name is Jay and I live in the central Texas area.  I'm currently in the process of selling my condo and possibly purchasing my first rental property.  Here are the details:

1) I should net $30k-40k on the sale of my first property.  My condo has appreciated greatly in the last three years because we have a solid location in Austin.  

2) I'm going to use my VA loan to purchase my next property. It will be minimal money out of pocket.

3) After all costs, I estimate I will have around $35k-$45k in a money market fund (sale of property plus around $8k in savings, atm).  

4) I hope to purchase a $120k or so rental property for $20k-$25k down, and have the rest of the cash as working capital.  

That all being said, any thoughts?  Advice?  I have a great loan officer who's doing everything he can to work with me and get this project up and going.  

[Alexander Merritt]

Hi Jason. It's a good starting plan. Before you jump into it I'd make sure you narrow your scope down a lot. You'll want to consider things like location (a HUGE criteria), Are you planning to "house hack" (buying a duplex/triplex/fourplex as your primary; renting out the other units) or renting an apartment and having a separate investment property? Depending on your age and family status (no wife/kids) I would suggest house hacking because you can basically live there for free while your rents pay your mortgage. Also, what are the demographics of the area you are looking at? What do rents in that area look like (rentometer.com)?

Also, why are you planning to sell your condo? If it's really appreciating a lot I would consider keeping it and just renting it out