Buying my first rental property

[Charles Kappe]

I just wanted to get out there and introduce myself to this forum, I've been sitting behind the screen learning from a distance, reading forums, watching podcasts, asking questions at my job etc. I am 21 years old, I live in outside of philadelphia, pa in a suburb in montgomery county, pa. I have a vocational background in construction, electrical, plumbing and masonry from my schooling. I am currently an account executive for a regional property preservation company dealing with the bid and invoicing for HUD properties, foreclosures, pre-foreclosures, bank owned properties etc. I see so many great homes come across my desk right in my home town, I see the homes before they hit any mainstream sites like zillow, truila etc have full sets of interior and exterior photos and even go out to properties myself from time to time and say to myself this would be a great deal. I am highly passionate about getting involved in the rental properties side of things, preferably live in duplex, triplex or quad-plex's or something in that nature. One thing is my money is very tight with being young but I don't see it holding me back. I was thinking a 203K for a loan option since I can afford the low 3.5% - 5% down payment but allowing me to factor in repairs. Most of the repairs I can do myself and also have the access to help with them if needed. I've seen some deals in my area, one for example was in Norristown, PA ( highly low income area, low price homes) a side by side duplex. $225,000 for both or $125,000 each unit. 3 bedrooms, 1 bathroom per unit. 2,100 SF total for both units. Average rent in the area is 1,200 per month for the area. The house just needs TLC. Maybe $25,000 worth of work per unit. Taxes cost $2,500 per year. I appreciate any advice or comments in advance.

[Daniel Hedges]

I am not sure how much cash you have on reserve, but it is always a good idea to have some cash on hand.  The reason for this is you might need it for some repairs.  The fact that you can do the repairs yourself is great, but remember that there is a cost for materials.  I am speaking from experience where I have gotten into binds with not having enough cash on hand to make critical repairs from bad renters.  I just say all of this so that your investing can be as smooth as possible.

Another word of advice is that you might look into wholesaling some of these homes you come across.  This can help you build up your cash reserves.  If I had to start over I would wholesale  as much as I could and pile up cash.  I hope this advice helps.