Your inputs are highly appreciated!

[Vincent Van]

Hi all,

I live in Los Angeles / Orange county, California. I have reserved some cash to deep my toe in REI, and if things work out great, I can allocate more cash into this biz to scale up.

Since I'm new to this, so I'm gonna have some reasonable goals so they are achievable :-)

1) Goals:

My long term goal (10 years+) is to have enough passive income from rentals (or anything related to RE) so that we can have financial freedom.

Intermedia term goal (in 5 years) would be to have $5k+ monthly income from RE in

Short term goal is to have roughly $1k monthly passive income by end of 2017

2) How can I get to my short term goal?

Follow the 50% rule, to have $1,000 income, I would need to collect at least $2000 in monthly rent. Here are few ways I thought of:

a) Purchase 3 properties in mid-west, about $70~90k each would produce maybe $600-800 / month rent.

b) Purchase 2 properties somewhere (I don't know), preperable in A, or B class neighborhood, each cost $100~$125k, and can produce $1000+ / month rent.

c) Purchase a property near my cousin's backyard, which may cost $400k+ and can get $2000 / month rent. The cash-flow (if any) here is just too low, plus I've already own my primary resident (which is a bet on appreciation) so I can to diversify further into cash-flow.

d) I can invest $300k in REIT index which yeild 4% / year, and get $1k / month. Since it's a fund, and not real hard-asset, so this no good. Plus the yield is dropping because price just hit all time high again.

3) My (temporary) requirements

a) Income stream should be be as passive as possible. I'm not a handy man, nor good at communication, nor active person, and very shy so because of this, many real estate strategies may not fit me well.

b) Rentals should be in property tax friendly and landlord friendly states. So I don't want to take any risk having to deal with tenant that don't pay and stay in my property for like 6 months (California) nor get a suprise property tax bill in Texas which can increase 10% per year!

c) I would like avoid cheap properties or one in warzone even they can produce more % return.

d) I'm willing trade off a bit of lower return for better neighborhood, a bit newer house with less maintanance, or area tend to have long term tenants (are they called B class neighborhood/property?)

e) The market should have at least some population, and job grow with a diversify industries.

f) Price should not have been appreciated for more than 40% since the last crash (I'm not sure the exact % here) .. I just don't want to overpaid for property or a bag holder here. Just want to minimize my risk here.

So given #3, seem like #2b would fit my needs the most. So my 2 main questions are

1) Is there a market that meet my requirements above? If so, any recommendations where I should look?

2) Since the properties may be in $100 - $125k price range in B class neighborhood, is this true that finding my own team would be better bet since most turnkeys work with C or D area? But again, I want it to be as passive as possible.. Technically, if I'm really lucky, I just need to find an AWESOME real estate realtor who can get me a move-in ready property, and connect me to a good property management company, who would then find me tenants.

What are your thoughts?

Thanks,

Vincent