For analytical types who like helping newbies reach goals...

[Betty Cruz]

Here's a hypothetical scenario... :-)

I am not experienced enough nor numbers smart enough to figure this out with confidence but I am devising a plan and would be very grateful for input from some of you who are so brilliant at figuring out what I call real estate puzzles. I have read hundreds of posts and it always seems like the people with really great answers still ask for more info from the poster so I will try to write down as many details as I can think - sorry for the lengthy post...as the subject line reads, this is for analytical types.

1. GOAL - to have at least $1200 passive income and a place to live that is paid for by renters. I want to be able to achieve this within 2 years and sustain it for 10-12 years after that. Basically, I am trying to find gap funding for a pseudo-retired life as I wait to be able to tap into my 401k retirement savings. 

2. Current situation. I have a day job and I'm completely debt free except for my personal home. I have sufficient savings/credit and pre-approval for down payment on up to $200,000 worth of rental property. Additionally, I have $200,000 equity on my current residence that I will definitely sell within 18-22 months. It is way too much house and I'm just waiting till I'm an empty-nester to dump it. I don't think it is a desirable house to rent out because it has high HOA fees and a swimming pool (which I don't wish to maintain).

3. My idea. I have tossed around many ideas and am open to any other options, but this is my working plan...

a. Purchase a rental now (or as soon as I can find something good, which seems difficult) and set it up to cashflow at least $300/mo. This would get me started, get me learning how to be a landlord and get me building up some equity as I'm not a huge fan of a lot of debt.

b. After selling my personal home in about 18-22 months, use the cash ($200,000 equity) to buy a duplex or multifamily that I can house hack. I'm thinking that with no or very low mortgage, I could easily live in this for "free." This also gives me the flexibility to live elsewhere if I want (I'm thinking out of state/out of country, etc).

As I analyze deal after deal, I feel the combination of rental property earnings from one leveraged property and one non-leveraged property could give me the desired passive income. What am I not thinking of? What would be a better plan? Any help would be much appreciated!

[Wendell De Guzman]

Originally posted by @Betty Cruz:

Here's a hypothetical scenario... :-)

I am not experienced enough nor numbers smart enough to figure this out with confidence but I am devising a plan and would be very grateful for input from some of you who are so brilliant at figuring out what I call real estate puzzles. I have read hundreds of posts and it always seems like the people with really great answers still ask for more info from the poster so I will try to write down as many details as I can think - sorry for the lengthy post...as the subject line reads, this is for analytical types.

1. GOAL - to have at least $1200 passive income and a place to live that is paid for by renters. I want to be able to achieve this within 2 years and sustain it for 10-12 years after that. Basically, I am trying to find gap funding for a pseudo-retired life as I wait to be able to tap into my 401k retirement savings. 

2. Current situation. I have a day job and I'm completely debt free except for my personal home. I have sufficient savings/credit and pre-approval for down payment on up to $200,000 worth of rental property. Additionally, I have $200,000 equity on my current residence that I will definitely sell within 18-22 months. It is way too much house and I'm just waiting till I'm an empty-nester to dump it. I don't think it is a desirable house to rent out because it has high HOA fees and a swimming pool (which I don't wish to maintain).

3. My idea. I have tossed around many ideas and am open to any other options, but this is my working plan...

a. Purchase a rental now (or as soon as I can find something good, which seems difficult) and set it up to cashflow at least $300/mo. This would get me started, get me learning how to be a landlord and get me building up some equity as I'm not a huge fan of a lot of debt.

b. After selling my personal home in about 18-22 months, use the cash ($200,000 equity) to buy a duplex or multifamily that I can house hack. I'm thinking that with no or very low mortgage, I could easily live in this for "free." This also gives me the flexibility to live elsewhere if I want (I'm thinking out of state/out of country, etc).

As I analyze deal after deal, I feel the combination of rental property earnings from one leveraged property and one non-leveraged property could give me the desired passive income. What am I not thinking of? What would be a better plan? Any help would be much appreciated!

 Betty,

You can "house hack" by buying a 4-unit - live in one of the units rent-free because you have the three tenants paying for your mortgage. Then, when you sell and cash out $200,000 from your current house, you can then do private lending with it (you can lend it to other real estate investors). It can earn 12% p.a. or 1% per month - generating an income of $2,000/month.

For the meantime or until you sell your current residence, you can rent it via Air BnB to generate even more rental income.