Starting out in Baltimore Here is my Plan

[Kevin Favorite]

Hello folks, I just want to start off by  saying I have enjoyed all the discussions on here and the wealth of information being shared! It never really  occurred to me that I could  or should think about  real estate  investing until  I stumbled upon this  site. 

 I live in Baltimore purchased a  property in 2009 and have been unknowingly  house hacking it for the  past 8 years. Now I am ready to expand my  footprint . My  mortgage is my only debt (with  roommates paying it) so now I feel like I have more $$ to begin to make this happen. I am looking at  ways of  getting started and although I tend to lean toward the  conservative as far as  my  financing I think I am probably in pretty  good shape so here is some details about my  plan.

My plan is do a  cash out refinance on the  house I currently own that I paid  185k for and owe 143k on. Its  3 bedroom 3.5 bath and average  recent  sales  in the  neighborhood that are  3/3.5 comparable are about 189- 240k. I recently  spent about  15k  not really  updating but customizing  the  top floor  bedrooms and all 4 bathrooms and things look pretty  stellar so I am guessing my  house is worth  about 215-225k.

FHA Mortgage payment (mortgage/taxes/insurance) is 1365 ( Baltimore property taxes suck $460 a month)

Rent out 2 of my  bedrooms for  1400 total. 150-200k in W-2 income, 750+credit score.

According to PenFed if I do a cash out refinance on my  home I can get about 25k out of it and basically have the  same mortgage and interest rate at 4.35 and  closing cost would only be  1900 since they would  pay the rest. 30 year mortgage. Guess it all depends on appraisal.

This is where it gets a little hazy. I guess I could refinance current home into a conventional mortgage and I could buy another property with an FHA loan if I wanted? Less money down, I could then purchase additional properties with conventional loans.. assuming I would then move into that FHA loan house. or I could just buy with conventional mortgage additional property with 20% down. Assuming I get the 25k cash from refinance Ill also have about 25k additional to invest. Id like to get possibly 2-4 properties if that's not stretching it in the 40-65k range each but I feel like the financing is always the tricky part. There is a landlord with 9 properties nearly all on one street selling them each for 85k, renting low for 600-750 a month when market rate is about 1200 for 2/1 properties, but the properties need to be in pretty good shape. Got no response on the realtor about owner financing. Id like to be able to spend about 200k and get as many of those properties as I can. My thoughts are on offering 50k for each property and I dont think I would consider it a good deal unless they are in pretty good shape and/or they could be purchased for 60k or less. Given that they have tenants Im assuming they are in better shape than an vacant building. However the thought of being able to control almost your own block as a landlord is rather appealing. I do not plan on making any moves until about August because I am out of the country and by then those properties if still available will have been on the market for close to 3 months, but I just want to make sure I have a logical game plan and not just dreaming over here.

So long story  short  any thoughts on the financing of this adventure. Apologies for all the words. Thanks