Getting into rental property

[Jeffrey Bass]

I am trying to get some feedback. I have been doing a lot of reading and listening to podcasts on rental property. I wanted to get some open feedback.

I am looking to purchase my first condo to turn into a rental property. I am doing a house hacking process where I am getting a loan Thru primary resident and placing 25% Down payment. I plan on putting tenants in immediately as I live in my travel trailer. My cost of living is fairly low.

I ran the calculator on bigger pockets and have a 5% cash flow. I plan on placing payments on the principle of the loan monthly for the first year and have enough income to pay the loan off in 2 years. I am not touching 60% of the money for the rental as that is operating expense and that will stay in reserve for vacancy and cap expense.

My goal is to pay the property off in 2 years or very close to that then purchase another property and place tenants in there as well and have the tenants from the first property pay on the second and I too will place funds on the principle. Trying to do a debt snowball process. I am looking to do long term but and hold as I want to focus on getting 5 property with 75% paid with no loan balance in 8 years.

I was just hoping to get some feedback on my process. Anything would be greatly appreciated. Thanks for reading and responding. Have a great day. Happy investing.

[Dion McNeeley]

Hi @Jeffrey Bass,

I like the aggressive principal paydowns. This is something I do as well. I like to pay one down every two years and take one year saving the next 25% down. I also like that even though you are doing owner occupied, you are still doing a large down payment. I hear a lot of people say go owner occupied to get in for 3.5% down. This would make getting any kind of cash flow hard to get. 

My only concern with how you are doing this is the HOA. Like @Frank Chin said. Be careful. 

Not only can there be rules that make renting hard, living in the RV can be a problem as well. I would make sure there is nothing stopping this and be ready for the rules to change if the assoc doesn't like thee trailer being there. I am also concerned with random assessments that HOA's can have come up. You really have no control on those.

Good luck,

Dion.