Trying to get started with my first property.

[Andrew Barrios]

Hi everyone. I'm Andrew, I'm 28 and I've lurked around for a bit while trying to gain knowledge and finish building my own house. My wife and I have been talking about getting into real-estate investing for the last two years, but with so much on our plate, we felt that it just wasn't the right time. Now that all of the dust has settled, we are looking to buy our first property.

The goal for us is to buy & hold, fairly local (<1hr away) single family homes to help supplement the income from our full-time jobs and allow us to retire sooner. We thought about duplexes, but there's only 1 in town that's for sale and its in an area I'd rather stay away from. Because we built our house ourselves we've got about $75k of sweat equity in it. The idea is for us to use a HELOC to fund the down payment(s) and use a traditional mortgage for the remaining balance. We would funnel the extra cash-flow into the principal and repeat the process to buy additional properties. The idea is, more cash-flow from additional properties will allow each property to be paid off sooner than the previous one... compounding. Ideally we'd like to be able to produce $1,200/month from rent within 5 years.

I've found 3 properties near my area that I'm very interested in; all in similar price ranges. I've tried calculating the ROI on each, but it was a back of the hand calculation and didn't include cap-x. The numbers looked good... About 30%-35% ROI. However, because the homes are only in the $50k price range and will only rent between $700-$800/month, cap-x is going to take about 15% of total rent.

Here are the numbers in the one I'm most interested in, but all three are incredibly similar. I've scheduled to see all 3 this week and I'm in the process of obtaining the HELOC.

Price: $52,000

Year built: 1965

Beds: 2

Baths: 1

Sqft: 1,045

Tax Assessed Value: $28,640 (Everything is way lower than sell price in the area IDK why)

Estimated Taxes: $56/mo

Estimated Rent: $750

Any idea if this is a worthwhile purchase/strategy? Need any additional information?

Thanks for taking the time to read and respond.