Starting Out - Need help with strategy

[Kevin NA]

Hi all,

Im just starting out and am realizing that the first step is to set up goals and a strategy to meet your goal. I could use some help developing my ideas.

First my situation:

I am a 38-yo single man living in BK/NYC. I have a steady 9-5 professional job decent income but under 6-figures. I have $30k in cash, $55 in liquid assets (stocks) and about $75k in illiquid (retirement accounts).

I am currently renting an apartment. I own no real estate.

I have time to dedicate to investing but not more than nights and weekends will allow.

I am not handy but willing to deal with routine maintenance if needed. Would be willing to manage my property at least to learn the ropes before going with a manager.

I am generally responsible with my finances and have good discipline when it comes to savings, etc. I would consider my risk tolerance to be slightly on the conservative side. I guess its all relative but REI terms for me this would mean not getting into complicated deals until I have the experience to understand them and not to leverage myself to the point where I couldn't handle the worst case scenario.

Goals:

Build a RE portfolio to supplement my retirement income (20-year horizon). Ultimate goal would be to live off RE income and retire a few years early.

Options and Ideas:
Buy an BK/NYC apartment and live in it. I am more or less priced out of these markets, but could possibly do it. I don’t feel this is a strong investment because the upfront capital requirements and cost to carry will make a second deal very difficult. Alternately I could buy and occupy a condo in Jersey City or Hoboken which would give me a bit more breathing room financially. Biggest upside in BK/NYC is I am sure the appreciation would be better. Downside is no cash flow.

Buy a condo in a less expensive market. I am from NJ and this would probably be my target. I dont know which town yet but would have to do my research. I could do this wholly as an investment and put 20-25% down. Upside is some cash flow, equity and relatively minor maintenance requirements.

Buy a 2-3 family in Jersey City and owner occupy. This way I could get more favorable financing. Downside is being a live-in landlord and I frankly don’t want to live there, but it’s a possibility if this puts me in line with my goal. Alternatively I could buy a multi-fam as an investment and manage from afar. I would be a train ride away and also have a car, so its fairly convenient. I lived there until recently and know my way around.

Questions:

What should I be thinking about in terms of my long term goals? I don’t want to handicap my long term goals for the sake of my first deal.

What are realistic goals for me? What are the metrics I should be looking at? My goal is vague at this point, I would like to get much more specific.

As a first time home buyer, what advantages do I have? How can I capitalize on them if my goal is investment and not just a roof over my head.

Would it be wise to invest in a property, yet pay rent elsewhere?

As you can see I could use some direction! Any help would be greatly appreciated.. thanks!

[John Evan Miller]

BP is a great place to get some good investing advice. Welcome to the forum.

That being said, you asked about long term investment goals. Well, that depends on what are your long-term goals? Investing in real estate can give you a monthly cash flow and/or provide lump sum payments when you sell them. If you are looking to "Build a RE portfolio to supplement my retirement income" then I believe you should be looking into a monthly cash flow scenario rather than wholesaling or flipping houses.

What type of income producing property should you invest in? Well, that is a big question. Have you gone and talked to some banks to see what loan amount you would be approved for? This is a good place to start. By getting pre-approval, you will know where your investment ceiling is located. There are a lot of different types of first home buyer programs that you may qualify for. Your lender will be in the best position to help you qualify for them.

From there you just need to find a property that you can maintain, afford and that provides a suitable cash flow.