How does this sound for a plan?

[Scott Cooper]

This will likely be a long post...will try to be as concise as possible but I'm hoping to share my experience, interest, and ideas for moving forward in REI and get some feedback and opinions:

Background:

My wife and I each owned a property when we got married - each purchased in the early 2000's. One was a condo, one a Single Family. We moved shortly after getting married and sold the SF, we didn't hit the peak of the market but we were fortunate enough to walk a way with a good profit from the sale in 2006. I wish I could say it was planned that way and I did learn a lot but the truth of the matter is I had zero experience in RE and was just fortunate to have bought and sold at the "right" times.

The area we moved to was a lower priced market so, in 2007, we put 20% down and bought another SF there. The area weathered the downturn fairly well through 2009 and we refinanced the property down to a 15-yr mortgage. So, we built equity above the 20% down fairly quickly. In 2010, we moved again and decided to rent to some friends - a young, very responsible, very trustworthy couple. The upside - we knew our house was in good hands, the downside - we agreed to rent for 1/4 of the mortgage payment until we decided what we wanted to do with the house. Lot's of factors: it is nice piece of land, the area is "resortish" so there are a lot of seasonal rentals, etc. etc. Fast forward to today, the downturn finally hit the area, it was just delayed. Based on an appraisal from 6 months ago, the market value is down 20%. We're not under water and still have a lot of equity but we are subsidizing someones living each month, on top of having equity locked up.

The condo (remember that), we held onto all these years as a rental. It made sense b/c it had appreciated a lot during the boom and we figured there was a lot of cushion and could try our hand at the Landlording game. We did so for 8 years and just recently sold it -- mainly because we moved again, knew it was going to need some costly maintenance, and wanted to free up the equity so we had access to cash.

We now live in a townhouse that we purchased as a Fannie Mae foreclosure, renovated, and moved into. We have ~25% equity and another 15-yr mortgage payment that is very manageable with my day-job income. The idea was to move into this cheep townhome, live in it 2-3 years, try to sell it for a profit (due to the work I put into it, not so much banking on appreciation) or possible convert to a rental.

The Plan:

Through all of this, I've realized that I enjoy RE and am considering taking my involvement to the next level. I've learned a lot a/b being a landlord, been through 5-6 RE transactions now, but realize I still have a lot to learn. I've really grown to like the townhouse community we're in and see a lot of potential in it. It is a slightly depressed community - there were a bunch of foreclosures here, of the 54 units (it's a small community in a small town), 17 are rentals and some are ill maintained. It is in a good market (DC area) but far enough on the fringe that prices aren't ridiculously inflated. I am likely going to be the HOA president so I'll have a lot of opportunity to influence the community (hopefully in a positive way). I'm very motivated, both b/c I enjoy it, and b/c I have young kids so I want them to grow up in a good area. I also may have an opportunity to acquire another property here in the community (a rental) that has a good tenant in it and that I think I can get at a price where the numbers "work" based on my previous experience as a landlord...income-wise, we broke even on the condo we owned and actually made money on the equity and appreciation - but it was well worth for the learning experience. The numbers on this one are a little more favorable and I see it as more stable.

So, long story short, I'm considering incorporating an LLC, and jumping into lanlording and property management. I woud acquire this unit in my community, approach other owners of rentals in the community and try to land them as clients. Being involved in the community, on the HOA board, and living here, my hope is that I can market myself as someone that has an obvious incentive to see the community do well. Also, having someone local to manage affairs seems like it would be a selling point in general.

My goal is to retain my day-job and try to build this property management/rental business on the side, with a distinct focus on the community that I live in. I'd like to think I could get to where I have 10 or so PM clients, and own 3-4 units here myself. To get there, I'll have to unload the SF we have out of state and just walk away from the loss - it will still free up a chunk of cash. My interest is in doing something along the lines of 60% PM, 30% rentals, and investing 10% into other ventures (either branching into adjacent areas, or trying out other types of investing like flipping).

Thoughts?