Gut Check My Beginner Thinking

[Andrew Baisley]

Hi Everyone, I apologize in advance for the wall of text. I have some ideas on how I want to get started in this business and I was hoping that this might be the right place to get a reality/gut-check.

First, some general background... I have no actual experience with real estate. There. I said it. However, I have done my research.

I have a mentor who is a very active flipper and Section 8 landlord (she is in Florida, while I'm in NYC, though). I've read the guides here on Bigger Pockets, I've listened to all the podcasts, I lurk in the forums, I've done lots of deal analysis using my own Excel sheets and other people's numbers (for practice/fun), I've read the staple books (Kiyosaki, Ferris), and, in a past life, I remodeled homes, so I have good DIY and building experience.

I think I understand the basics on paper.

Beyond that, I'm relatively intelligent and successful in my day job. I'm also patient and have, I think, realistic expectations. I don't put any stock at all in HGTV or this crazy flipping trend happening in pop culture.

My goals:

- Q1 2014: Have my first deal done
- End of 2014: Generate enough deal flow that it makes sense to leave my day job and get out from behind a desk (with the support of my wife, who is totally on board with all this, but likes working at a big company with a stable job!)
- Next several years (5-10 yrs)/long term: Generate $12,000 / month in net positive cash flow

In broad strokes, here's my plan:

- Do my first deal in an area within a 3 hour drive of NYC, maybe the Utica/Albany area or along the I-87 Thruway corridor.
- Do my first deal all cash or nearly all cash, spending $75-90k on a duplex (includes any rehab costs)
- Immediately use the equity in the home to finance another, slightly larger (or nicer) property in the same area
- Rinse and repeat until I've met my goals
- Occasionally flip properties if the opportunity is there (as I have the skills and experience to do much of the work myself), but main strategy is buy, hold and rent

So, a few questions:

- I know there are about a million and one ways this'll go off plan, slightly or entirely, but at a high level, is this a sound strategy? Are my timelines realistic with my resources?
- I've thought of possibly starting with some smaller deals, maybe flipping several mobile homes, to get my feet wet. Logic being, if I totally lose my shirt on a $5-10k deal, it won't be the end of me. Or, possibly flipping some smaller single family homes, to avoid the issues specific to mobile homes (which I know nothing about, having never even stepped foot in a mobile home).
- What would you suggest I do next?
- Does anyone have specific advice about Albany, Utica, Syracuse, Troy, Schenectady or even further southeast, like New Paltz, Poughkeepsie, Newburgh, etc? (I realize that this is a very wide swath - I'd like to pick one of these areas to focus on for all my properties and not, ultimately, spread myself too thin).

I hope that this is the right place to post this. If it's not, please tell me so that I can move it.

And, THANK YOU, in advance for any input. You guys are awesome.

Andrew

[Brandon Turner]

Hey Andrew Baisley great post!

Yes, I think it's a viable strategy. That said, I know it can be tough to "rinse and repeat" too much. So, you buy a duplex for cash and then you go to the bank to get a refi, they will give you 75% or 80% of the value, which if you got an amazing deal or did a rehab on it - you might be able to get all your money out. But after a few (depending on your bank and your income) they will eventually stop you. But still, you could probably get 4 of them this way, each cash-flowing around 200-400 per month hopefully.

So you could probably build up around $1200 per month in passive income which is great - but then you'll hit a wall with financing. That's when partnerships and other creative methods get involved. but you can worry about those later. You can also start, at that point, looking into much bigger properties. (Trading up, as I like to call it.)

Anyways - I think your plan looks good. I think you could probably move faster than you are thinking (2014 is a long ways away! Get moving! )

Also check out, if you haven't yet, my article:

How to Make a Million Dollars in Real Estate: A Step by Step Path

You might enjoy that!