Looking for Realistic information

[Melissa Lapinski]

Hi everyone. I am so happy to have this site available. I have already received so much information. Thanks to everyone!

I am not under any illusions that I am going to be rich. I am really looking for financial stability. I understand that this is going to take a lot of time and work and I am ready for that.

My first question is a realistic ball park estimate of how much money I should have in my pocket for my first investment. I know this is all going to depend on the property, etc. I am just wondering if there's some sort of way to figure out how much I should have. Maybe a calculation or percentage of property price or something?

I am also having a bit of a hard time trying to make my first business plan. I know you are supposed to have short term goals and long term goals among many other things. I want to make sure my goals are realistic, and motivating at the same time so I really don't know where to start. Does anyone have a rough draft of your first business plan and information on how it worked out for you?

I know these questions are very vague and I apologize for that. I am truly a beginner :)

[Kelly N.]

Hi Melissa,

What is your strategy? We're into buy and hold and also new, but here's my 2c anyway.

My goal is to have 6 months of PITI (mortgage payment, interest, taxes, and insurance) for each property. We are closing on our second triplex soon, but after maybe 5-6 properties I will probably cut this number down a bit.

My other stipulation is that we have 6 months reserve of our own personal expenses- enough to pay for our PITI, utilities, food, gas and insurance for our vehicles. Although highly unlikely, if my husband were to loose his job, we'd have this reserve money to pay the bills for a while til he could find another.

Since I don't think my husband will loose his job and both our properties will be completely vacant at the same time, I am keeping whichever amount is greater as the reserve amount- at the moment our 6 months' expenses are greater, but one more property and I will be increasing the reserve again.

Keep in mind that the banks also like to see a 6 month PITI reserve for future loans on future investments. While they will consider your retirement accounts in this calculation, but I am looking at cashing out our retirement fund as an absolute last resort.

So, it is a matter of what your goals are (make sure you have enough reserve to qualify for a new loan in the future) and what your risk tolerance is. You might read up on Dave Ramsey's 3 to 6 months of expenses, I know that helped me get my head on straight about this topic :) I feel the risk of my husband being jobless are low, but we also have a family to support so my tolerance to risk is pretty low.

Hope that helps,
Kelly