I'm a newb! Please critique my plan!

[Scott Dongjin Lee]

Hello everyone! Just joined BP website a couple of days ago, thanks to my friend @Jesse Hodges. Just a short introduction of myself, I am an active duty military member currently serving overseas. I'll be back in the states next summer and my wife and I have been saving up on the side to start our journey in real estate investment when we are back. (We also have two kids, one toddler, one infant). With that being said, I am a complete newb to this world, I am probably going to make many mistakes, but I am here to learn from everyone and get better at real estate investing as time goes by. I've been an active listener of BP podcast and have been reading Brandon's rental property investing (of course I'm going to read multiple times). So Here's my plan as of right now. Please feel free to fill any gaps that you see! 

I was initially sold on the idea of house hacking. Wanted to purchase a duplex or triplex, use other people's money to generate your wealth etc. However, it's been very tough to find any MFH near Colorado Springs (Near AF Academy to Pueblo) or Austin area (Georgetown, Roundrock, Leander). Most MFHs that I've found either need some major work (which I am afraid to jump right in with lack of knowledge in home improvement) or in a neighborhood that I really do not want to mess with at least as a beginner. (Do I really want to deal with tenant eviction when I'm deployed? hm..) 

Then I heard about long-distance real estate investing but the truth is, I can not commit myself to become a full-time real estate investor when I'm in the military. I know Brandon talked about commitment in his podcast but where I am in my military career and the job that I do in the military, I can not shift my primary focus from that to real estate investing 100%. Maybe when I become more knowledgeable in the real estate market later on, I can. 

So I started to look at SFH that I can potentially buy (2 Bds 2 ba that can turn into 3 bds 2ba) or 3bds 2bd that need some small home improvement to add value to the house. With the money that my wife and I saved, I can purchase my first property (250k-300k) with 20% down, make a few improvements and research the area more, then a year later, I can rent it out to another family while I begin to purchase another house with VA loan with zero down potentially. If I did the math correctly, with what my wife and I make, we can cover down on two mortgage payments even if the 1st property becomes vacant for a few months. However, it's not going to make a crazy amount of cash flow in the beginning. After 4-5 years (which is another moving time for military guys) after purchasing the properties, I will determine if I want to sell the house or keep renting out based on the appreciation and amount of equity that we've created over the years + cash flow.

My plan for the first house is doing 15 years fixed conventional loan but for the first couple of years, I was going to double down on the principal to lower the interest cost but the downside to that is we may not have enough saved money on the side to qualify for another conventional loan for the second property so I was going to purchase the second property with zero down VA loan.

So basically, one conventional loan + VA loan or two conventional loans (if this is even possible) to start purchasing SFHs to begin my real estate journey. I believe I can learn a lot from the two properties and study/research more to get ready for my next real estate investment.

If you have cash saved up, how would you start your real estate investment journey? Please let me know what you think of my plan. Thank you for reading!

-Scott-

 

[Dimitri Paspalaris]

Scott, I would do a single deal first before doing a second one to see if you like this investing method. In addition, I recommend a 30 year loan so you have more flexibility when it comes to payments just incase you have a rainy day. I have not house hacked yet, but I am going to for my next deal. Lots of people recommend this for your first deal to learn the foundational information on how to get deals and execute the buying process. I own two properties and I am doing the long distance military investor route so if you have any questions just ask.

-Dimitri