Getting Started with Buy and Hold - Southern Colorado

[AJ Romero]

Hi there,

My husband and I have a pretty good problem to have -- finally have some available cash to invest (50K+). We are just stuck trying to find the best way to reach our goals. We would like to be able to replace my husband's income in 10 years by investing in small cash-flowing units in/around our area. Luckily we do live in an affordable city, however rents seem to be flat from neighborhood to neighborhood and the best returns seem to be in areas that we wouldn't be comfortable purchasing in.

Just looking for some workable ideas so that we can set firm criteria for properties that would allow us to reach our stated goal...Thanks for your help!!

AJ

[Elizabeth Colegrove]

AJ Romero What type of houses are you looking for? My husband and I have been very sucessful using conventional debt leverage to buy our first 4 properties. After 4 it does get tricky.

At 50k (20% down) you can buy 1 house at $250k or 2 houses at $125k. In our areas cheap houses are located in areas that as a single women I am not interested in going in buy myself. On the other hand we have been able to buy nice middle class houses at 90k - $1100 rent a month, $160k at $1350 a month, or $200k at $1650. These houses I listed are newer so need less structural issues.

The $1350 would be about $1175 a month cash flow x 4 houses. That would be $4,700 a month in profit.

These returns are not as high as some command on the blog. On the other hand our tenants are predominately low maintenance and less work. If you bought 4 of these houses and used the current cash flow you could pay off the mortgages much quicker. They would cash flow nicely and have great appreciate if you ever wanted to sell.

Just a different strategy.