Just starting buy & hold - planning for growth

[Jason Stratman]

My partner and I have recently started looking at Buy & Hold properties.  We currently don't own any properties, but our goal is to build a rental portfolio by acquiring 1 to 2 properties per year.

We have spoke with our realtor, and have our financing lined up, etc, but I want to confirm that the strategy I want to use is viable... We have enough starting capital to cover the down payment and repair costs for only 1 or 2 properties. Since we want to expand our rental portfolio past 1 or 2 properties, we are looking for a properties that we can acquire using the 70% rule (70% ARV minus Repair Cost). Our goal is to refinance these properties within 6 months with a 70% LTV cashout, to pull our initial capital back out and repeat the process, either by buying at a great deal, forced appreciation, or loan pay-down.

What I don't want to happen, at least at the start, is to have all of our capital locked into a single property, even if it cash flows well, because then we can't expand.  Even if a property cash flows at $200/mo, but we need $20,000 in capital to purchase our 2nd property, I don't want to have to wait for 8+ years to do our next deal.

I've been educating myself on the site for the last few months, so I'm fairly certain that my strategy is sound as it is essentially the BRRR strategy... But since we are just starting out I think it just puts me at ease to put it down in my own words and have others that are in the business confirm that we are thinking this through correctly.

Thank you very much for your time and feedback, we greatly appreciate it!

Regards,
Jason

[Tamara Elliott-Deering]

I think your strategy sounds good. Just to make you wrinkle your brow, have you considered looking for a flip property for your second investment instead of a hold? If you can get the kind of deals your talking about for a hold property you should be able to find a flip property that meets the same parameters and that might be a way to boost your cash.

Just a thought. Good luck. Let us know how you're doing.