30k starting out. Critique my plan?

[William Houstian]

I have a full time job but I want to build a rental portfolio and become a cash flowing Real Estate Investor as quickly as reasonably possible. Currently I am renting an apartment until September of 2018. My plan now is to owner-occupy a house that I will buy at that time to get the benefit of not having to put down 20%. Then in a year I will repeat this, move to the new place, and rent out the old. This allows me to buy more properties as I will not need 20% down each time and will be buying them owner-occupied. The downside of this though is that I will only be able to acquire properties at the rate of one per year. I want to build my rental portfolio faster than that. The other options I see are to buy cheaper houses on which I can afford a 20% down payment, or to flip houses and use those profits as down payments on rentals. Once I own the first property I will be able to take out HELOC to potentially do this but I just want to know if this all makes sense and what options exist I may not be considering. Thanks. A lot of my plan centers around the fact that you need 20% down if you are not owner occupying. Are there ways around this?

[Jack P.]

@William Houstian, 

There are a lot of ways around the 20-25% rule if you involve partners, private money lenders, hard money, etc., but I wouldn't recommend starting out that way.  It's difficult to get your foot in the door because of inexperience, and you would assume a lot more risk.

As for your plan, remember that the lending programs that require less that 15-20% down also have a number of limitations. For FHA loans, you can only purchase a second property with FHA backing if your move is due to employment changes, etc. That is, you can't keep the same job and buy 3 houses with FHA loans in the same area.

If you want to make money fast, do a flip...or several.  However, those take up much more of your time and require much more work and risk to make money.

I would recommend looking at purchasing a multi-family fourplex to gain some experience and take advantage of the benefits of being an owner-occupier.  That, and take some time to set up your long-term real estate plan.