First house with 15k? Suggestions

[David L.]

I have about 15k + 5k. 15k down + 5k reserves. However, if I choose to go no reserves, I can put 20k down. 

I've read a few threads about reserve amounts and it seems most people are comfortable with 6 months PITI. 5k should cover that for the house prices I'm looking at (100k give or take). I also have decent credit line and a small 401k should I need it.

My investment strategy: 

- I want to use the 15k or 20k as seed money to put down on a home out of state (CA is not an option) and do a buy-and-hold strategy on a low risk house. 

- This house will act as a non-liquid savings account for my kid. So when they're older, tenants will have paid off the house passively. 

- Ideally A or B+ areas with appreciation

- Home price range 80k-150k. Looking for the highest price point while still being cash flow positive. 

- House hacking/flips/BRRRR where I have to physically move out-of-state and live in the property is not an option. Mainly looking at finished homes that are passive.

Does anyone else employ this slow and modest strategy? Scaling can always come later, but for now 1 house is the goal. 

Example:

If the house is worth 100k and is cash flow positive on a 30yr mortgage, my kid will have a 100k to invest/pay for college/buy a home, etc. Any money the house generates will be used to pay it down or invested as part of the property.

I don't need the cash right now so maximizing cashflow isn't an priority BUT I still need the house to cash flow positive is because its important that the house passively can pay for itself when it comes to cap ex, vacancies, repairs. 

Questions:

1) What areas would you suggest that fulfill these requirements? (80k-150k home, A/B neighborhood, cash flow positive with 15k down, decent outlook for appreciation)

I've looked at Parma Cleveland and West Cleveland. No appreciation but seems like 100k+ gets you an A neighborhood. 75k even. 

Fort Worth is slightly more expensive at around 150k+ but relatively safe, low risk and appreciation is strong. But property taxes really kill any margins I would have. 

2) Is 15k enough to be cash flow positive at this price point? Maybe I'm not doing the math right but setting aside 10% for property management, 5% for vacancies, and other for cap ex.... it looks like it might be possible. Using a mortgage calculator.. 15k down on 100k is about $565/mo on 30 years. 50% rule puts rent at $1100 to cover expenses, to be cash flow positive. 

I'd be interested in seeing what areas are consistently getting these rents and will for the foreseeable future.

I'd also like to hear if it's not feasible with 15k? I guess anything is feasible should you go low enough on home prices but I want to remain in the non-war zone areas.

[David L.]

Originally posted by @Jaron Walling:

"- Ideally A or B+ areas with appreciation

- Home price range 80k-150k. Looking for the highest price point while still being cash flow positive."

This may be the biggest challenge for your strategy. I live in a market your probably looking at. Properties like this are comparable to a needle in a haystack. I'd focus less on the numbers and more on building a team that helps OOS investors like yourself. They can show you how to use a metal detector. 

@Jared Walling
IN and Atlanta, GA was also on my radar although I haven't done too much research yet. From what I read, IN can vary wildly from block to block. 

Having a team that can help find the deals would also be a way to go rather than using MLS or retail prices. What do you suggest? Finding a realtor first?

I want to avoid using random turnkey distributors as a lot of times they make properties look good when they shouldn't. I also don't want to waste a realtors time until I know I have enough funds to cover what I am looking for. But then again, I won't know until I ask and confirm