First Investment- Am I on the right track?

[Jeff Scully]

Hi all,

New to the forum and getting close to making my first rental investment and I'd like to be sure I'm thinking all of this through properly, so any feedback, tips, advice would be greatly appreciated! 

A little background- Currently living in the Philly Metropolitan Area in a small SFH as my only and primary residence. Until recently, was never remotely close to being in the position to buy a rental property after some terrible financial decisions that I've thankfully reversed due to a career change which has drastically improved my finances.

I am looking to buy a simple 1/1 apartment in South Florida to get started with walking distance to the beach. I've started to do my due diligence and the property's I'm looking at are both available for short term rental using AirBNB, and long term rental with tenants, though I actually prefer long term and would use short term as secondary choice. The part that is causing me to pause, as it is with most, is the down payment. These property's are ranging anywhere from $175-$200K and most are move-in ready aside from small cosmetics. 

Since I already have a mortgage on my SFH and house-hacking is not an option for me, and neither is FHA, (at least I don't think so) it appears that a Conventional Loan is my only option. I DO have capability of putting down 20%, or somewhere in the ball park of $30-40K, but I of course would rather not. As this is my first investment property, I know there are going to be additional cost, with closing cost, first and possible 2-3 months rent with finding tenants, insurance, having additional saved for the property etc.

With all said and done, the likelihood of the initial investment with all cost included will be in the $45k ball park (plus wanting to leave an emergency fund for myself for my SFH), I'll really need to have roughly $60K saved? I can realistically have this in about 4-6 months but the thought of investing that amount of money is stressful. This seems insane to me to invest in such a small property. I see so many post of first time investments that are much larger than what I'm looking at and it's blowing my mind how they are finding the capital without borrowing it which to me, is just too risky. IMO, if I don't have the capital for the down-payment, it's a red flag to me that I shouldn't be investing, or at least in the property(s) being sought after.

I'm well aware of the 1-2% rule and while I plan on following that, the cash flow is not what is appealing to me. I plan to buy and hold and if the opportunity presents itself, use for my personal use with my wife in-between tenants as a vacation property. 

Am I on the right track as far as the numbers go, looking at $35k just for initial down-payment using Conventional? After crunching the numbers, I'm looking at a mortgage in the ballpark of $1250 with a rental income of roughly $1500. Is it possible to use Conventional without putting 20% down? I have pretty low DTI with no CC debt (spouse either), relatively low car payments and and student loans that are capped at a very low monthly rate. Wife is an accountant and is on board with investing.

Any thoughts, advice, feedback would be greatly appreciated!