Is my first purchase aiming too low?

[Ben Wilkins]

Good morning all,

I am looking to get involved in real estate investment with a friend. We have been doing some research enough to know how to calculate COC and the value of a property. With our current liquid capital available to us, we were planning to purchase a two-unit for $40,000. COC is 31%, so not terrible for the first purchase. This is at 20% downpay using a standard 30-year finance through a local bank.

So our question right now: are we aiming too low? Our longer goal is to retire from our current careers within 10 years and have a sustainable income flow from real estate. To that end, we were planning to purchase a few similar properties over the next five years, then sell and upgrade. Rinse and repeat. This strategy was based on 20% downpays, rolling over income from owned properties and reinvesting, etc.

After reading other posts on here, I'm starting to wonder if our strategy is the best for us. Should we be looking at other options? What is a realistic first purchase, given we don't currently hold a lot of equity?

Thank you all in advance!