Theoretical Exercise: What can go wrong?...

[Broderick Graham]

Context:

As a new, bright-eyed, soon-to-be real estate investor in multi-family properties I want to be aggressive in building up a portfolio to where the rental income would allow me to step away from my full-time W2 job within the next few years. I also realize that I don't know what I don't know and that could hurt me. As a result, I want to lay out a scenario I hope to create (let's assume I can create the scenario below) and I am asking feedback on all of the things that could go wrong that I should anticipate/prepare for:

Scenario:

• 5 fourplex properties = 20 units (average $900/month rent) - Looking for cash flow not necessarily appreciation for these properties
• $1.5MM in investment property debt (Average purchase price $300K; Market Value $400K)
• $500,000 equity across properties (Average $100K)
• Loans: Conventional fixed rate or seller financing fixed rate
• Rental Income: $18,000
• Mortgage for all properties monthly: $10,000
• Cash Reserves on hand: $200,000 (separate from the equity in the properties)

Reason for Scenario: My purpose in stepping away from a full-time job would be to start ramping up flips to pay down the mortgages over time. The expectation would be that I can at least do 4 flips a year (average $30K) to cover our living expenses and let the rental income build up the cash reserves month-over-month for vacancy, repairs, capital expenditures, etc.; however it would be a safety net from month to month, if needed.

Request: I want to know any and all of the possible financial or other real estate investing issues that I might come up against that I need to be prepared for that could put me in a precarious financial situation.

So please, unload any and all possible events that would make this scenario something that would put my financial situation at risk.

Thanks for your time!