Starting RE investing with multi-family units? My plan.

[Tyson Bumgarner]

For starters, I have zero RE investing experience. I am not interested in owning SFH. Is it's reasonable to believe I could be successful starting off with multi-family units?

Here is my plan (keep in mind my 0 experience):
Purchase a duplex and pay it down using my pay and the tenants rent. Once paid off, purchase a second duplex, again using my pay, tenants rent and cash flow from first unit to pay it down. Rinse and repeat until I have 4 units. Sell all four and purchase a 12+ apartment complex.

Just for a little background of my financials so you know what I'm working with.
0 debts
6k saved, will save at least 30k before I start any of this.
I'm active Army and I will not be getting out, so basically I will have around 1,500-2,000 a month to put towards whatever loan I have.

I think that’s a pretty basic overview of how I want things to pan out. Granted I know very little, so please be brutally honest in your replies. I need the info.

-Tyson

[Joel Owens]

700 times 4 is 2,800 monthly times 12 is 33,600 a year gross rents.

Back out 30% at least operating and expense,10% vacancy,10 % management.

You are now at 16,800 NOI before debt service so on a 10 cap rate going in purchase would be 168,000.Not far off from the list price if there are no hidden surprises and the location is good (not a war zone) If it's a war zone the CAP needs to be much higher to offset the risk.

You need to look at immediate repairs to the property that have been deferred maintenance.So if you find it needs a new roof,carpet in one unit,2 new water heaters,etc. and that cost is 15,000 you would deduct from the 168,000 to pay no more than 153,000 going in.

Very basic analysis.6,000 you have is not much at all.You really need to grow this faster.

Problem with leveraging and waiting is we are in one of the best buying cycles ever.If you wait to leverage up then you might buy at the peak of the market and your debt service will hurt you when the market cycles down again after so many years.It ALWAYS cycles. Smart investors buy as much as they can in the down market to limit risk.Once the news channels pick up everything is doing good with the economy the herd mentality will drive up pricing to levels that does not justify purchasing at those numbers.