My plan

[Dan H.]

Hi, I am Dan and live in Miami. I worked in commercial real estate for corp clients about 6 years back but no longer touch the industry. I now work in shipping/logistics company, which can be demanding time wise but pays me all right. Im a year out of B-School and I will have my personal balance sheet set and my only late on my credit report drops off in june 2013. Around the time I will have 1.5 years (rounds to 2) at the company and and a modest corporate bonus for the year. All signs point to next july as the ideal time to bump my credit score from low to high 700s and get a loan to dip my toe into living the dream, but there are factors that could accelerate the process too.

My plan is to buy, as an FHA loan toting owner occupier, a multifamily unit that would cash flow when I move out as a way of starting to leverage up. I would also like to be able to afford the mortgage with minimal pain in a worst case scenario. I am reading the way to do this now is REOs. I would buy and hold, but would entertain selling out to a developer or turning a duplex into multigenerational housing if that segment gets going. I have certain neighborhoods in mind that check the "urban infill", "path of development", and"where I would actually live till the neighborhood gets redeveloped" boxes. I like the idea of a lottery ticket that pays for you to wait for it to hit.

I was thinking 4plex and a management company at first, to get as much OPP working for me off the bat. I would not let on that I owned the property.

Then I though of getting insurance and self-managing a duplex being another possibility that might be a good experience managing one other unit attached to the one I live in. Or I could get a mgt company in this scenario too.

I would spend the year the FHA needs you to intend to stay in the property using my limited handyman skills and contracting other repairs and build cash in excess of capital/vacancy reserves to get into other deals.

So, this is the short vague version of my business plan. I think its pretty conservative way to dip my toe in from a cash flow perspective and the valuations that are implied when I say Id like to pay P+I close to what I could rent for in a nice 1br condo are low.

Basically does this sound reasonable? Any opinions on starting by OOing in a duplex vs fourplex? OOing in general? Is it better to tell tennants that you are the owner or hide behind the mgt company?

TIA and thanks for all the great info you guys have on this site!