Out of State Investing with 10-15K - Beginner

[Anirudh Mohan]

Hi everyone,

I am new to Bigger Pockets and I just started my investment journey a month back and I'm very much still in the educational/explorational phase.

I apologize in advance for the lengthy post but I really hope I get some feedback on my goals to see if it is realistic and any changes that you would recommend here. 
I have watched a few bigger pockets podcasts and here are my current short and long term goals and abilities:

1) WHY

SHORT TERM GOAL:

I want to generate 600$ per month in cash flow by end of 2022 in order to :

    (i) Work towards longer term goal of achieving financial freedom   

    (ii)  Work towards medium term goal mentioned below

MEDIUM TERM GOAL:

I want to generate 3000$ per month in cash flow by end of 2025 in order to

   (i)  Work towards getting my rental properties generate the rent that I'm currently paying in Seattle Area 

(ii) Also work towards replacing being in a rental place and instead move to my own home in Seattle ( it is difficult to focus on this right away because of the rental market here as well as the monthly income I can save towards it right now). This amount generate will contribute towards significant down payment towards that property as well as pay a chunk of mortgage for that .

(iii) Work towards Financial Freedom

2)  WHAT

SHORT TERM GOAL

Given my current savings potential, I will achieve my short term goal of generating 600$ cash flow in rental income, by buying 2 100-150K properties in Columbus, Ohio and Tampa, Florida area by end of 2022. I will buy one house at mid year and another one end of the year. My anticipated downpayment for both these properties are $25K combined. Focus will be on targeting areas with higher cash flow but still a reasonable appreciation 

MEDIUM TERM GOAL

I will achieve my medium term goal of generating 3000$ cash flow by 2025, by being able to buy 10 rental properties in $100-200K range in Columbus, Tampa, Dallas, and any future potentially good areas to buy. Hoping for average property cash flow to be around 300$. 

3) HOW?

- Will get feedback from BiggerPockets community towards my goals and market areas

- Speak to real estate agents in Columbus and Tampa right away to identify good areas and properties in the given price range, by end of March 2022

- Watch more Bigger Pocket podcasts on analyzing deals

- Have lender, real estate agent and property manager contacts in Columbus/Tampa area by end of April 2022

- My goal is to start making offers around end of April to buy my first home around June and start making offers around November to buy my second property by end of the year

I need the community's help with the following:

1) Are these realistic goals ? Should I be refactoring any of these to have better focus?

2) Given my target of 100-150K homes, with focus on Cash Flow but a reasonable appreciation over the years, is Columbus and Tampa reasonable markets ( Tampa seems to be out of price range for single family homes, by the looks of it)

3) Do you have any good real estate agent contact in these areas who have worked with investors that I can get in touch with ?

4) Is 10% downpayment reasonable or will most standard loans expect 20% downpayment for investment properties? If it's 20% then I may need to adjust my goals accordingly. 

Any other advise would also be greatly appreciated !

Thanks,

Anirudh Mohan

[Corby Goade]

Quote from @Anirudh Mohan:

Hi everyone,

I am new to Bigger Pockets and I just started my investment journey a month back and I'm very much still in the educational/explorational phase.

I apologize in advance for the lengthy post but I really hope I get some feedback on my goals to see if it is realistic and any changes that you would recommend here. 
I have watched a few bigger pockets podcasts and here are my current short and long term goals and abilities:

1) WHY

SHORT TERM GOAL:

I want to generate 600$ per month in cash flow by end of 2022 in order to :

    (i) Work towards longer term goal of achieving financial freedom   

    (ii)  Work towards medium term goal mentioned below

MEDIUM TERM GOAL:

I want to generate 3000$ per month in cash flow by end of 2025 in order to

   (i)  Work towards getting my rental properties generate the rent that I'm currently paying in Seattle Area 

(ii) Also work towards replacing being in a rental place and instead move to my own home in Seattle ( it is difficult to focus on this right away because of the rental market here as well as the monthly income I can save towards it right now). This amount generate will contribute towards significant down payment towards that property as well as pay a chunk of mortgage for that .

(iii) Work towards Financial Freedom

2)  WHAT

SHORT TERM GOAL

Given my current savings potential, I will achieve my short term goal of generating 600$ cash flow in rental income, by buying 2 100-150K properties in Columbus, Ohio and Tampa, Florida area by end of 2022. I will buy one house at mid year and another one end of the year. My anticipated downpayment for both these properties are $25K combined. Focus will be on targeting areas with higher cash flow but still a reasonable appreciation 

MEDIUM TERM GOAL

I will achieve my medium term goal of generating 3000$ cash flow by 2025, by being able to buy 10 rental properties in $100-200K range in Columbus, Tampa, Dallas, and any future potentially good areas to buy. Hoping for average property cash flow to be around 300$. 

3) HOW?

- Will get feedback from BiggerPockets community towards my goals and market areas

- Speak to real estate agents in Columbus and Tampa right away to identify good areas and properties in the given price range, by end of March 2022

- Watch more Bigger Pocket podcasts on analyzing deals

- Have lender, real estate agent and property manager contacts in Columbus/Tampa area by end of April 2022

- My goal is to start making offers around end of April to buy my first home around June and start making offers around November to buy my second property by end of the year

I need the community's help with the following:

1) Are these realistic goals ? Should I be refactoring any of these to have better focus?

2) Given my target of 100-150K homes, with focus on Cash Flow but a reasonable appreciation over the years, is Columbus and Tampa reasonable markets ( Tampa seems to be out of price range for single family homes, by the looks of it)

3) Do you have any good real estate agent contact in these areas who have worked with investors that I can get in touch with ?

4) Is 10% downpayment reasonable or will most standard loans expect 20% downpayment for investment properties? If it's 20% then I may need to adjust my goals accordingly. 

Any other advise would also be greatly appreciated !

Thanks,

Anirudh Mohan

Welcome! I love the focus and how specific you are about your goals- you are much more organized than I have ever been!

You've asked a lot of questions, and you should, but I want to help you focus on a concept if you want to scale. Making the assumption that since you have $10-15K to start, you aren't a high W2 wage earner. That gives you two options to start:

1. House hack locally with an FHA (MFH) or 5% conventional (SFH)- I know this is tough in Seattle, but it's option #1 and you'll get the best "jump start" by going this route. 

2. Invest in higher cash flow areas like those you've mentioned above- BUT, the challenge is that unless you have the ability to save more down payments quickly, you won't be able to scale in these markets. You'll need to save another $20k or more every time you want to buy a new property. 

People here on BP don't really like hearing it, but if you don't have a ton of cash and want to scale, you need to buy in growing areas that are rapidly appreciating. It's the equity build up that will help you buy more properties- cash flow won't do it. If you find a market with reliable and aggressive appreciation and no rent controls, rents will rise aggressively too- so excellent cash flow will follow and you'll be able to scale and ride the appreciation up as well. 

Best of luck!