Getting Started - Seeking Advice! (Indianapolis)

[Jeremy Brower]

I've been lurking here for the past couple of months off and on as my desire to get into REI just keeps getting larger and larger. I finally took the plunge and signed up this morning and wanted to run my base plan by some of you guys to get as much input as possible from those who have "been there, done that" before.

First off, my current situation is as follows:

I am 34yrs old and own a 9yr old tract built home here in Indianapolis 3BR + Game Room 2.5BA 2-Story, that appraises for $130K with a monthly payment of $965 including P&I, MI, Homeowners, HOA Fees with just under 21yrs left on the FHA mortgage at 5.75% - approximately $107k left on the loan. I'm currently talking to a lender about doing a re-fi on this home to obviously take advantage of the much lower rates. I was close to pulling the trigger last fall but was looking for another .75% on the rate and we've been riding that roller coaster since. I'm ready to lock in this week or next though. This same size home rents out for $1150 - $1250 in my area. My re-fi would put me back to a 30yr again, but take my payment to $755 including everything. If I maintain the same monthly payment as what I have now with the extra going to P&I then the loan would be paid off in 15yrs time, with the additional $250 - $300 / mo being banked for property upkeep when it becomes a rental.

The only other debt I have is a few thousand dollars on a credit card and my auto loan with about $15k left on it. I have right at $10k saved that I'm looking to invest into a small SFH for a rental within 15 minutes or so from where I live. I'm looking for something in the $30k - $40k range, giving me a few dollars left over for any minor rehab work that needs done to get it tenant ready with a 20% down payment on the home.

My re-fi on my current home is going to stay FHA since I can do that Streamline and get the best rate out of it which locks me into living in that home for another year. During that time I plan on saving as much as possible for a down payment on a new home to move into in the same area of the city, and turn my current home into a rental as well, gaining that one organically into my portfolio.

From that point my plan would be to get the principle paid down on both of the rentals as much as possible and possibly do a cash out re-fi on one of them for a down payment on a 3rd rental 4-5 years from now.

I would like to get as much input and advice from everyone here that has started as small as what I am and what you think about my plan relative to my given financial situation.