The Ten Year Plan

[James Grant]

Okay, so I have done quite a bit of research and planning over the last 8 months. I already own a SFR, it was a home I previously lived in and did not sell due to the housing crash and has been a rental property for about 10 years. Sicne leaving the navy I have a ten year plan to generate enough cash flow such that I can start my own business and not have to worry about pulling money out of the business to support myself. Since becoming a memeber though I've read a lot. Here is my plan and I'll list my questions afterwards. Starting in about 9 months I will go after my second rental property. The market I am looking at is dominated by single family homes so that is what I am looking at. I plan to pick up one property a year after that so that by 2026 I could leave my current job wihtout altering my standard of living. These 10 properties would all be SFR, and the area I'm looking at has turnkey properties that are selling for around $120,000.

Questions:

1.  How do I get financed for this number of properties and maintain a debt to income ratio that will continue to solicit lender approvals for these mortgages?

2.  Many people talk about local lenders being easier to work with, has anyone used lenders that are local to them vice local to the property?  If so, how has that worked out?

3.  I understand that risk is a large part of using larger leverage for rental properties.  If I were to use the 20-25% down and leverage the rest I could purchase 2 or more properties a year, and more properties means more cash flow proably.  Are there advantages to putting more down, or is it just reducing the risk involved for that property?

4.  Debt to income ratios should be less than 36%, at least that is what I've read.  I've done some calculations about this to try and see what mine would be over the course of my ten year plan, and at points I reached into the 30-33% range.  How difficult can that make obtaining additional financing?

5.  My wife and I both work.  Is it a good idea to purchase homes seperately to avoid the 10 mortgage rule or should we focus instead on our combines income to reduce the debt to income ratio?

Okay, that is probably good for now, and much longer than I expected.  Thanks for all the help and advice.  BP has been a great resource.

James