New Investor Looking to Learn! Ann Arbor / Southeast Michigan

[Jonathan Hawley]

Hi all, Jonathan from Ann Arbor, MI here!

I've been around the BP and REI communities before but have never jumped in. Safe to say, I think I've matured enough that I'm ready to drink the Kool-Aid. :)

I've always been pretty frugal and invested heavily, especially for my age. So far, that's been entirely through paper assets in my 401k and IRAs. These assets have treated me pretty well in the short time that I've had them, but I find myself looking for something a little bit more active. I don't want to buy myself a second job, but I am drawn to the idea of owning assets where I can improve the performance by putting in extra time/effort.

Goal:

I'm going to make $2,000 monthly cash flow in real estate by the time I turn 30 in mid-2026 (4 years). 

Strategy:

Learn as much as possible, and quickly. I much rather getting started and learning by doing, so I'm going to try and focus my learning/research on problems that I'm currently experiencing or working through on my RE journey (as opposed to reading every book and watching every YouTube video before starting).

Raising down payments will likely be the determining factor in how quickly I am able to scale, but that is probably a good thing because it will give me time to devote more time to fewer properties in the beginning. As long as I'm continuing to gain experience and learn, the waiting period while building the next down payment won't be wasted.

Given that down payments will be a limiter, the BRRRR method seems very appealing to me. However, it also requires MANY skills that I don't have experience with (yet). I'm planning my first few purchases to develop the skills I would need to execute a successful BRRRR.

Action Plan:

1. Stay engaged in the RE and BP communities to network and learn. Asking a question on the BP forums every week seems like a good goal to shoot for to stay engaged and learning about topics that I'm currently facing in my RE journey.

2. Find and purchase a SFH with positive cash flow by ~June this year. I'd like this to be as close to turnkey as possible so I can focus on deal analysis, market analysis, the mortgage process, and learning how to work with a PM company.

3. Find and purchase a second SFH with positive cash flow by the end of 2022. I'd like this one to have some rehab work to it, but nothing huge. Enough for me to get practice estimating rehab costs, working with contractors, and perhaps even learning to do some basic rehab myself.

4. The process of flipping houses feels much riskier to me than buying cash flow rentals. While following the above steps, I'll be networking in local RE communities. Hopefully I'll find a mentor to teach me flipping wisdom in exchange for free/cheap renovation labor on weekends. 

5. Flip or BRRRR a house of my own, depending on the opportunities available and whether a flip or BRRRR makes more sense for those specific opportunities. The main goal here is to get some experience managing a larger renovation and keeping tight timelines to minimize holding costs. If I can complete a successful renovation of my own by the end of 2023, I'd be completely happy with that.

6. BRRRR all the way to $2,000 monthly cash flow. If everything else went according to plan (I'm sure it won't), I'd have 2-2.5 years left to build up my portfolio from the 2-3 cash flowing properties I already own.

Sounds straightforward on paper, I'm sure it will be anything but. :)

Thanks for reading!