Seeking First Investment Property to Start Build Generational Wealth

[Pari Z.]

Hi there!

My partner and I are looking to create a portfolio of long term rental properties to create freedom and independence from our W2 jobs, and create a foundation for generational wealth. Having a toddler now has fueled and accelerated or desire to make some actual moves towards this goal. 

My partner's profession is not linked to real estate, but he is sharp as a tack when it comes to finance and financial analysis. And for over 10 years, I have been in multifamily affordable housing development, and I am very familiar with asset management, property management, construction, and tax credit financing.

We own a primary residence and plan to stay here (house hacking is not for us), and have been saving scrupulously for the down payment of our first investment property, ideally a 2-4 unit multifamily. 

Because of my professional experience, we'd prefer that our properties be nearby so we can self-manage and save the 5-8% typical of property management fees, at least until our portfolio grows. But given our high cost city and sky rocketing interest rates, early and simple analysis of any property has so far resulted in negative cash flow. 

My main goal is to understand what types of loan products are available, and we are now more open to analyzing out of state purchases.

We are eager to make our first purchase within the next 3-6 months. The mid term goal is for me to replace my W2 salary within 2 years, and shift full time to the management and expansion of our own portfolio, with the goal of replacing my partner's W2 salary within 1-2 years after that, so that he can join me. 

We have a toddler, and hope to have another kid soon, so between that and our full time jobs, life is chaos lol. But we have never felt more strongly that this is the path for us to "reduce the noise" and be in better control of our collective futures. We are both self-made, and while the goal feels daunting, we know we have it in us to hit it.

Long story short - I love my job, but I'm done making money for other people!

[Matthew Kwan]

HI Pari,

There are several ways to run and make sure you are maximizing your rental income while keeping your living expense as low as possible. Try looking into zillow/Redfin and see what your potential rents you can get near the neighborhood by filtering the bedrooms/bathrooms of the intentional property that you are planning to buy. This will allow you give a reference point on how much potential rent you can receive. (Max vacated rents - your monthly mortgage payment) = +/- net cashflow.

On the other hand, you could also look into multifamily units where you can live one of the unit and rent out the other vacant units with as little as 5% down payment. The main hurdle that many of our borrowers face are the income aspect of it, especially expensive markets like the West coast. However, it allows you to use the vacant rents of 75% market rent as an alternative income to help the borrower to qualify.

Happy to connect and assist you in your real estate investing journey. @Albert Bui @Carlos Valencia