How to reach my goal: Is my goal correct? Beginning buyer

Question

I am a teacher and my wife is an accountant. We live in Kansas. For the last ten years we have been investing in stocks. I would like to diversify into real estate. My wife's grandmother passed away. My wife and I went 50/50 partners with her parents to buy her grandmother's house as an income property. We bought the house for 55,000 made about 3,000 in repairs (all cash). It is currently being rented for 825 a month. The town the rental house is in, $800-$1000 rent a month, usually gets more reliable renters. There are several houses between the 60 and $80,000 dollar range that come up and are close to turn key ready. (My philosophy: Would I live in this house) I know this limits me but I want nice houses with great renters. I am currently 34 about to turn 35, my goal is to buy another house within the next 2 years and have 5 by the time I am 45, 10 by the time I am 55. What I am looking for help on 1) what information about the town do I need to be looking for to know if this is a good goal/ where do I find the info about the town 2) was the first house a good deal to begin with 3) any info/books/articles/advice/ you can give to me would be much appreciated.

If I left any info out that would help, please reply and I will do my best to provide it to you.

Thanks

Jeff Ast

If I left any info out that would help, please reply and I will do my best to provide it to you.

Thanks

Jeff Ast

Ben Relph · Answer

@Jeff Ast

I am an investor in the Wichita, KS area.  You should consider joining the Wichita Real Estate Investors meetup group.  The group typically meets on the first Saturday of the month.  However since the first Saturday of the month of July is Independence Day, the next meeting will be in August.

Glad to find a new investor near by.   Best of Luck.

Joe Moore · Answer

Welcome  to BP.  Also find rei meeting in your local area and start going there and start making some connections.  Good hunting in your investing career.

Jeff Ast · Answer

Thanks Matt I will start reading and listening.

Jeff Ast · Answer

Austin,

Do you usually do a 30 or 15 mortgage when you do a cash out refinance?

Jeff Ast · Answer

Alexander,

Thanks for the help. That is what I am trying to figure out is the numbers. The property we have now the numbers all look good. Is there something I missing or is this something I should be able to replicate and make a good living doing it. Is it really that easy. The only expenses we have is the taxes and insurance. The renter is responsible for all the other bills. That runs us around $120. All cash so no mortgage. So we are clearing around $8,500 a year on $58,000 investment. That puts it close to 15% return. I know we need to plan for unexpected expenses. Most of the big ticket items are done roof, ac, composite deck, siding.

Matt Carpenter · Answer

@Jeff Ast Welcome to BiggerPockets, Jeff!

I would say that the first house was a good deal. If it cost you $58,000 and you are renting it for $825/month, you are looking at about an 11.9% return, which I would say is great.

As for recommendations:

• What Every Real Estate Investor Needs to Know About Cash Flow by Frank Gallinelli
• BP Pocast #120: How to Find, Analyze, and Finance an Incredible Real Estate Deal: http://www.biggerpockets.com/renewsblog/2015/04/30/findanalyzefinance-real-estate/

Austin S. · Answer

Welcome @Jeff Ast! It was almost as if I was reading my own biography with some minor differences. I am the accountant and my wife is (was) a teacher. I am 33 but will be 34 in about a month. I currently have 2 rental properties. I also lived in southwest Kansas for 16 years as a kid. We loved it there.

Your investing market sounds pretty similar to my town and where I have my current rentals. I tend to purchase the cheaper homes though that need a little more work. Buy all cash and repair, get tenants in them and then do a cash-out refinance with a conventional lender to get my cash back.

My market has been consistent with values of housing and rental market but has recently gotten much hotter as we are seeing some effects of an oil boom that is happening about 45 miles west of us. It is really hard to find a good priced home now that will cash flow. I have recently turned my research into real estate secured note investing and want to go that direction in the future.

Happy investing and welcome. You will find tons of information if you read posts, listen to the podcasts and attend their free webinars.

Alexander Felice · Answer

1. if you live in the town you're investing in, you should know a good deal about it. Drive around, look at houses, talk to people at the city if you can, talk to builders, talk to investors. Find deals in town and run the numbers on them, find out what a good deal in your town looks like. analyze 5+ deals per day. When you pull the trigger you don't want to hope it's a good deal you want to KNOW.

2. hard to say without more data. Are you making money on it? what are expenses, cash flows, Cash-on-cash?

3. listen to all the BP podcasts and hang out on the site a bit. At the end of every podcast (and throughout) they will recommend books for you to read. Before you know it you'll have more information than you can possibly use