New Investor in Dallas, TX - Seeking Advise

[Jay Callerton]

I'm a real estate newbie and would like to see what the community thinks about what would be my first step. I've ready the books, listened to the podcasts and read through the forum. I think I know where I want to begin, but I'd like to see if anyone has any insight. 

I want to start with SFR around $50 in the Dallas market. I'm okay doing some cosmetic fixes to get it up and going. Here's the question:

I have my primary resedence (about 25% equity), and would like to finance the second home as an investment property using conventional loan. In addition, I have about $22K in consumer debt (locked at 0% for awhile). I also have the ability to go further into debt to get the money for the down payment for the second home (and then finance the remaining balance of ~$40K). Where shoud I start? (ie pay off debt first, look for other financing options, etc)

I would love to hear any insight. I'm completely open for suggestions as I maybe completely missing the mark on my 'plans'. 

[Jason Hirko]

Hi @Jay Callerton welcome to BP. I think your plan sounds reasonable, but let me give you one warning. A 'conventional' lender, or really any lender, is not going to want to see that you have borrowed your down payment, and most won't fund a loan as such. My advice would be to save as much as possible until you have the 10k, rather than paying down other debt. Then once you have your first rental, pay down your other debts.

You also mentioned being OK with some cosmetic fixes... you might need to get a lot more comfortable with more than cosmetic fixes in order to really maximize your return. On your $50k house, if you can buy it for $30k, put $10k in it, you can refinance it all day long, take your down payment back out, and do it all over again.