Atlanta part-time investor asking for suggestions

[Leon Lee]

Hi, everyone 

I am a newbie investor with a full-time job. So far I have purchased three investment properties in B- neighborhood as the start. The prices of these properties are in the range of $130K to $160K each and the rent is about $1300. So far, my tenants have been great. Now, I have learned some basics on rental purchase and management and would like to dive a little deeper. So I would like to hear some suggestions from Pros here. :-). 

Basically, I realize that saving up for downpayment and then applying for a loan to get a property around $150K is probably not the best strategy for me to achieve my financial freedom: the cash-on-cash return is not great, which delays the process for next purchase. From BP podcasts, Brandon's BRRRR strategy sounds really good to me, which I think might help me achieve my goal faster. So, I have the following questions:

(1) My full-time job is quite time-demanding (research related), is it possible for me to do BRRRR while doing my full-time job? How many hours do I expect to invest on a flip each day? As I am a newbie, I try to get involved and control the costs as much as possible.

(2) My initial( and possibly naive) plan is to buy a house with $30K in cash, spend another $15k to $20K on rehab, with the targeting APR value to be 80K or above. So that after the rehab, I could refinance and get my money out. Are these numbers realistic? Since I also plan to hold these properties long-term, which neighborhoods in Atlanta will be the best for this strategy? Adair Park seems to be too expensive now. I am looking at Westend, Pittsburgh and nearby neighborhoods, but repeatedly saw comments about avoiding these areas. Any suggestions?

(3) Compared to my first strategy (save up for down, buying properties in B class neighborhood), what are additional risks for my current one (pay cheaper houses in C- or D neighborhoods in cash, flip it and rent it out)? 

I have benefited a lot from BP and really like the discussions here. I apologize for not having a full profile in advance, as I have not told my co-workers about this yet. :-)

Thanks

Lee

[Dan Mahoney]

@Leon Lee  Welcome.  Here are my thoughts on your 3 questions.

1) It's not the total hours that will be the problem, it's the unpredictability.  If your full time job is not flexible (e.g., you have to have your butt in the seat from 9-5, M-F) it will be tough.  If you have the kind of job where you can step out for a couple hours you can make it work.

2) Your numbers are in the ballpark, but you will likely find that if you can buy a house for $30k it will need more than $20k of work.  Also you will need to be able fund the full amount (purchase and rehab) in cash until you refinance.  You could get hard money but then most of the value you create will go to the lender instead of you.  

There are reasons why the different neighborhoods are priced so differently.  Each has its own set of risk/reward trade-offs.  As a first step, visit these neighborhoods, get out of your car, spend some time walking around, and see how you feel.  This will also give you a sense for which blocks are better or worse, which is really important in lower-income areas.  @Dan Mason I think Leon is talking about the Pittsburgh neighborhood in Atlanta, not Pittsburgh, Pennsylvania.

3) In addition to the inherent risks of real estate investing, in lower-income areas of Atlanta you will face increased risk of theft and vandalism (e.g., AC units stolen, pipes and wiring ripped out, window broken, door kicked in), significantly more challenging tenants, and neighbors whose actions reduce your property value (e.g., building code violations, drug activity, squatters, loud music, loitering, littering).