New, Part-Time Investor in Spokane, WA

[Kevin Graham]

Hello, BiggerPockets Community!

After weeks of combing through this site and becoming absolutely amazed with the insights and knowledge that you all have to offer, I figured now would be a great time to write one of these. 

I am a 24-year-old aspiring investor in a relatively small market (the entirety of Spokane County has less than 500,000 residents). After reading a book written by another investor in my area, titles "Living At Zero", I decided that I would be doing everything I possibly could to generate enough passive income per month via rental properties to exceed my expenses. I currently work as a production manager at an advertising agency, and I will soon be a 25% partner of the firm. I also write music for TV/film/video and generate a modest supplementary income from that, but I want to have a cash flow to fall back on/fund bigger and bigger deals. 

My rough plan in a nutshell:

- Save as much of my active income as possible for a down payment on a multi-family unit. I am currently able to save roughly $12k - $15k per year, and my plan is to have around $30k-$35k in capital to get my first deal off the ground. I am planning on hitting this mark within the next two years. I own my home and have equity in it, and I have a few emergency credit cards, but I don't want to tap into any of this just yet. 

- As I'm saving my capital, I will use every resource I can find to further educate myself on all aspects of buy-an estate investing. I will do everything I can to get a sense of what my local market is like, and try to network to form relationships with lenders, property managers, lawyers, real estate agents, other investors, etc. I figure there's no sense in me even saving up for this if I won't be educated enough to find and execute the right deal.

- Based on calculations of about 50 multi family units in my area, and assuming the market continues its current rate of growth and Cap Rate, I believe that I can purchase a property (most likely a duplex) with the aforementioned capital that will cash flow around $400 - $500 per month after PITI, expenses, property management, vacancy, and maintenance/CAPEX.

- Use this new rental income, along with the same active income I've been saving all along, to purchase property #2 within a year of the first. 

- Repeat until I have 5-7 properties and my cash flow reaches approximately $3000 per month (which is about what I take home from my active income).

- I'm still working on my plan after this point. Right now, the thought of having $3000 per month in passive income seems like a dream come true to me, but I also know that in the grand scheme of investing and to many members on here, that's pocket change. Maybe I'll use this cushion to focus more time on real estate investing, maybe I'll try to 1031 a few properties for larger properties, or maybe I'll be content with what I've got. 

- I also think that the combination of cash flow, tax shelter, loan amortization, and general appreciation is a far better long-term hedge against inflation than the stock market, and is a viable retirement plan. 


So there it is. I hope that you will look at this, shoot holes in it, and tell me why it won't work and what I should really be doing. Is it ridiculous to wait two years just to raise the capital for one deal? Should i be looking to partner, or use the equity in my home to get started quicker? I have done enough homework to get to this point, but I'd be naive to think that I couldn't use some pointers and guidance from those much more experienced. 

Also, if there's anyone else on here in the eastern Washington area, I'd love to connect with you as well. 

Thanks in advance for your time, everyone! Your insight on this site is truly amazing. 

- Kevin Graham