Newbie from Carlsbad, California

[Stephen Warnock]

Hello BP community!  I have been lurking around the BP site for several months now without properly introducing myself.  I finally decided to formally introduce myself to the Forums.  I am a high school special education teacher in San Marcos, California.  Due to recent life changes and events, I have rekindled my passion for investing.  It all started with "Rich Dad, Poor Dad."  A fire was lit after reading that book...

Since finishing that book, I've spent the last 6 months reading, researching, and studying real estate investing; Now it's time to get into action! I am looking to invest out of State, using the BRRRR and Fix and Flip strategies. I have contacts in the Midwest that make that area quite attractive for me. I have a local California lender who remains a good friend and has been helpful with getting me pre-qualified for traditional lending. In addition, I have established several partners who are ready to join me in deals around the country.

Here are some of my immediate real estate investing goals:

-Buy 2 SFH, or 1 Duplex that yields a total of $400 CF in Hamilton County, Indiana by 12/31/18.

-Complete 2 profitable Fix and Flips in Marion County, Indiana that yields a total of $30k 12/31/18.

-Form an LLC

Here are some of my long term goals (The Why):

-Accumulate $1M in net worth through assets by December 2025.

-Acquire $6K in passive income per month through Rentals, Notes, Lending, etc... by December 2025.

-Have the option to quit my W2 job if desired by December 2025

Thank you for reading through my New Member Introduction.  I look forward to interacting with the BP community more consistently.  The amount of information and resources on this site has been extremely helpful for me and my real estate ventures.  Now let's go make some deals happen!

Stephen 

[Dan H.]

Not to point out the obvious but at $200/month cash flow it will take 30 units to obtain your $6K/month goal and $6K/month ($72k/year) in San Diego is not likely enough to quit your W2 job.  Note that the prices and rent are at their current cost because those locations historically have not appreciated faster than inflation.  This implies the $200/month cash flow in unlikely to ever be worth more than the $200.

I recommend all investors start local but you seem to be adverse to that so I will go with another one of my common assertions: The only Midwest investing that makes sense for most Coastal So Cal/San Fran RE investors is true MF (5+ units).   Otherwise it is a lot of risk and effort for not much upside.

If you decide to proceed with your plan look at the cash flow projections with a lot of prudence. I have seen cash flow projections that do not include any cap expense estimates with various rationale. I have seen turn over estimates that do not match the market. I am not a big fan of many of generic rules but the 50% rule (cost not including mortgage associated costs (PITI) is ~50% of rent) I believe to be semi accurate in low rent locales. I do not find it to be very accurate in high rent areas like coastal So Cal but if my rents were at Midwest rates I would find this rule to be close to accurate. So any cash flow projection that is not close to the 50% rule should be heavily scrutinized. My point is that sellers will make the numbers look enticing; you need to verify all such numbers reflect some semblance of reality.

If you desire me to make a case for investing local PM me.  There are so many reasons why newbies should start their RE investing local.

Finally I question if Midwest RE investing is likely to out produce the historical 10% return of the S&P 500.  I know Midwest RE investing is more work.

Good luck