New to Real Estate: My Plan So Far

[Chris Roush]

I would like to officially come out of the weeds as a BP lurker and say hello to the investor community! I have been listening to the BP podcast for months, as well as absorbing as much audio book content around BRRRR as I can find. I no longer listen to music in my car or on walks. On the treadmill, I get sucked into the Youtube channels for BP, Clayton Morris, as well as a few local investors here in Kansas City. I have even attended a few local meetups on the topic and will be joining the local investor club here in KC (MAREI)

TL;DR - I'm hooked, I'm pumped, I'm....terrified!

It is time for me to take action. I have setup a budget which provides me with $1000+/mo in investable cash. I have cash reserves of $10,000+, I am sitting on a HELOC worth $25,000 at a zero-balance, I have my deal funnel coming through in the form of an MLS portal, I'm chatting with my local hard money lenders to get an idea of how placing quick offers works. I'm looking to get pre-qualified for conventional loans with my local banks (still in process). I feel like I'm setup to begin my journey.

Here's my current plan, and I am open to suggestions on improving it:

I want to:

1. Invest in single-family properties
2. Aim for 10%-12% cash-on-cash returns
3. Learn how to properly rehab properties and estimate costs without breaking the budget
4. Reach 10-15 properties. My goal is 1-2 properties per year at a linear rate, but I would be happy if I could figure out how to compound that acquisition rate.

I like the strategy of buying properties with a HELOC, paying the HELOC down with investable cash, as well as cash flow from the rentals, opening a second HELOC on the rental, and repeating. I want to blend this strategy with BRRRR.

Does it make sense to buy turnkey properties, or properties that require $5000 or less in repairs using a HELOC? My thought is to use this strategy as my slow play to attain higher cash flowing properties at a slower acquisition rate, while keeping an eye out for BRRRR deals that can be done with hard money and low/no money down. Even if the cash-on-cash return is lower for my first deal, I feel like it would be a nice confidence boost since I still have to tackle other tasks like properly setting up my business entity and dealing with taxes. I don't want to ignore the fact that BRRRR is probably the best way to break out of a linear growth pattern. Not to mention the flipping skills can be used for multiple strategies and fast cash when done right.

I look forward to chatting with the community, and am very excited (and scared) to start!