Long Time Listener, First Time Caller in Raleigh, NC

[Jeremy Reid]

Hey folks!

As the title says, I've been around a while browsing the forums, listening to the podcast (as well as about 10 other real estate podcasts), reading books, etc.  Real estate investing has been part of our plan for a few years, but it's taken us some time to get everything in order so that we can pursue it.  Right now our (mine and my wife's) goal is to acquire our first property by the end of 2019. 

I grew up in the triad area of NC before ultimately ending up in Raleigh for engineering school - I'm a mechanical engineer by profession.  Prior to that, I built houses.  I know alot about houses.  I love houses.  What I don't like, anymore, is working on houses.  Mostly because I'm time poor (professional job, side business, 1 kid, 1 on the way).  So that said, my strategy does not include any sort of sweat equity.  I'm ok sacrificing some returns for hiring out anything that takes longer than about 15 minutes, and at this point am pretty much assuming that I'll be using property managers.  

My investing strategy is roughly:

- Acquire single family homes in the 75 -125k range for 20% down (possibly even using something like Roofstock)

- Renovate/update as necessary

- Get quality contractors and PMs to mostly run things

- Investing will be buy and hold for cash flow.  Appreciation is just a side benefit.  Properties must cash flow from day 1

Overall goal is diversification of income, enough to where rental income could potentially replace W2 income in the far future (we aren't looking to quit our day jobs, and for that reason this will need to be mostly passive in nature).  Also general wealth building.  We are heavily invested in tax advantaged retirement accounts as well as taxable.  I could see our portfolio shifting to be 50% or more in real estate, long term.  So in short, the goal for real estate is to create a vehicle for passive income for early "retirement".

As most of you probably know, Raleigh is a tough place to try and invest.  The market here is booming.  For our first property I'd like to keep it within an hour of our location, but ultimately my goal will be investing out of state in better markets - hence the plan to use PMs from day 1.  That takes a certain level of comfort and experience that I don't think I'm at quite yet.

LONG term, I'd like to move into some more interesting investments...commercial, vacation rentals, etc.  But that's a long way away.  Just buy and hold SFRs for now.

We are realistically about 6 months away from making any moves, but I just wanted to give an intro and maybe start some discussions.

I look forward to it!

[Jiri B.]

@Jeremy Reid Good plan! As you said it, this market is tough. There is extremely little inventory in this price range, but yes, if you go out an hour or so, you should be fine. That does not mean you just simply pay less, it will have effect on your entire investment (longer commutes to check on things, lets buyers / renters, more days on market, lower rents, lower appreciation, etc).

You will still need about 30-50k in cash to make this happen (20-25% down, repairs, closing cost and other expenses so keep that in mind.

You also said "cashflow from day 1". Probably not realistic if you do repairs but probably more like few months without any cashflow depending on the amount of work. That will make a dent in your budget so i would make sure to account for that.

Totally agree, quality contracts are the key. But prepare to pay more for those. The more work you leave out to others, the less cashflow you will have. So it might still be tough to get cashflow with those plans.

Overall still solid plan! I would stay, go for it! Don't wait around just go and make it happen!

I have never met an investor who said "I wish i would never started". They all say "I wish I would have started earlier"

Good luck!