New Real Estate Investor from Oxford, MS.

[Stephen Adams]

Hey, I'm incredibly new to real estate investing (as of this past summer) and I'm starting out in though not limited to Oxford, MS.
I am a subscriber to the BiggerPockets Real Estate Podcast and the BiggerPockets Business Podcast. 

I have read the following from the BiggerPockets catalog:

• The Book on Rental Property Investing by Brandon Turner.
• How to Invest In Real Estate by Joshua Dorkin and Brandon Turner.
• The Book on Estimating Rehab Costs by J. Scott.
• The Book on No Money Down by Brandon Turner.
• Buy, Rehab, Rent, Refinance, Repeat by David Greene
• The Book On Flipping Houses by J. Scott.

My Personal Goal

My initial fairly long-term-ish goal is to generate a $60k/year annual cash flow from my property portfolio. With a Cash-on-Cash-ROI estimate of at least 15%, I would need to invest at least $400,000 which if leveraged with a 20% down payment collectively across all properties would amount to $2 million dollars worth of property (this excludes other costs such as rehab and holding costs).

$60,000/year would translate to $5000/month. I've seen many people mention that they try to achieve at least $200/month per unit of cash flow on leveraged properties and at least $500/month per unit of cash flow on all-cash properties.

This would amount to at least 25x or 10x properties respectively. 

Would this mean 25x $80,000 properties?

I would prefer to use the BRRRR method if possible to snowball the growth of my portfolio, however waiting to accumulate enough money for the first all-cash purchase would require a long amount of time before actually starting. This could be a good thing, allowing me enough time to fully understand the market and filter possible deals without acting simply on impulse, however it could also result in missing out on possible deals due to the inability to act. I've entertained the idea of going an alternative funding route such as private lending and partnerships however it seems like both would heavily handicap the effectiveness of the BRRRR strategy. I could go the more traditional route and use a HELOC or equity-backed commercial loan backed by my primary residence's equity to get the ball rolling but it would only fund the down payment and I'm focusing on off-market properties that I could force appreciate and also which banks would be hesitant about loaning conventionally on.

My location is a little odd. It's a college town in a low cost-of-living state, however the property values are a notorious outlier compared to what you might expect in such a state. It's a small town so the overall inventory is also fairly small and there are many relatively big players with enough capital to make real estate investing in the area incredibly competitive for those starting out with limited capital. It seems like one's best bet is to preempt any property going to market by going straight to a potential lead since most of the bigger investors have their fingers on the pulse of the MLS through their network of realtors and will quickly snatch up any property that could potentially cash flow or constitute as a "cheaper" single-family residence. The only way that I was able to purchase my primary residence before any other real estate investor snatched it up was from walking door-to-door in a desired neighborhood and asking the homeowners directly if they were interested in selling their house.

One positive about the location is that it has many available online public-facing resources that make researching and lead generation a lot more accessible than those that require a subscription or the purchase of documents to do the same. I rather exhaust the possibilities of building my portfolio locally before looking at other possible locations to do so.

I would like to combine a lot of the knowledge from the aforementioned books to aid in building this portfolio, including the tips from David Greene, J.Scott's books on finding deals, understanding and estimating the rehab process and Brandon's help of creatively financing possible deals and managing rental properties. 

About Me

My academic and professional background is that of a Software Developer with a B.S. and M.S. in Computer Science.