Initial Game Plan for Starting My Real Estate Investing Journey

[Wendell Butler]

Hello! My name is Wendell, I am 26 years old and I am brand new to BiggerPockets, already love all the support and information in the community.

I just wanted to layout where I am at in my investment journey as well as my initial game plan for really jumping straight into real estate investing. I would love feedback with any insights, constructive criticism, things I should look out for and tips!:

Current Job: Loan Officer Assistant - Currently in courses/classes to obtain my license to become a license Loan Officer. I switched to this job in July 2020 knowing I wanted to invest in real estate. I felt learning everything I can regarding loans, the market I am in and real estate processes was a great opportunity especially during the crazy market right now. Currently make ~$50k salary.

My First investment: I purchased my first investment property (I live in it currently) back in May 2020 for $142k. I purchased this from my sister below the appraisal value of $146k (benefit of no realtors so she gave me a deal), but they also did not take into account the re-done basement and $10k hardwood floors my sister put in because they did a desk appraisal. I already re-did the kitchen for around $7k as well as added new rugs/carpet in the bedrooms and repainted. Condos in the same place as me are selling for upwards of $180-200k and look very similar to what I did with mine. I currently pay $865 mortgage (PITI) and $300 for HOA fees = $1165. I have a roommate I found to live with me that pays me $700 a month and splits electricity/utilities with me.

Game Plan: 

1.) I want to treat my first investment property above as a short term rental/flip. I feel I will be able to sell this condo for around $180-185k depending on the market (even if it drops a little bit from what it is now). I am planning on selling in August 2021 once my roommates lease is up. I would like to come out of selling this property with $30k net. I think that will be possible with the new kitchen, new hardwood floors, basement re-done, touch ups and appreciation. Let me know your thoughts!

2.) I am an Army veteran so I have the amazing VA loan at my disposal (I did not use it on my first property, I used the MA Housing zero money down). As I sell my first property for the hopeful $30k net I will be searching for a duplex to buy immediately with a zero down VA loan. Yes you can get a duplex/tri-plex with a VA loan as long as you plan to live there for a year, which I will. Looking at around $200k-$250k duplex in MA (obviously the cheaper the better). Nothing special, but definitely a move in ready property that I can immediately touch up a little and rent out the other unit to cover my mortgage and create positive cashflow. Break even at the least, best case scenario is get 1.25x the PITI so I totally cancel out my debt-income ratio and it allows me to do my next step. I will also make touch-ups and additions as I live there to increase its value.

3.) With the money I am currently saving as well as the ~$30K Net I get from my Condo sale, I want to immediately look to purchase a single family home investment property. Aiming to have around $50k liquid money for investing. I want to get something around $150k - I will look and get a sale for 15% under market value (I know this is hard, but that is my goal and I will do it - it will allow me to have a cushion and not lose as much money if the market goes down). Once I secure that property I will look to do a lease-to-own agreement. Obviously if I can do a sale-by-owner immediately I will so I can cash in on that 15% discount I got - then repeat the process. Worst case if i cannot get a lease-to-own or sale-by-owner I will short term rent until I find lease-to-own/sale-by-owner. Lease-to-own with this will get my a down payment from the lessee, 15% profit from the initial discount I bought for, create cashflow from the rent, plus I won't have to be their property manager if they want to purchase the house and sign an agreement. Will aim to sell property lease-to-own within 2-3 years (Faster the better).

I want to create a snowball effect of lease-to-own single family homes using that strategy and bring in other investors to work with me. My duplex I'll live in I will look to refinance, move out and rent out both units. Then repeat buying another duplex with the VA loan again to repeat the process.

I know that plan sounds great for me, but obviously a ton of things can go wrong. I am in the Massachusetts market near Worcester/Boston so the prices of homes here are obviously much higher than other parts of the USA. I appreciate any thoughts, insights, tips, things to look out for, just ANTHING! I am very open minded and new to investing, but I feel I have a good game plan. Thank you in advance!!!