Newbie Getting Started in Peoria, Illinois - Our Plan so Far...

[Odille Remmert]

Hi :)

We've been loving listening to the BP podcasts, and we SO appreciate all the resources here and how much we're learning!

We live in Peoria, Illinois, and we recently (and completely unexpectedly) inherited some rental property in the UK - two sets of five self-contained apartments, and two houses. 

Due to illness in the family, and a few other factors, we are selling one set of flats, and one of the houses. The set of flats has now sold and is in conveyancy stage, and we've just accepted an offer, this morning, on the house. 

After paying off the mortgages (they were interest-only mortgages, so we need to pay the full amount), fees, taxes, etc. we should clear around £91,000. 

We will send £21,000 to cover our brother's medical treatment, and put £20,000 into an account in England for a year's income (combined with the rent from the other house), for my sister. 

Then, the remaining £50,000 we will bring over to the US to start a rental portfolio here.

Depending on transfer fees, we should end up with about $55,000 to $60,000

Our Plan So Far (based on what we've learned so far from BP) - this is what we're thinking of doing, and would appreciated any advice, input, suggestions, etc. :)

It is just my husband and I, we're in our mid-50's and have another business (self-employed) that is just over two-years-old.

1. We will put $20,000 into a savings account (6 months of expenses) - for "back-up" and use the rest for deposits/costs etc. on one or two properties to get started. 

2. We are currently renting, and our plan is to start with one of the following options (depending on what deals we find that work)... 

a) Buy a small multi-family and house-hack, then buy the next property, and then move forward from there, with the aim of establishing a strong foundation of income and equity and able to eventually move into a single-family of our own once we're ready. 

or

b) Buy two single-family properties - one to live in,and one to rent out... and then move forward from there, buying the next one ... and so on.

or

c) Buy a 4-bed single-family that lends itself to house-hacking, move into that, and then start to buy small multi-family properties from there. 

Our future goal is to build multi-family properties that are small communities (rather than just housing) - with a focus on building happy, healthy, supportive communities that span all ages (we have lots of ideas for these, but I'm sure those will change and adjust as we learn more and get more experience :) ).

We've teamed up with a local realtor, who seems great - we're very happy working with him so far - and we've been also looking on realtor.com and Zillow.

I've run 52 properties through the Bigger Pockets rental calculator so far, and have narrowed down to view, so far:

3 Duplexes 

4 Single-Family (two 3-beds and two 4-beds)

Thoughts, Advice, Input, and Opinions:

I would REALLY appreciate any input or advice on the above, and on the following (we haven't looked at the properties yet - we start viewing tomorrow - so these figures are approximate, and subject, of course, to any extra things we discover when we view them :) )...

2-PLEX - 2-Bed per unit
We can't live in this one because it already has tenants under lease, therefore the mortgage would be about 4% (I'm guessing?) - and we would need to buy another property to live in.
Asking Price: 159,900
Highest we can go (for the figures to work) - $138,000 
Monthly cash flow: $273.10
Cash on Cash ROI: 10.37%

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2-PLEX - a 2-Bed and a 3-Bed
We can live in, therefore mortgage should be 3.5% (?)
Asking Price: $149,900
What would work best for us: $127,000
Monthly cash flow: $333.10
Cash on Cash ROI: 11.97%
Asking Price would give us:
C/F: $250
ROI: 7.93% (I know Brandon likes a 12% ROI, but if it's an improving area, perhaps it's worth dropping that...?)
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2-PLEX - 2-Bed per unit
We can live in, therefore mortgage 3.5% (?)
Asking Price: $165,000
Highest we can go (to get the figures below) $120,000
C/F: $301
ROI: 12.07%

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SF - 3-Bed (we would get this one and another - one to live in, and one to rent out)
We can live in, therefore mortgage 3.5% (?)
Asking Price: $112,000
Highest we can go: $100,000
C/F: $102.60
ROI: 5.35 (exception because improving area...?)

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SF - 3-Bed (we would get this one and another single-family - one to live in and one to rent out)
We can live in, therefore mortgage 3.5% (?)
Asking Price: $89,900
Highest we can pay: $86,000
C/F: $215.52
ROI: 10.26%

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SF - 4-Bed
Can live in and house-hack therefore mortgage 3.5% (?)
Asking Price: $129,900
Highest we can go: $119,000
but would be better at: $115,000
Rent: $1,700
Needs about $20,000 work (This is as guess so far because we haven't seen it yet)

C/F: $318.80 (at $115,000) or $304 (at $119,000)

Cash on Cash ROI: 8.32% (at $115,000) or 7.81% (at $119,000) (Is this too low to do the deal, even though the cash-flow is good...?)

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SF - 4-Bed
Can live in and house-hack therefore mortgage 3.5% (?)
Asking Price: $128,900
We could pay that but would be better if go down to:
$118,900
Rent: $1,700
Needs about $7,000 repairs (This is as guess so far because we haven't seen it yet).

C/F: $402.79 (at $118,900) or $366.86 (at $128,900)

Cash on Cash ROI: 14.31% (at $118,900) or 13.85% (at $128,900)

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All input, feedback, and advice would be appreciated. :)

Thanks v much in advance.