Long-game strategy for 1st time REI

[Lindsey Andrews]

Hi everyone,

First time investor here. I'm from Virginia and am currently in the middle of closing on a good cash flowing deal in St. Louis, MO.

The only issue is that I am needing more cash up front than originally planned and I'm trying to decide if the deal is worth moving forward with. It needs more reno than expected.

I would love guidance around what my strategy could look like moving forward to continue buying properties if I start off with this property. It ties up most of my liquid cash.

Here is the deal analysis (a 4plex where I'll rent out all units as LTR, with a property manager)

View report

*This link comes directly from our calculators, based on information input by the member who posted.

I'm estimating $20k in reno right now, but I have a feeling it could go up to $30k.

Other factors:

- I went $30k over asking. I haven't gotten the appraisal yet, but I'm concerned it won't appraise for as much as I offered, much less go even higher once I put the extra reno in.

- The sellers are putting in a new HVAC system before closing. The basement was vandalized and they have also agreed to fix/replace the furnaces, parts of the plumbing, and electrical. So, it's a benefit to have a lot of CapEx items starting off new. My agent also thinks I'll have room to negotiate for them to cover closing costs.

- I am planning to fund half of this in cash, and the other half with money from investment accounts. I also have a HELOC on my current home, but I don't really want to use it and pay 9%+ interest unless it's something I know I can pay off fairly quickly. I have more money invested, but I don't want to pull much more out of there.

- Looking ahead, I hope to get this deal cashflowing at $400/month once we get through initial work and have tenants placed. I also can rent out my current place as a MTR, cashflowing anywhere from $1200-$2000/month.

How would you fund this deal and get yourself in a position to be able to scale and buy another property in the next year?

Is there 'too much' to spend on a first deal that could be a detriment to future investing? 

Here's the strategy I have in mind for now: find a BRRRR for the next one that I can house hack and rent out as a MTR. Maybe I can use the HELOC for that and aim to use an FHA and only put around $20k down. Advice?