Feedback on my 5 Year Plan

[David Lauka]

Whatsup y'all!

So I'm pretty excited about making a splash in REI and wanted to share my 5 Year plan and hopefully have some of you pro's critique it and provide sound advice. I've got a great realtor, property manager, and portfolio lender lined up and they all think this plan is fairly reasonable for my area. The plan is outlined below pretty simplistically but I am wondering what kind of growing pains I should expect for this plan:

Year 1) Purchase a total of 8 units via SFHs and multi-units.

Year 2) Purchase 16 Units via SFHs and multi-units

Year 3) Purchase 24 units via SFHs and multi-units

Year 4) Purchase 32 units via SFHs and multi-units

Year 5) Purchase 40 units visa SFHs and multi-units

I have around 25 - 30k of my own money to start this operation with roughly 85k of HELOC available to me. My credit is excellent and overall I'm in a pretty sound financial situation to leverage mortgages.

My plan is to targeting properties 80k and under and use the HELOC's for down payment and cash out refi after 6 months. I have discussed this with my lender and she thinks it is a viable approach. For SFH's my lender requires at least a 15% DP and 25% for multi-units. They will cash out 75% of SFH's and 70% of multi-units. I am planning on pumping in around 25k of my own money each year to this plan in case the cash out doesn't cover the spread.

I am targeting a cash flow of around $200/unit.  I'm using the BiggerPockets tool to help with the calculations and assuming 5% vacancy, 5% repairs, $183 capex, and 11% for my property manager.

According to my portfolio lender I should be able to get best rate financing for my first 10 properties by using 5 without an llc and then opening an llc and do 5 more. Once that is used up I may consider bringing in some private lenders for funding the down payments and use ARM's for additional loans.

I mainly want to buy and hold but also want to have properties that will appreciate in value and can sell off every 4-6 years.

I have about 115k in my 401k that my lender says I can use for reserves but was wondering how I can keep up the appropriate debt/income ratio so that I can continue to grow.

I appreciate any feedback to this plan.  If you think it's crap, please let me know before I make my first purchase! :)  

David "Tanner" Lauka