Looking at First Investment, Any Advice is Appreciated

[Andrew Plotner]

So backstory, I'm in the military and have about 6 more months on station. Don't know if I will be going overseas or not and want to get into real estate. So Jumping in. Have lots of properties lined up to go visit with my real estate agent and gave him the following list to help me find a profitable property.

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Goals: I want to utilize real estate to gradually grow passive income.

Long Term: By the time I am 46 I would like to be generating $10,000 a month (inflation adjusted) and utilize that money to live on so I can do a job that does not feel like work.

Short Term: Each year I would like to compound my profit. Starting with ~$5000 profit the first year in cash flow, and grow that by a minimum of 15% each year with a target of 20% each year.

Strategy: Buy and hold strategy. Buy Single family (SFH), small multifamily properties (MFP)or a mobile home park (MHP) and generate profit through those. I will not be in the area so a management company with a fee of probably 10% is to be expected.If mortgage for 85k is 400 a month then another 800 for management, insurance, taxes, maintenance, etc (determined using 50% rule). then that's 1200 a month, rent would have to be 1600/month to justify a 4800 profit. Having a multifamily property makes the strategy a bit easier since rents for each can be 800 and still generate the 4800 profit cash flow (assuming a 2 units).

Time Frame: I’d like to buy at least one new property every year on average over a 15 year time span starting slow: 2 in the first 5 years, 5 in the first 10 years, then 15 in 15 years.

Market: Mostly hands off, this includes properties which I can utilize 3rd parties to manage/ fix/ etc or I can easily manage myself from a long distance.Mobile home parks with no park owned homes would be an easily managed by self, whereas small multifamily homes are good for management companies. The SFH seems risky but if the deal is right it can work.

Criteria which must be met:

Cash Flow: 5.5% cap rate MINIMUM for SFH or MFP and 10% MINIMUM for MHP.

Max Purchase Amount: 85k (With closing costs factored in) for a Single Family home

200k (with closing costs factored in) for MFH or MHP

Max Rehab Amount: 6% of purchase price.

Max time frame: 6 months until deal closed.

Flexibility: None given my short amount of time left here, If no deals are found here in the gulf-coast then once PCS'd the VA loan will be used to purchase a multi-unit property at the new location if in continental united states and I will live in it while renting out remaining units. If I move overseas then I will continue to utilize mobilehomeparkstore.com looking for a promising deal.

Exit Strategy: Rent to Own is a good exit strategy for single family homes, or if the market suddenly booms and I can make a 20-30% profit on the house that is also a good time to sell. So should the property I have purchased reach 100k then I begin a rent to own, if it reaches 110k then I start looking to sell out right and use the profits made in a 1031-exchange to buy a new deal. "

Does anyone have any advice or tips and tricks to look out for while going through the properties. Things to look out for etc. Your knowledge and wisdom is much appreciated.