New Investor Seeking Advice

[Mike Welch]

I'm currently 38, have a stable profession in the Bay Area, and am looking to diversify my holdings by acquiring a number of rental properties.

I'm looking to invest around $30K initially and am planning to hold any properties I acquire for the long term (between 20 to 30 years). I'm not looking for a quick payback, but I would like to preserve my capital.

I'm seeking to find distressed properties that are either bank owned, or in a short sales situation. I would like to withhold a bit to fix up the properties and to retain a reserve to pay for repairs, unforeseen expenses, etc.

As I live in Northern California, I cannot afford property in my primary market. I have ties to Arizona where I lived for 10 years, and Indiana, where I have friends and family. I'm okay with being remote from the properties if I can find a good management team.

I currently have a bid in on two short sales owned by IndyMac, and have read with great interest their arrangement with the FDIC. The two properties have been remarkably rehabbed, are near historic areas, and have generated above market rental income. Owner is selling as she as been sick and fell behind.

What advice would you offer to a new investor, looking to slowly and steadily build up a portfolio of rentals? Again, I'm only interested in dealing in cash. I do not want to finance anything. Where should I look for bargains? What should I look out for?

Thank you in advance!