1 Year in RE Investing

October 1st, 2019 marked our 1 year mark. Real Estate investing has been SLOW. I am still in the mindset change period in large part due to reading RICH DAD, POOR DAD. We have 1 single family home under our belts and currently have a duplex under contract. 

So far.... single family home has cash flowed $1,836. We have that one on a Seller Finance note with 15 year amortization and 5 year balloon. Total gain after mortgage pay down & cash flow minus expenses we made $6,660 for the year. Our game plan is to continue with the seller finance note for the next year or 2 and refinance giving us a much larger cash flow margin!! BOOM. You gotta start somewhere and this baby has been a great one to learn from.

We have a duplex under contract that we are moving into. Going to live in the top unit and rent the bottom unit out. Putting this bad boy on a 20 year mortgage.. We are living in this one for 1 year and then putting a tenant in the top unit so both will be rented out. 

Lessons learned so far for lending on a duplex.. I have seen a lot of people talk about a 5% conventional loan that will get you into a 2-4 unit property. That's what I wanted but according according to the Fannie Mae & Freddie Mac guidelines you have to put 15% down on a seller occupied duplex. 

FHA would have been an option for us but the whole house needs painting on the outside, the bottom unit doesn't have a heat source and the deck needs to be replaced. The guidelines for FHA Loans are more strict on what they will lend on because of the lower required downpayment. 

We bit the bullet and are putting the 15% into the duplex. Because of the downpayment the property will cost us about $300 a month. Once we move out the property will be cash flowing for around $500-$600. 

Time to start saving again!

Once we get another $20,000-$25,000 grand saved, we will start looking for another 2-4 unit that hopefully will be in good shape, at least good enough to use an FHA Loan on. 

Our goal is to buy a property a year for the next 15 years. This would put us around $2.5 million worth of assets under management. Once we hit 15 homes we will probably sell most of them and 1031 the profits into a apartment complex. The reason we are taking a 20 year mortgage on this duplex is because we are eventually going to sell in order to purchase something larger. We want life to be as simple as possible once we reach our goal of 15 total properties. If we bought a larger apartment complex and allowed a property management company to handle the rest it will free us up to travel and live a life of FREEDOM! 

If we stopped after this next home, then in 15 years our net worth would be $350,000 with $2,500 worth of cash flow coming in every month. That's not bad but it doesn't give us the total FREEDOM that we are looking for. Stay tuned and let us know if there is a property that we might be interested in or if you want to partner on a deal! 

God bless & happy investing