The Plan rev2

Right now I have a 401K with 30K that took me 10 years to build. Not a very great return on my money I know. With no employer match and the downturn I'm accounting for most the 30K out of my salary. I may be moving jobs soon which would lead me to make a decision on that fund anyway. Long story. I want to use that money, that is currently going nowhere fast, to invest in a long-term-hold property.

Yeah so that above plan was not a smart one. Let's just leave it at that.

If you've read my other post you'll see that I already have an "investment property" that was my primary residence. I actually got some news this week that it's getting tons of looks and we may have a great tenant on the line. Hopefully that will be occupied the first of February. While this rents, my family and I are staying with the in-laws for one year. What living with the in-laws is going to do, is allow me to save a good amount of what I make for one year. After the year is over I should have a good chunk of change to put down on a primary residence and hopefully some left over to finance a rental.

I'm currently living in the Eastern Panhandle area of WV and have been scouring the area due to the low home prices. I've found that 45 minutes away is Hagerstown, MD, which has a ton of small multifamily homes. I think I can get a "turnkey" 4-unit for around 120K. I actually went to see one that was 70k in Hagerstown and was almost traumatized out of real estate all together. It was definitely ran by a slum lord, and one of the tenants was a crazy cat lady with an apartment full of gnats and flies. Not a good start to my voyage but on I march!

I've also been looking at some areas around the Baltimore DC area which is where I'm currently working. I've found some decent opportunities in the Westminster area that could work out numbers wise. If anything, all these "opportunities" will give me experience at analyzing and hunting for deals.

As far a funding, I think my only option right now is to use a FHA or FHA 203K loan to take advantage of the low down payment of 3.5%. The rub would be that my family and I would have to live in a unit for a year until we fulfilled that "owner occupied" requirement of the loan. I'd have to do one hell of a sale job to accomplish that but if the numbers work, and it's in a good neighborhood, then I think we could make it happen. Otherwise, we'll wait out the one year buffer to build capital to invest with.

For systems, I currently have a great property manager that gives me a great rate for also using her as my REA. She's done a great job to get a bunch of bites on our rental that was unfortunately on the market during the holiday. She is also a long time investor herself with multiple active properties. I feel like she will be a great resource going forward.

I pulled Brandon Turner's Investment Calculator from the BP file store and have modified it to meet me needs. I made a Google Doc so I can punch up numbers on the go. Check out the link Here. I'm always moving stuff around so you'll see it change as I go. Feel free to comment as well :). Right now it's all for experience and the fun of running the numbers but I think it'll be a great tool when I get started for real.

Wish me luck!