If we were starting today what would we do?

To say we are currently in unusual times in real estate would be an understatement of gigantic proportions.  However, as a new investor looking to simply plant a few seeds that can be harvested later, your timing couldn’t be better.  If we were new investors just starting out we would do the following and reap enormous rewards in future.

First as a new investor (assuming you can qualify for the loan) you can purchase up to 10 properties fairly easily as FHA supports investors up to 10 loans (4 Loans are very easy, loans 5-10 will take extra time and a lot more rigger but you can get them done). 

Given the 10 loan rule , our first goal would be to buy 10 foreclosed properties in the next 12-18 months.  We would focus on bread and butter houses that support the largest percentage of the rental market.  We would avoid high priced areas of status because we want easy to rent cash flow properties. 

Now keep in mind we would not go out and simply buy the first 10 we saw.  But instead we would look for properties that produce a 20% return on our cash investment after make ready costs.  In addition these houses would likely be purchased at or below 50% of replacement cost.

If you can not buy 10 then just focus on buying what you can comfortably afford (but buy at least 1).  A friend of ours asked us once how many he should buy and we said you need to buy at least one for each of your kids and then two for he and his wife’s retirement.  A simple fact is that at the end of the day, most people are going to be upset they didn’t buy more properties when they were on sale. 

Every property we purchased we would get a 30 year fixed mortgage, we may never see money this cheap again so take advantage of it.  When you do this you are not only getting the house at a steal of a price but you are getting fixed payment terms at a ridiculously low interest rate.  So when, not if inflation takes off you have an income producing asset that will increase in value with fixed mortgage payments (it doesn’t get any better than that).

This would end phase one of our plan.  Buy income producing assets at depressed prices.

Good Investing