All Forum Posts by: Gary L.

I like your strategy, Sri L.!

I guess I wasn't clear.  I would pay off the 300K from my employment income, not from cash flow.  My income is good so I should be able to pay off the 300K in 3-5 years.  

Hi Andy. I don't see how you can make the 1% rule work in a market like San Diego. Even if you were to get a bargain at say 500K (the average SFH in San Diego is 650K), the 1% rule would require you to get $5,000 per month in rent. No one is going to pay that kind of rent unless your 500K house is on the beach!

I still have children at home who love our primary residence so I'm not interested into moving them into a multi-family property just for an investment.  So it looks like I'm stuck with a big down payment to get positive cash flow on the new rental property.

My goal is cash flow for retirement (I'm 60 years old) so ROI isn't as important to me. Instead of leaving money in my retirement account (SEP), I am going to use some of it to buy positive cash flow property. Here is my plan:

--use 300K of retirement plan along with 300K from interest only HELOC to purchase and renovate a fixer in one of the suburbs of San Diego where prices are lower (a 3bdr/3ba will still be 500-550K).

--rent out the property and use the NOI to pay the HELOC interest payment.

--Continue working for another 10 years, paying off the 300K on the HELOC as quickly as possible, and then buy another property, and start all over, possibly purchasing future properties out of state where 300K would suffice to make a positive cash flow.

--I would prefer my first property to be in San Diego so I can eventually gift it to one of my two children.

--What do you think?

I'm just starting out buying rental properties but live in a very expensive market (San Diego). The average SFH is approximately 650K. How do you purchase cash flow positive rental properties in an expensive market without putting down a huge down payment?