Hi everyone, just joined the community here. Looking to get started in real estate investing asap. Began the process last month and have been analyzing deals and even put in an offer today. Still, I'm not entirely confident in my vision/direction.
Context on myself - I live in Metro Detroit, graduated college 2 years ago and have been working as an engineer. Work is close to my hometown, so I was able to move back home with my parents and have saved a huge chunk of my salary the last 2 years. In addition to making pretty decent money, I've recently added a side career in the digital media space, so it's time to put the income & savings to use. Also, in addition to these two jobs, I'll be starting my MBA (company-funded) next month. I say all of this to paint the following picture:
- I have very little free time, so I plan to hire a property manager.
- I have $90k cash in hand. As a result, I'd prefer to not do anything creative like home hacking or leverage private lending.
- With that 90k, I plan to buy 1-2 SFH long-term rental properties, and a home for myself and move out.
My question is very open ended, what would your strategy be if you were in this situation?
Currently, this is my vision: I am looking at single-family houses in the $90k-120k range. I hope to buy two of them at that price point with 20% down and try to cash flow as much as possible, without being too risky with vacancy rates (aka, avoiding inner-city Detroit). I'm looking at houses that don't require too much work, as I don't have the time or skillset to refurb them. Plus, I believe it has to be in pretty decent shape to get a traditional mortgage approved on them anyway. On the flip side, I am hoping the home isn't totally maxed out and I can go in and replace the carpet with vinyl flooring and change out the kitchen cabinets and counter tops. This way, I can do little stuff to add value instead of buying a recent flip someone else is maximizing profit on, but also not doing a full refurb either. A nice middle ground, I think. With my own house (that I'd live in), I'd like that to be about 250-270k. I've come around on only putting 5% down even if I have the cash to do 20%, as real estate experts seem to say "just buy another rental instead of lowering your own mortgage a little. You can only do that 5% option on your primary residence, so take advantage of it." Hopefully you all agree? If not, I'd happily go back to my previous, traditionally-rigid mentality of paying the "usual" 20% since I have it lol
Anyway, that's my current line of thinking. However, so far, I haven't been finding great cashflow margins on the rental property numbers I'm running, and that's what has led me to make this post. Do I have the wrong idea about diversifying and getting two cheap rentals, and maybe should instead be looking at one medium rental? Am I being stupid when I'm saying "I saved money, so I'm going to ignore alternative, creative options like private lenders & the BRRRR method" and missing out on the more profitable avenue that way? Can I go with the BRRR method without needing to dip my toe in the priiate lending sector? Should I not be avoiding lower-rated communities and am overexaggerating the vacancy/tenant quality element? ...Or is my vision not flawed at all, and it's just hard to find high cashflow opportunities in the current market?
I know the YouTube videos all talk about "how to buy your first rental if you're broke" and have creative, bold advice on how to leverage other people's money. There isn't so much about the nitty gritty of which traditional "boring" option to go with if you have decent money.
I definitely wouldn't say that I have analysis paralysis, but I do want to fine-tune my exact vision and then commit to offering on everything that meets my subsequent buying criteria. Really, really appreciate any insight, and I apologize for the lengthy post. Just wanted to cover all the variables and factors instead of saying "I'm new, tell me where to start. Go!"
