Thank you Lane, and thank you Brad.
As far as a business plan goes, I would like to start with single family homes or condominiums. Between my partner and I, we can save around $3,500 a month to go into investing. The plan is to buy one or two properties a year over the next three years and then accelerate from there. The reason for this is we are paying for our MBAs during that time and want to save up for our wedding. The end goal for us is we want to be able to have more flexibility in the future when we have kids in maybe ten years.
We have been learning as much as we can about buying and renting homes and buying our first property in Sterling Heights to live in was our first test. We learned a lot since we didn't use a realtor. The original goal was to buy the condo, then rent that out when we move, but we have since then decided to try to start in the rental business sooner mostly because mortgage rates are great right now.
So far,I think my biggest obstacle is that I feel the need to pay the full 25% down payment in cash, despite all the material I've read about not using your own money to start out. To me that feeling slows down our progress immensely. Have you ever not paid a full down payment in cash for an investment property? If so, how? Can't a private lender allow you to put a lower percentage down? If you've ever used a private lender, what was the experience like? @Brad Ter Beek, do you know any reliable private lenders in Novi, or Novi area?
Another worry we both have is with tenants. How difficult is it to get reliable tenants? How frequent is your turnover for your different types of properties? I'm sure the type of tenants depends on the area, but what are good ways to screen tenants? What is your experience for evicting them? Worst experiences with tenants?
I know I'm not supposed to let feelings or emotions dictate decisions in business, and especially in rentals, but I can't help but be slightly uncomfortable knowing that its up to a single tenant to try to sue me/us for whatever reason. I intend on opening an LLC for every couple of properties to help limit liability, but from what I've read, the courts tend to favor the tenants. I may just have a pessimistic view of people. I'm hoping as we acquire more properties the bad experiences will average out with the good ones.
Finally, what price range is the best to start out with for rentals (from your experience)? I prefer quality over quantity, and I initially wanted to start out with 100k-125k properties. I'm thinking I should rethink that but I'm not entirely sure how I should make that decision. What should I consider when deciding the price range for rental properties?
Thank you,
Morgan
