So I've posted only a couple of times here on BP and I feel like I would get more out of this if I were to just lay it all out there. So here it goes, some things to consider and then I will lay out my questions.
BUSINESS: We opened an LLC to manage our real estate investing and finances. We are mainly only interested in multifamilies to rent as this is the strategy we feel best suits our goals.
FAMILY: My mother owns a real estate company with 20 agents. She gives me a lot of advice and is willing to help as property manager once we get 3 properties (the point I feel I wouldn't be able to do it reasonably well anymore). Her problem is that she is WAY more conservative than I am, resulting in her only having one investment ever and it not being profitable. Almost everyone in my family are very handy including my husband. We completely rehabbed our first home, ripped out the kitchen to the studs and rebuilt it, ended up selling it for $25k profit to move closer to family (don't get excited, this went to paying off other debt). My dad is also a professional floor installer and ex-plumber (does work very cheaply for us), my aunt owns a flooring business (gives us flooring at cost), and a family friend is an electrician (huge discount).
PROPERTY #1: We are closing in 2 weeks on our first duplex (82k purchase price, 25% down, 600/mo profit). We are using retirement funds for the down payment on this house as we felt it was a small price to pay to get started (and my husband has a sweet stock purchasing plan at his work to make up for it). Plus we have no significant amount of liquid cash to start our real estate investing so this was our only option. We are honestly not worried at all about this one. We already have tenants lined up ready to move in and it is basically 'turn key' in our definition (just needs some paint and floors - very easy for us).
PROPETY #2 (hopefully): Hopefully we will also be acquiring another duplex via an auction website. This is a foreclosure at 40k under market value, been on the site over 8 months and my offer has been the highest and best so they let me put in a purchase agreement (should hear by Monday on this one). We will be acquiring this property by a family member putting a lien on it for us against his self directed IRA and I will be paying him interest. Again, we had no additional cash for a down payment to mortgage it. If we do obtain this property, it also needs very little work (only paint and floors). If we were to mortgage it fully (ill get to this), it would bring in a profit of 600/mo.
Some questions:
1. First of all, are we doing this right? LOL. 4 doors in less than 3 months with a total of $1200/mo profit?
2. If we do happen to get the second property, we want to mortgage it right away to pay back my family member and then have enough funds for down payment on a third property (because we would have 40k in equity so borrowing 80% of market value should give us enough for a sizeable down payment). Any issues with this plan?
3. We want to obtain a third property quickly (hence the mortgaging of the second property right away). Are there other ways to go about doing this?
4. We would like to eventually get to the point of being able to purchase an apartment community/building bringing in at least $5k/mo. I've read a strategy where you sell everything to have the down payment needed for a purchase this size but it seems risky and that it would take awhile. Thoughts?
5. We've considered (instead of question 4) instead just acquiring as many properties as possible to rent. However, how do we get the cash to do this? I can't keep coming up with the money for the down payments. How do I keep acquiring properties if I don't have the cash? Seller financing is not very common in my area...
Okay that's enough for now. THANK YOU in advance for your advice :-).
