Finally, a novice should never do their own title search.

Despite being a two-family for almost 70 years.Initial mortgage loan fell through in underwriting because Fannie/Freddie won't touch anything like that, apparently.Secured a portfolio loan that's actually better rate, but I am hesitant to sign the commitment since I feel like I don't understand all the possible implications.The lender said she approved the loan because in their mind, a SFH might actually be more valuable in that unlikely event so it didn't affect their willingness to take on the debt.I intend to buy and hold for at least 10 years, but I can imagine this issue will affect my ability to sell down the road, since a prospective buyer won't be able to get a conventional FHA loan just like I wasn't able to.This property should cash-flow really well after some rehabbing to the one unit, but I'm realizing this limitation will also make doing any kind of cash-out refi more difficult as well.Curious if this throws up any red flags for you veterans of the REI world that I, a relative novice, am not seeing.

It is a common misconception with novice investors that equity (free and clear) in a property is a good thing.

(I am useless when it comes to any type of home labor besides landscaping) My thought was that I could maximize my profits this way, and all the books I read seemed to provide assurance that I could do it.What I noticed was that my biggest impediment to get started was capital.I was by no means broke, and by most people’s accounts was living an above average quality of life compared to others my age.I however; did not have the savings to put $40,000 down payment on a $200,000 house.I read a lot of different books about creative financing and low money down types of investing.I am by no means saying that these strategies do not work, but they were not for me.Working full time I was very limited in the real estate strategies, and didn’t have the time or handiness to flip houses.Patience and Focus are really tough qualities to acquire especially when you’re motivated to take action.It took me working 3-4 years at a good company straight out of college to save up enough money for the down payment to purchase my first rental property.Throughout those two years I would check my bank account probably no less than 2 times a week keeping track of my savings.I however kept focus on saving and made sure to limit my spending.I am not talking about completely limiting your spending and not having fun or going out to eat.It is important to enjoy yourself and spend some money sometimes or else you will never be able to keep your focus.Patient and Focus actually transformed me from being a complete novice real estate investor into an intermediately knowledgeable real estate investor prior to even buying my first house.Because I had to wait three years I had ample time to evaluate housing deals and find out trends and housing demand in my local market.It’s tough to do these evaluations knowing that you cannot actually makes offers on any of the houses you are doing the analysis on.What I later learned however; is this practice helped me in making a very educated first rental property purchase that has turned into a success.I continue to do market research and deal analysis while I am saving up for the next rental property.For my job I fly out of town Monday through Thursday and work full time so it is possible to manage a property and not be in town all the time.Properties Acquired:I am doing a very simple 30 year fixed rate mortgage with 20% down.These houses are in good neighborhoods and school districts and seem to appreciate or minimally hold good value.I only allow quality tenants and my time management is extremely minimal.For some the returns may seem small, but it’s a nice amount of passive income I am starting to receive in now while slowly increasing my equity.Compared to my 401K returns even with-out considering the appreciation the REI seems to fair well.1st Home: Purchase Price $189,000, Cash-flow: $350/month, Equity $250/month2nd Home (9 months after 1st House): Purchase Price $183,000, Cash-flow: $400/month, Equity $235/month3rd Home (11 months after 2nd House): Purchase Price $180,000, Cash-flow: $450/month, Equity $235/month4th Home (10 months after 3rd House): Purchase Price $197,500, Cash-flow: $350/month, Equity $250/monthFuture Strategy:For now I think I will continue to keep the same very simple model as I don’t have the time for flipping or managing a condo/apartment complex.

Is this a no brainer for a novice investor to add a property like this to his portfolio? 

Once you tell him about your needs, he should be able to tell you 2-3 markets he thinks will be a great fit.After that, you will not need to rely on the novice advice of BP'ers when it comes to insurance.  

Why am I, the novice, thinking this is such a good deal? 

A novice lender is by definition risky, and people with money are generally too smart about money to take that risk.So, you need to partner with someone who has money, and get some experience in lieu of great pay.

I am a novice in the real estate world but I have been studying the subject more and I thought it was time to take a step further and join the BP community!

The more novice investors are worried about losing everything if a tenant or someone gets injured on their rental property.