New investor, does my strategy make sense?

[Andrew Curro]

Hi BP,

I'm a new investor in Albany, NY. Hoping to get some feedback on my strategy.

My plan is to save for one year (45K) to cover DP (5%), closing costs (12K), and emergency fund (6K); buy a fourplex in a class B neighborhood; rent and hold long-term. I am looking to owner occupy and therefore put down a 5% DP (allows $400K - $500K property comfortably).

I want the property to cashflow $12,000+ / year. This number was calculated using the following parameters:

1. All 4 units collect rent (as if I were NOT living there)

2. 5% down payment

3. 50% rule for expenses

The cashflow would then be combined with my W2 income that has been allocated to RE to help cover DP/closing costs/emergency on the next fourplex purchase a year later. Does this strategy make sense/do my numbers work in the capital region?

[Joe Villeneuve]

You will find trouble if you continue to use that 50% rule.  It isn't a rule, it's a guess...and incredibly inaccurate.  Every market is different, and using that rule implies that it isn't different.  Learn how to analyze using actual numbers with $$$ in front.