Hi bigger pocket members.
I have made it my goal yesterday to buy my first multi family home in or around Lakewood Ohio! I’ve been reading and studying real estate books and pod casts for about 1 year and a half now. I’ve been saving up and trying to hit my other goal of a 20 percent of a down payment for the property. Which should be complete in the next 6 months from now. I’ll put my plan below and I’m more then open to any suggestions or corrections from anyone.
•My wife and I will be looking around Lakewood Ohio for a multi unit property to rent out. Our goal is to save up as much as we can in six months and our down payment at that time should be around $14,000-20,000 dollars. I know 20-25 percent must be put down in order to qualify for a loan that would allow us to buy an investment property. I’ll provide you with the list of the areas we are interested in below.
-Lakewood: 2,3Bd/1Bth rents are ($700-1,000) per unit.
-Eastlake: 2,3Bd/1Bth rents are ($875-995) per unit
-Madison: 2,3Bd/1Bth rents are ($700-1,150) per unit
-Willoughby: 2,3Bd/1Bth rents are ($750-900) per unit
•Here’s the business/investment plan we have in mined. We are looking into putting in plenty of offers for duplex’s/triplexes/quad plex and even 5 until building. Property’s with 2bed and 1 or more bath on each side of the unit would be what we are looking for, but if the property only has 1 room in each unit. There would need to be attic space or something like that, where I could have a contractor add an additional room or 2. The property would need to be in rent ready conditions or at least close to it. I am looking for motivated sellers or a seller who is willing to sell for a lower price.
The strategy that we would like to use is, making offers on property’s at 30 percent off the asking price. The reason for that is to have at least 30 percent Equity in the property as soon as we close on it. Our budget level is $95,000 or lower on the property. After purchasing the property with a 30 percent discount on the asking price.
After about a year of owning the property I would like to refinance the 30 year fix loan, for a 15 year fix. Then pull out my equity of the property except for 25 percent and use some of that money to fix up the current property, but using the rest of the money to buy another multi family property. Then eventually repeat the process until we hit our goal of 5 multi family homes that all cash flow over the mortgage rate.
At that point I’ll pay off as many as possible and then continue the strategy with nicer property’s or Adventure my way to commercial apartment type of properties with six units or more.
•Another part of the strategy, I would implement is to have a property management company set in place, since I live out of state. It would make it easier to manage.
•By any chance would you happen to know of some real estate attorneys that could creat an LLC for me, Loan Officer, property manager, general contractor, home designers that you would recommend in the area?
Anything would help.