Feedback Appreciated- Plan to begin in Buffalo

9 Replies

So the rundown is I'm 23 Years Old and looking to be a Buy and Hold Investor until I have enough passive income to pursue Flipping Houses. I am in downtown Buffalo, NY with a 70k job, no debt of any kind, 720 Credit Score, and roughly $12,000 available for initial downpayment and closing costs and am pre-qualified for houses up to $350,000. 

I'm considering a couple of different options, some that could most likely be answered in general, while others pertain only to Buffalo is. 

1. Given that I plan this to be a live-in property in order to utilize an FHA Loan,

A. First of all is an FHA Loan a good idea to start off with for my situation.

B. Bouncing back and forth in between whether I should search for multi-family homes in the $200-350K range (where the rental income works out of course) while I have the opportunity to use only 3.5% down, or to search for homes in the 50-200k range and then move forward from there. My current plan was to use an FHA Loan for a larger property because I'd be able to build up a larger equity and income base and be able to purchase my next property more quickly.

C. In general as to only having roughly $12,000 available at the moment. I have the ability to save between $1500-$2200 a month would it make more sense to wait several months to have a certain amount of cushion available after a D+CL. My contrasting point here is that if I do manage to find a good deal, all but the most expensive homes (320-350k) I would be able to handle the mortgage without finding a single renter. 

Buffalo Specific: 

1. As it's Owner Live-In I'm partial to remain in the Elmwood/Allen/Chippewa neighborhoods, but since I work at Rich Products anyway looking for personal thoughts on areas around the West Side in terms of:

A. I know it's been a pretty high market for the Elmwood/Allen/Chippewa area and whether you would think that there will be any good deals, and any major risk of depreciation. I know can't predict the future etc. or bet on depreciation, but it seems like I'd be buying into a high point in the market which of course is never good. 

B. Anyone with experience owning/renting houses further West than Baynes St. or in the area around D'Youville how difficult is it to find good renters and any thoughts for how the neighborhoods are trending. 

C. Just any neighborhood specific advice for positioning in the area most likely to improve in the next 5 years. Balancing out potential rental income and growth vs. would I be able to live there right now. 

Welcome! Love your ambition and I like the fact that you have a goal and plans. Here's a few things that might help and perhaps put a wrinkle to your strategy.

1) Buy and hold is generally the most successful path (and longer) to creating long term wealth through passive income. But  here's the catch. If you're limited in your own funds and don't have a good nest of people who want to invest in you, if you invest the $12,000 you have now into your first buy and hold, you are probably not going to be able to get much out to put to use since it's generally hard to pull all of your money out. You may be able to buy, rehab, rent, refinance (as the guys on the podcast like to say), but with $12,000 only I'm not sure how far that will go (not trying to burst bubbles, just putting perspective).

2) I currently I have only one buy and hold property and although I got it below market, I still have a significant amount of cash tied up in it. My remaining funds I teamed up with a fellow investor and we're in the process of flipping condos in order to build up enough cash to start putting into Buy and hold rentals. Our plan is to flip four condos a year and buy two rental properties with the profits. I think it will get you where you want quicker.

Best of luck,


Hi David! Welcome to BP and congrats on starting out! I am new myself so take my input with a grain of salt, lol. I think FHA with a multifamily is a great way to start. Your mortgage would be partially (if not all the way) paid for and that will allow you to free up your income from your job to work on other projects. I would, however, suggest that you save up more than the $12k you have if you choose to go with the more more expensive multifamily ($200k+). Since you will be a landlord you'd be responsible for anything that's always best to have a good bit of money in reserves for expenses. Although you'd be able to cover the mortgage with your salary, if a water heater or HVAC unit needs to be replaced two months in, you'd be screwed if you don't have the money to take care of it.

Hope this helps!

Good luck!

I agree with @Phil Bottfeld as well. Here's what I think....

Research heavily and read books, listen to podcasts and network for the next 6 months, while you save your max $2200. That will give you an extra $13,200 to add to your $12k. Then you have over $25k to work with. That should get the attention of a local investor(s) to partner with on some flips. Once you do enough flips you will generate enough capital to buy and hold multiple properties a lot faster than you'd be able to if you tie it up into one deal. 

My personal goal is 30 flips in the next 3 years, and purchase 10 buy and holds in those same 3 years. Then continue that process until I have enough cash flow from the rentals to replace my salary. I'm praying it takes 6 years or less....then I can "retire" in my 30's (even though I'll still be actively investing....just can quit my 9-5).

@Phil Bottfeld  

Thanks for the advice! Some additional context I did have on the plan, for feedback is that my original plan is to slowly build by Buy and Hold in this context. 

1. Buy first investment property using FHA with a larger property due to 3.5% down.

2. I can save roughly $20,000 a year from my job plus looking at properties which would gain me $500+ profit (while keeping reserves etc.) while I live in it, for a total of $26,000 available next year. Once there, there are some good neighborhoods in Buffalo for Cash Flow where I can buy 2 properties in the $80,000 range at 10-20% down payment.  

@Tye Brooks

Thanks, I was also thinking that way for having a greater amount in savings available before taking the leap, but I was mostly thinking in terms of vacancy, because I can afford the mortgages even without tenants. But you're right that I should have a good cushion for any repairs needed.

I really hadn't looked into flipping houses at all, but it seems like the recommended approach to building up a bit more equity. Do you have any advice on beginning to look for more information on flipping and also partners to do so? 

@David Longhini

I think everyone has to do what's best for them. Flipping does require more knowledge and time, so if it's not something you are 100% sold on, I wouldn't do it...but it definitely is a great way to build capital more quickly. So far what I've done is read a bunch of the forums, listen to the podcasts, read books, attend webcasts and network with anyone I can.  I am speaking with local investors and trying to partner on my first few deals.

The Ultimate Beginner's Guide here on BP is good, as well as the Book on Flipping Houses, and Brandon's book on Investing with Low or No Money Down. I've read them all and got some pretty valuable insight. 

If I can help in any way let me know. I'd be happy to share what I've learned or tell you where to go to learn it, lol!

Thanks @Tye Brooks

I originally wasn't completely sold on the idea of flipping houses mostly because I'm not very familiar with working with contractors or the requirements needed. The irony of that, however, is my father is a Plumbing Contractor, and my brother is a member of the Millwright's Union, so would be a good place to start with evaluating properties. 

Additionally, I was under the impression until a webinar yesterday that it would require more cash outlay, but I'll look into partnerships. 

Welcome, David!

You're starting out much like I did, except you have a plan. Just the fact that you're here means you won't make the mistakes I did when I was looking for my first properties.

I am a big fan of Gary Keller's books (HOLD and Millionaire Real Estate Investor are great reads), not to take away from any of the others mentioned already. Read before you start looking or working with a realtor. It's easy to get excited and move faster than you can read. In the mean time, while you save up some more, it's free to cruise zillow,, etc to get a feel for the comps in your target neighborhoods. Zillow is nice because they show what properties actually sold for (the z-estimate is crap; scroll down.), which you can use as a source of rough comparable data.

The savings cushion is critical, but I also buy a home warranty. I've had good luck with American Home Shield. For my home and properties nearby, I selected a higher deductible plan to save a few bucks on the premium, but for a few properties we have that are hours away, we pay a bit more and have a lower deductible since there's no practical option to just go over and fix it ourselves. A major appliance or two replaced by the warranty company will pretty much pay for the coverage and deductible.

Put as much down as you can. More money down means a lower payment every month, which means more cash flow. My first house was purchased for a fair price with a VA loan with nothing down, and it barely cash flows since I moved out. By my third property, 20% down and an aggressive offer results in a property that meets the 1% rule and cash flows $400/month.

Best of luck!