Path to my third investment

[Chris Schoonhoven]

Hello,

Posting to share where I am on the path towards my REI goals. Appreciate hearing if other members are on a similar path or if anyone has strategies that I might either be missing or which might help me.

My goal is to have RE investments bringing in approximately $8k/month in 15 years time. Currently I have 2 rental properties bringing in about $250/month (all of which is coming from 1 property while the 2nd property is currently breaking even). I'm now looking to make my third turnkey rental property investment and my goal with this acquisition is to find a property that would create enough cash flow to help me save up to be able to purchase my 4th property within the next 12 months. I have $20K saved up and specifically I would like to use that money to purchase a property in the $80- $100K range that would be in what I would consider B-C areas in attractive markets of either the Cleveland OH area or the Memphis TN area. I'd love to find a property that would be near 20% below market value and would be in an area that would be easy to rent and throw off cash flow of around $300/month after all operating expenses and financing.

My plan is to wait to find an attractive turn key property in the range of $80-$100K. Buy at a 10-20% discount, so my purchase price would be $74-90K (20% down payment). Hoping to be making around $250/month with the rental income. This would put me at around $500/month coming in from rentals. So in a years time, this would bring me to $6K from rentals. I'd plan to save up another $10-15K from work to go toward the purchase of property 4 in the next 12 months.

Any ideas or suggestions are welcome!

[Stephen Akindona]

I think you are definitely on the right track with your planning, but finding a turnkey operator who will rehab, rent and mange your property and sell to you with a 20% discount off of market value and offer great cash flow is slightly unrealistic. There is no doubt in my mind that if you can find the deal, rehab, rent and manage for yourself you can achieve these numbers but going turnkey would be very hard. The truth is a lot of turn key operators are selling properties at FMV and some are even selling at a premium!

In most cases, especially considering Memphis you are buying for cash flow and the best strategy here is long term buy and hold so the FMV becomes less of a factor as long as the cash flow is good. Weigh the pros and cons of turnkey and decide if you are willing to sacrifice equity for a more hands off approach!

Let me know if I can help you in any way in the Memphis market.