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Updated over 10 years ago on . Most recent reply

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Kyle Fritz
  • Engineer
  • Tucson, AZ
0
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12
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First REI purchase strategy (feedback needed)

Kyle Fritz
  • Engineer
  • Tucson, AZ
Posted

Very soon I will be beginning the process of purchasing my first REI property.

Important back-story information:
I have a full time job as an engineer and currently work in Colorado. I will be purchasing this property in Tucson, AZ. My company pays for my rental car, gas, food, and lodging for the 8 more months that I will be working in CO; they only do this so long as I (at least on paper), LIVE more than 50 miles from where I work. They fly me home (to Tucson) once a month for a few days. I have been trying to figure out how to go about buying my first rental property while living out of state, and properly ensuring it is managed and cash-flow positive. I would like to buy property in Tucson to start, so that in 8 months, when I am back there, I can be near it. One more important tidbit: when I DO move back from CO, I will be staying in hotels with a 2+ hour drive from Tucson, and will only be in Tucson Friday evenings - Sunday evenings.
Done with back-story....on to my questions:

I have been studying and saving money for about 8 months now. Here is my current plan (with some follow up questions I need help with):

I will go get pre-approved for an FHA loan, and begin looking for a Multi-family property (preferably 4, but possibly 3 units). I will have to occupy one of these units as per the FHA requirements (and conveniently meeting my companies requirements as well, stated earlier). I have enough money saved for roughly 3 - 4 times the needed down payment for an FHA loan (assuming a $150,000-ish property).
I would essentially be the "property manager" of the tenants, however, for obvious reasons, I would not be able to respond to emergency maintenance, and I doubt tenants would appreciate their plumbing in need of repair for weeks at a time. For this reason, I am considering hiring a close friend to be my "roommate", free of charge, so long as they will handle all maintenance and upkeep needed for the property (I have some friends I trust that this should sound appealing too), I would reimburse for all materials bought for repairs (so long as they called me for anything over $50).

After this first property, I would continue to save money from my current job at the same rate, and put most profits from the multi-family unit away in preparation for a new REI property.

So there is my general plan for my first purchase. My questions that I need some help with are as follows:

1) At what point should I introduce a RE attorney into the equation?
2) Hiring a friend can be messy. Would they technically "work" for me or not since they are not making profit? Would I need a contract with them? What sort of contract would this take the form of, and is there a name for a peer-to-peer agreement contract, or something similar?
3) Would you recommend I search for HUD homes, pre-foreclosure homes, or MLS homes? Keep in mind I do not have the luxury of spending days driving around to learn the market (unfortunately everyone recommends this, so I will have to be extra careful with online research instead)

Thank you for taking the time to read this lengthy post. If you have a better idea that I may not have thought of, please feel free to share it!

Most Popular Reply

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Brandon L.
  • Real Estate Agent
  • Falls Church
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Brandon L.
  • Real Estate Agent
  • Falls Church
Replied

After reading the initial post. I agree with @Mike T. , Invest some time in educating yourself, and building relationships. I would not look to a stranger to plan my investment strategy for me. 

The best advice I can offer is to browse the forums, there is so much information here that it would take a lifetime to get through. Find any topics related to the Tucson area, and read, read, read. 

 @Kyle Fritz I am at the same stage in my investment journey as your are, I am looking for my first 4 plex in the tucson area. Send me a private message, maybe we can meet up and compare notes sometime.

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