I am looking for the guys who live and breathe this business with ACTUAL notches on their belts, rather than just completing the latest and greatest seminar (no offense, as I am a rookie too) to evaluate my proposed real estate strategy I'd like to begin implementing this week.

A little background information: I'm 22 years old, a recent college graduate in Accounting and am currently employed at a CPA firm here in town (about to begin studying for the CPA exam...pray for me). I live on the Mississippi Gulf Coast and have always had a passion for real estate (I get it from my grandpa I believe).

Anyway, here is a rough game plan for how I want to build my business. I'm focusing strictly on cashflowing rentals for long term appreciation and basically buy and hold (I need them to be strong cashflow performers so I can actually follow through with the 'hold' part of "buy and hold"). This is truly a "get rich slowly" strategy and I'm OK with that.

ACQUISITION:

I've just formed my LLC and am opening a business account to stick EVERY extra dollar in I have each month. I'm on a strict budget (I'm an accountant, remember?) and am trying to sack away as much cash as possible to buy a cheap first property with cash in the next year or two. In this area, you lower end working class rentals can be had for $45k-100k roughly and depending on the area will pull between $500-1100/month in rent.

As I'm saving up money for my first deal, I am getting maps of the area and basically zoning it out by price ranges and also by market rental rates (when I can find that). I'm trying to get a good cross-section of the market I'm working with and also a feel for the areas of the coast that are more likely to contain properties closest to the 50% 2% rule. While I'm saving up the money, I figure its prime time to get to really know my market and I'm going to commit time daily to get to know everything about my market I can. I feel this is critical for landlords rather than buying and praying you're in a good area.

Fast forward to a year or two and I've got money to buy a property cash, or nearly cash. I buy the property, get it rented through my system I am creating (more on that later), and have good cashflow (from both the 50% 2% rule AND no debt servicing requirements). I take the cashflow from this property (after setting aside roughly 50% in a seperate account for an 'emergecy expense fund, i.e. new roof, etc' + continue my contributions to the business account monthly. Now with a larger monthly contribution than originally done, I should be able to stack up money faster to acquire a second property with cash, or nearly cash in about another year or 2. Repeat the process, snowball both property cashflow + personal contribution and should be able to buy a property in a year or two again. Basically I want to keep snowballing the cashflow to buy property cash like this and not personally draw anything off the LLC until way later in life when I get tired of being a CPA. I figure by age 45 if I've been diligent I should have a nice cashflow situation and built in equity from appreciation. After about 10 years of this I should be buying properties 2 or 3x a year. All along I will have never sold a property (unless certain circumstances make it a very good deal) and will have a large net worth in my real estate portfolio and a strong cash flow position. I feel I will have mitigated risk as much as possible in this game.

TENANT PLACEMENT:

I am going through all of Bigger Pockets and finding everything I can about effective Tenant Placement and am going to try to build a system that works for me. I will have tenants understanding that if they don't play by my rules, they are out. They are not my friend, they are a customer. (I'm not heartless, I'm just not going to waste time and money on a deadbeat, I will stick to this philosophy within reason.)

Once I've got enough properties to make management a full time job, I'm outsourcing to a property manager and will focus my efforts on managing my property manager.

EXPENSES:

Mentioned earlier, I realize that on average 50% of collected rents go to expenses along the life of the properties so I will set 50% aside diligently in the LLC's savings emergency fund to kick Murphy out of the business.

MY LOGIC:

I am risk adverse. I've seen way too many landlords not treat this as a business and buy too high, negative cashflow (in hopes of appreciation??), have a bump in the road personally (and can't pay the negative cashflow!) and ultimately file BK. I'm not buying these to "live" on in the short term, so I really want the ensure that I can hold these for the long term while also building up funds to acquire more and more properties and ultimately be a huge property snowball for me. I'm a huge believer in systems and systemizing things to be as efficient as possible and will do this as much as possible.

Don't tell me that I need to keep a mortgage on a property for the tax deduction...NEXT...you pay out 10,000 to the bank to save 3,000 from Uncle Sam. If your CPA tells you to take out a loan for the tax deduction, GET A NEW CPA WHO CAN DO MATH.

Anyway, where are my flaws? I'm looking to move on this soon. Thanks! Sorry for the long post!

Daniel J. Payne

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