Getting started, deciding long term strategy

[David Poynter]

Long story short, I have always wanted to get into RE investing but life got in the way.  I have finally paid off debts and am ready to move forward in this next phase.  I am a physician and plan to work for another 8-12 years or so.  I don't care about cash flow while I'm still working, meaning that I won't pull any money out of my investments for probably 10 years and everything will just get re-invested.  I plan on sticking to single family and possibly small multi-family, but don't have a ton of time to do the work myself and will use a PM.  In the end, my goal is to have cash flow to help fund retirement 10ish years from now.  I plan to put $80k or so per year into this venture.

Some things I am considering 

- since I don't care about cashflow now, am I better off getting 15 year fixed mortgages so that I am paying down principle faster and losing less to interest payments?

- should I focus more on locations I believe are going to have more growth over the next decade even if they don't cash flow much now?

- anything you would do differently in my situation vs someone who is focusing on living off the proceeds immediately?

Thanks in advance
 

[Travis Timmons]

If you need the money 10 years from now and no income now, buy the property you want to own the most 10 years from now rather than the one that looks good on a spreadsheet in year 1. 

I had a chat with an investor friend who is in a similar situation last year - he and his wife both have high paying W2s. He bought a 3 unit in an awesome part of Boston for 1.4M. It bleeds out about $1500/month in the first year. He is converting one of the units to a mid term rental when the inherited lease ends to mitigate some of that loss, but historical estimates and trends point to rent doubling every 15 years and home values coming close to that. 

The total return and future cash flow on that will obliterate cheaper markets. You just have to have the income to hang on through the first 3-5 years. It's not for everyone, but if you are levered 4 to 1 or 5 to 1, you turn a $300k down payment and $15k of losses for a few years into 1-2 million dollars of equity and have a building that does $200k in gross rents 10-12 years from now when you need it. It also gives you the option of cashing in that equity and paying cash for cheaper properties. It's a nervy proposition but the best one if you have the income and stomach for it.