New member 5 year plan.

7 Replies

im 26 and have worked very hard to save up 40k dollars of my own hard earned money.im getting ready to invest in a foreclosure. the target price is 19k. with 30k of renovations needing done. the comp showed home value at 70k.
 

5 year plane.
renovate above home and use rental money and personal money to pay off home within 12mo.
sell  above home
buy two homes for 35k and rent for 600 a month.

Buy my first home valued at 150k (800 month)

take loan for another rental property and pay off ASAP with left over rent from first two rentals(400mo) and rent from newly bought home (600)...=1000 total to home.

30 months later new loan for another 30k home using above income

and so on....

and so on...

Obviously there will be cost that come up and a few set backs but this is the plan I have developed to hopefully one day retire. What do u think?  

@Daniel Miller

Welcome to Biggerpockets family! I am sure other members can provide you a great insight on your plan. Good luck on your new adventure!

I guess what I'm asking is after I renovate and rent for 1 year and pay off house. What would I be better off getting a loan for my first personal home and then leveraging multiple income properties at once?

With a decent credit score and 70k in bank and then a 150k house payment would I be able to leverage other properties? Could I get approved? Or am I better off as a new investor sticking with original plane.

@Daniel Miller

Welcome to Bigger Pockets. It is a good community to network and learn about all aspects of real-estate investing.

so are you guys just trying to get your number of post up or what? Why no advice?

Daniel, Your ability to finance largely depends on your personal income and ratio of debt to income. Most lenders will not include rental income in that ratio until you have tax returns for at least two years showing the income. After taking a look at what that means for you it's a matter of how fast you want to grow. Leveraging with debt can help you grow faster but brings more risk and you have to be comfortable with the level of risk you take on. Personally, I'm leveraging properties to grow faster but paying down the mortgages on a 15 yr time scale versus 30 to reduce the debt quickly. This impacts my current cash flow but works for me. Hope this helps, David
Originally posted by @Daniel Miller :

I guess what I'm asking is after I renovate and rent for 1 year and pay off house. What would I be better off getting a loan for my first personal home and then leveraging multiple income properties at once?

With a decent credit score and 70k in bank and then a 150k house payment would I be able to leverage other properties? Could I get approved? Or am I better off as a new investor sticking with original plane.

 LOL - trying to get their post counts up! LOVE IT!

First question. Leverage is a good method of accumulating wealth. Some wealth teachers say pay off the mortgage, others say don't and leverage your assets - get loans. Californians say we can't and don't ever expect to pay off our mortgages. Leveraging multiple income streams to build more income streams is a great plan.

 Second/Third questions. Not exactly sure what you're asking on the second. Could you get approved? I say buy the first one and get that going, save up money if you can while you reno it, keep your credit in great shape, and talk to a mortgage person, or several, as soon as possible to see how you can do what you want to do. They can give you pointers on what you'll need to qualify for more loans. 

Join your local REIA and meet people who have done what you're aspiring to do and ask how they did it. And of course BP is the best resource!

Do you stick to the original plan (pay off ASAP, sell, buy) or leverage out? I've heard of both and both have worked for different people. I think you have time to figure that out. While you are working on the first property, learn as much as you can and develop your strategy and modify as you learn or as things change.

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