Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 16%
$32.50 /mo
$390 billed annualy
MONTHLY
$39 /mo
billed monthly
7 day free trial. Cancel anytime
Real Estate Deal Analysis & Advice
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 8 years ago on . Most recent reply

User Stats

32
Posts
4
Votes
David Lauka
  • Kalamazoo, MI
4
Votes |
32
Posts

Feedback on my 5 Year Plan

David Lauka
  • Kalamazoo, MI
Posted

Whatsup y'all!

So I'm pretty excited about making a splash in REI and wanted to share my 5 Year plan and hopefully have some of you pro's critique it and provide sound advice. I've got a great realtor, property manager, and portfolio lender lined up and they all think this plan is fairly reasonable for my area. The plan is outlined below pretty simplistically but I am wondering what kind of growing pains I should expect for this plan:

Year 1) Purchase a total of 8 units via SFHs and multi-units.

Year 2) Purchase 16 Units via SFHs and multi-units

Year 3) Purchase 24 units via SFHs and multi-units

Year 4) Purchase 32 units via SFHs and multi-units

Year 5) Purchase 40 units visa SFHs and multi-units

I have around 25 - 30k of my own money to start this operation with roughly 85k of HELOC available to me. My credit is excellent and overall I'm in a pretty sound financial situation to leverage mortgages.

My plan is to targeting properties 80k and under and use the HELOC's for down payment and cash out refi after 6 months. I have discussed this with my lender and she thinks it is a viable approach. For SFH's my lender requires at least a 15% DP and 25% for multi-units. They will cash out 75% of SFH's and 70% of multi-units. I am planning on pumping in around 25k of my own money each year to this plan in case the cash out doesn't cover the spread.

I am targeting a cash flow of around $200/unit.  I'm using the BiggerPockets tool to help with the calculations and assuming 5% vacancy, 5% repairs, $183 capex, and 11% for my property manager.

According to my portfolio lender I should be able to get best rate financing for my first 10 properties by using 5 without an llc and then opening an llc and do 5 more. Once that is used up I may consider bringing in some private lenders for funding the down payments and use ARM's for additional loans.

I mainly want to buy and hold but also want to have properties that will appreciate in value and can sell off every 4-6 years.

I have about 115k in my 401k that my lender says I can use for reserves but was wondering how I can keep up the appropriate debt/income ratio so that I can continue to grow.

I appreciate any feedback to this plan.  If you think it's crap, please let me know before I make my first purchase! :)  

David "Tanner" Lauka

Most Popular Reply

User Stats

638
Posts
652
Votes
Kyle McCorkel
  • Rental Property Investor
  • Hummelstown, PA
652
Votes |
638
Posts
Kyle McCorkel
  • Rental Property Investor
  • Hummelstown, PA
Replied

@David Lauka

LTV = loan to value

The total loans divided by the total value.  Lenders use this to ensure you have skin in the game.

If your DP is $20K, that's 25% of the $80K valued property. So you're starting out with an LTV of 75%.

A cash out refinance wouldn't do anything in this scenario.  A lender will say they will loan you 70% of $80K, which is $56K.  You already have a loan on the property for $60K, which was the original loan from when you purchased the property.

Loading replies...