Finding my piece of the pie!
So this is my first post here on biggerpockets although I have been occasionally coming here for some time. It is actually my first time blogging ever so here it goes.
I will start off with my current situation and goals so that you readers can have a better perspective of where I am coming from. I am currently enlisted in the U.S. Army and deployed to Afghanistan. Upon returning next summer I will be leaving the Army and going home to Minnesota, to attend college full time and (drumroll please) start investing in real estate! Because of my current location I am obviously limited reading books and the internet instead of jumping into the market.
Now on to my main point. I am here to seek the advice of experts as well as other beginner level investors that might have some insight or opinion on my strategies. I will begin by listing my goal or desired end state to be achieved in 10 years or less. I am trying to be as specific as possible but if I am still vague please feel free to tell me. Next I will be listing two options that I have a desire to pursue. I have also taken the time to reference the origin/inspiration of each idea and to give credit where it is due.
I guess my main question is do I need to start investing with a specific target market in mind, similar to other consumer products? Or can I afford to say “middle class working families” is my target market?
Do I even need to decide on where to specialize before I even begin?
Anyways here it is.
Goal:
Exit rat race within 10 years = $4000 per month in passive income. This is just a modest estimate.
Strategy: Buy and hold properties that have cash flow and will build equity
$4000/month = 40 properties @ $100 cash flow.
Or
$4000/month = 20 properties @ $200 cash flow.
Average of 30 properties over 10 years
= acquire 3 properties every year.
= acquire 1 property every 4 months as a minimum that will average my cash flow @ $150 per month.
I feel this is a good starting goal that I can achieve even working full time. This goal can and probably will change over the years depending on circumstances.
Option 1:
Property type: Manufactured Homes.
Strategy: Buy a MH from a motivated seller at an extreme discount for $3000 or less either with seller financing or all cash. Then market the MH as a lease option for $10000-$15000 with a security deposit of $1000 and set monthly payments that will cover MH park rent and my margins.
Cash flow: $100-$200 per month.
I will be following John Fedro’s plan. Anyone else Mobile home madness fans? MobileHomeInvesting.net
Option 2:
Property type: Single Family/Duplex/Triplex. Distressed/out of date/poorly managed.
Deal: Foreclosure, short sale, REO, motivated seller.
Strategy A: Fix and flip property. Initially limit flip to just cosmetic damage (paint, carpet, smelly, etc…)
Strategy B: Fix and hold to rent/lease. Similar to strategy A except make the property cash flow.
Strategy C: Fix and occupy. Live in property during remodel/renovation for at least 2 years and then sell to avoid capital gains tax. Do a 1099 tax deferred exchange into another property.
Is this option too broad? I do not want to exclude a possibly profitable option by trying to specialize.
For option 2, I am mimicking Brandon Turner’s Marcy street investment. I actually followed him over here from Realestateinyourtwenties.com.
Well that’s enough for now. Please feel free to leave any sort of advice, comments or opinions. I have a thick skin so hit me with your best criticisms and let me know if more information is needed.
Thanks in advance.
-Dan
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