I am in an extremely lucky position financially and I want to leverage that to change my career up to something that doesn't involve a 9-5 (6,7) daily grind. We have significant amounts of capital (in excess of 2M) so I don't need to worry about income in the immediate future, but I want to use the fact that I can tolerate financial risk to invest in rental properties.
Here is my intent:
1) Try and find something with a few units in a nearby town that we can get positive cashflow going, assuming some parameters for expected occupancy and catastrophic repairs.
2) Treat a 20% down payment as the initial investment (+any renovations needed), with the return being rent net of mortgage, taxes, insurance, and incidental expenses. My day job would become about keeping these N units occupied, plus any sort of maintenance like trash, landscaping, repairs that don't require a licensed tradesman, etc.
3) Once we can document that the income from the property is covering the mortgage, repeat step 1 and purchase a new property.
The end goal would be to treat the net rent plus the equity from the mortgage payment each month as the ROI on the down payment. Buying one property at a time would allow us to get acquainted to the ins and outs of being a landlord and know what our breaking point would be for hiring full time property managers. Mortgaging the properties lets us keep most of our current wealth invested and minimizes the risk of catastrophic failure. I am not going to bank on appreciation either, especially since I intend to hold the properties very long term – it would be a nice bonus when my kids inherit the properties but not something I think is wise to base rental investments on.
My understanding is that the biggest obstacles to success most people face (outside of selecting and marketing the right properties) is lacking the capital to purchase properties, and trying to juggle the on-call nature of being the landlord with their day job. I am not trying to treat this as a get-rich-quick property flipping scheme and we would be in it for the long haul as an outright career change – at least until it makes financial sense to hire out a manager.
Does this overall plan make a lick of sense, or am I missing something painfully obvious?
EDIT: For additional context I would be buying property in MA. I am an able-bodied and pretty handy guy in my late 20s, with a background in software engineering so I'd like to think I'd be pretty good at the logistical side of things.
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