help me spend my money wisely - Posted by Mike

Posted by jeff on June 20, 2004 at 06:58:29:

I would use the 18K to purchase 2 properties. Try to get a 10% down mortgage, they are around. With CC and 10% down on a 70K property you should be able to get 2. The key is to purchase below market. Say you get 10% below appraised value, now with 10% down you are at 80% LTV. You clean up and rent the place out, after a year you get a HELOC on the rentals and purchase more properties. After 5 or 6 years you should be able to amass 10 or more rentals. Depending on how much time and effort you put into it. Some people have purchased 10 in one year, not me I did 4 in a year and was pulling my hair out, so. If your goal is to buy and hold. I like SFH over multifamily because I feel they are easier to landlord, they go up in value faster, and less overall upkeep. There are creative ways to purchase, without spending your cash, but… That could limit the properties you can purchase(good areas, below market, little work), also it is harder to purchase below market if you need help from the seller, and those deals are not as easy to put togather. You should also address your debt to income ratio, because after you purchase properties it will get worse. Most lenders allow 75% or so of your rent as income so your cash flow needs to be high. If you own a home you could use a HELOC to purchase property, and get rid of other debt. good luck

help me spend my money wisely - Posted by Mike

Posted by Mike on June 19, 2004 at 21:24:08:

Here’s my situation,
I have $18,000 in the bank. I want to start investing in real estate/property management, and be full time in 5 years. I have excellent credit but high debt to income ratio. I am qualified for a no doc loan thru century21 mortgage, but only for 80%, only up to a duplex. I can buy a property up to my $18,000 down payment.
However, I do not want to limit myself to one property. Please tell me the best way to get the most for my money, in other words, purchase as many properties as possible.
I have found several potential properties in the 60-75,000 range.

Please respond
I am in Little Rock AR area.

Thanks, Mike

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Re: help me spend my money wisely - Posted by Mark Emerson

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Re: help me spend my money wisely - Posted by Gavin Wilkinson

Posted by Gavin Wilkinson on June 20, 2004 at 10:17:59:

Do you have other resources that you did not tell us about?

You need at least 5,000 per unit in reserves. Otherwise what will you do if the furnace quits, or the sewer line breaks and needs to be replaced or the tenant trashes the house and disappears or any one of a thousand or more things that can happen and will happen to you.

If you do not have a reserve, or a way to borrow the money lined up and guarenteed, when it happens you will not be able to fix the problem, and your tenant will leave. Then you have a payment with no income and soon a foreclosure with loss of everything you invested.

A reserve is a must.