New Investor - Cash vs. Leverage for Duplexes (US Market TBD)
Hi everyone! I'm a newbie investor excited to jump into the real estate game. I've been living in Sydney, AU for the past 3 years with my wife, but we'll be moving back to the US within the year. The catch is, her job dictates where we land, so I'm unsure of the exact market yet.
That being said, I have two main goals:
- Get started with my first few deals: Ideally, I'd like to invest locally (whichever US city we end up in). I have family in Fort Wayne, Indiana, and my dad (a construction whiz!) is there to lend a hand.
- Build a strong portfolio: My long-term vision is to own multiple mid to large multifamily buildings. While duplexes seem like a great starting point, I'm also open to considering fourplexes for potential increased return.
Here's my situation:
- Investment capital: $200,000
- Risk tolerance: Moderate (willing to leverage, but strategically)
- Experience: New investor, but I've been devouring BiggerPockets books for the past 2 years!
- Income: Strong and can be used as a safety net if if needed.
My main question is: Cash vs. Leverage for my first duplex (or fourplex)?
On one hand, paying all cash minimizes risk and lets me reinvest profits quickly. On the other hand, leverage could allow me to acquire multiple properties faster.
Considering my circumstances (unknown target market, family support in Fort Wayne, long-term goals), what approach would you recommend?
Additional Information:
- Any advice on navigating a market move with ongoing investments would be greatly appreciated!
- My long-term strategy involves using the "stacking" method for the first 5 years, acquiring multiple duplexes/fourplexes to maximize my return on investment. Eventually, I'd like to utilize a 1031 exchange to trade up into larger multifamily units.
Thanks in advance for your insights!
Dennis
P.S. Feel free to ask any clarifying questions!