Starting in REI
Hello All,
I am new to REI but am looking to get started at a young age. To try and keep the message short I will provide readers with a brief background. I currently own two properties completely( no mortgage or loans) valued around $230k combined. I am looking to buy my next investment property but unsure on how to go about it. I have done a few months of basic research but still have mixed ideas.
Idea 1: get home equity loans say for $160k, and buy a duplex for $160k or less. This way I wont have to apply for a mortgage and will just have to pay back the HEL overtime hopefully at a low interest rate. Of course I will do my research and buy a property that produces positive cash flow. Combing my new homes rent income with my other two properties income, I will pay back my HEL hopefully under 5 years time. Now using my newly established equity in all three properties, I will repeat the process but buy a triplex or fourplex. Use the exact same method and in the future hope to buy an apartment complex.
Idea 2: Pull out the same amount HEL (aprrox. $160k) and put sizable down payments on two duplexes(or 3 or 4) and get traditional mortgages to cover the rest of the homes cost. From my understanding depending on the numbers that leveraging your money this way results in a larger return-on-investment versus paying all "cash".
Idea 3: save up my income from my current 2 properties and go the the traditional route of putting 20%-30% down on a duplex and getting a mortgage on the property.
Like I said I am very new to this but really want to start. If anyone would like to chime in and share any pros or cons on any of my three ideas or if they want to share any success stories using idea 1 or 2 would be awesome! I really appreciate any feedback anyone has to offer and am completely open to suggestions or links for me to read and do more research on. I live in the Colorado, Denver area.
Thanks!!