$100K Cash. Should We Buy a Home and Invest w/HELOC, or Rent and Invest Cash?
I'm humbly requesting the help and brilliant expertise which is never in short supply around here.
We're about to be in possession of $100,000 to $138,000 cash from the sale of our home (primary residence). This figure will depend on the final sale price of course and all closing costs, realty fees, doc stamps, prorated taxes etc have been taken into account.
We are planning on leaving Florida and moving to the (much more affordable) Pittsburgh area, where we can just about purchase a new home all cash, or have very little mortgage. We're looking at homes between $120,000 and $170,000. This would be our primary residence.
We also want to begin a fix-and-flip business. I've got a little experience doing this and would like to get back into it. Our original plan was to put all of our cash into our primary residence, have little to no mortgage, and then open a HELOC which we'd use to purchase and rehab distressed properties. My uncle does it this way a few times per year via channels such as HomePath and the good ol' Gold Room at the downtown courthouse.
Now we're wondering if we should consider renting a primary residence in order to more freely invest our cash in distressed properties. My concern with that is that we're looking at a minimum of $1,100 per month in rent for a home with a yard for our husky. If we were to purchase our home with our cash, we'd be paying only taxes and insurance and maybe an inconsequential amount to a mortgage. We'd have plenty of equity in order to open a home equity line.
Or we could finance all but 20% of our home and use the leftover cash to buy distressed properties.
As you can see we have a lot of options and with a lump of cash this size, I felt it was only right to consult with the experts and gather some wisdom.
Wisdom? Anyone?