BiggerPockets

I am interested in Cash Flow and appreciation.

I can put my hands on $45,000.00 +/- immediately. This money currently earns me about $2250.00 a month but it's PV could diminish if market conditions change making me look strongly at Multi Family RE.

The money is in my S corp that is not related to REI.

My CPA says to take a Distribution and form an LLC for REI. If I do that I will have $35,000.00 +/-.

My wife will not be involved as a signor. I want to isolate my family and it's assets from my business.

As you can imagine I have lots of questions so I will throw out some to get a conversation going. Maybe it will help others.

Is taking the money out of the S corp through a distribution the best way to get access to the capitol?

Do I need this much cash to make a decent deal? ( My credit score is 725+/- with BR in 2000)

Where should I look for Financing? ( I have a strategic alliance with a local community bank for my primary business )

What sort of properties should I look at? Duplexes, Quads, etc?

If I do this deal I would like to have at least $1000.00 a month in positive cash flow that I could pay myself.

Should I consider a partner? I have strategic alliance in my primary business that has offered. Neither of us any significant experience in REI, but I have had some limited first hand experience in the past. A 6 unit property my dad owned 25 years ago and I owned a couple of SF units yen years ago.

Thanks in advance.

If you're making $2,250 PER MONTH on your $45,000, I would keep your money right where it is!!!

It is extremely doubtful that you are going to find a duplex or fourplex that is going to cash flow $1,000 per month. A typical cashflow IF YOU BUY AT A HUGE DISCOUNT is $100 per unit per month.

I would strongly suggest learning the business before you buy ANYTHING! I would also suggest joining your local REIA.

Good Luck,

Mike

From my experience, cash on cash returns on real estate is 10-15%. So on a 45k investment you cash flow 4500 to 6750 a year. The real advantage of real estate is being able to leverage considerable amounts of unrealized equity, which creates and accelerates wealth.

For example lets say you used that 45k to purchase 4 homes for 70k each but had market values of at least 100k each. Realistically your cash flow from those rentals would only be about 400 a month, but you've instantly gained at least 100k in unrealized equity. So while cash on cash is 12% your total return before taxes after one year is over 200%.

For a monthly cash flow of 2250 you would need an investment of about 270k. A couple of years of the method above might get you there. At least that's what I'm trying to do

This makes no sense.I call BS.