First Investment Property - Cash ?

Question

Hello everyone, Do you recommended first Investment property to purchase with cash ? .Do you recommended first Investment property to be a new construction built?Thanks in advance !

Chris Kersey · Answer

Hey @Kishore Kommana

Similar to what was said above, It really depends on your goals for RE investing and your risk tolerance.

As an example, I'm personally looking for long term appreciation to generate wealth in the future, because I make money for my day to day expenses with my current job. So for me, I leverage using about 70-75% debt. I do it a little different though, I buy land and build new construction duplexes using cash for both. Then once they are rented out, I leverage the equity created and the rent coming in to use a DSCR loan to pull my money invested back out. Similar to the BRRR Strategy. This lets me leave almost none of my money in the deal, and helps keep my cash ready to build the next house.

There are many different ways to to things though, this is just what I have. been doing. I'm also a local realtor in Houston so feel free to reach out if you specific questions about our market.

- Chris Kersey

@ckerseyrealestate

Ko Kashiwagi · Answer

Hi Kishore,

I'm assuming you are talking about rentals here? This would largely depend on your investment goals, risk tolerance and preferred strategy. Unless you are aiming for appreciation, it would make more sense to use some leverage through financing. You can lower your risk by putting more than, say 30%-40% rather than putting down 5-20% down.

Using new builds or turnkeys as rentals would be a good way to get started and lower the risk for cap ex, so this could make sense.