Miami Newbie - Liquidate or Leverage my home

[Terrence Conley]

Hello All:

I am REI newbie looking to build a successful portfolio. Being in Miami, I am aware of the aggressive real estate climate, but still believe I can be successful here. That said, I'm trying to figure out how best to start out while using my current assets intelligently.

We currently own a home in a pretty desirable part of the city - just outside Brickell, a high-end residential/business district just south of Downtown Miami. We have the comfort and privacy of a SFR while still being within walking distance to a bustling trendy area. We bought in 2010 in the middle of the housing crisis for 180K. Now it has a market value of over 400K. The house next door (same floor plan, worse condition) just sold for 425K.

So I want to make good use of the current equity to jump start my investment portfolio. I'm currently looking for quads to buy and hold. Of course there are many ways to get started, but I've looking mainly at 2 scenarios:

1) Pull equity out of my home to fund 1 or 2 properties and use those income streams to purchase more properties in a few years, and then more in few years after that, and so on. This way I get to keep the property, which is located adjacent to very popular (and still growing) neighborhood.

2) Sell my home and use the proceeds to buy 2-3 quads, probably house-hacking on of them. This would involve moving away from this great location to a more affordable neighborhood, but I would start out with more property and benefit from having an owner occupied investment (FHA Loan, tax breaks, etc). Again, I can use those income streams to acquire more properties in the near future.

There might be more possible scenarios that I'm overlooking, but just wanted to get the question out there for any feedback!

Thanks!

[Lucas Machado]

@Terrence Conley welcome to BP! Both avenues are viable, I really think it depends on your personal lifestyle preference as you said...Either way, once the multi units are rented and cash flowing, you can leverage them to continue to acquire more properties....And you don't need to fund 100% of the cost of acquiring+rehabilitating those properties yourself either. If you buy at the right price you can use hard money to fund ~70% of them, then refi the HML out with a bank loan.