HI there I'm 27 years old I live in Canada, I currently have one rental property and I'm looking to take my step as an investor. My current rental property has about 50000$ in equity but is not cash flow positive, doesn't cost anything but still no cash flow , another negative is that it is about 2000 miles away and makes it hard to deal with tenant issue, thankfully no major issues have come up YET. The market I live in now is pretty expensive the average cost of a half duplex is about 300000$ which makes it difficult to first, come up with the 20% down and second to be cash flow positive.
Multifamily units do come on the market at around the 500k-650k range, small 2 apartments I can find for about 150K, both that will produce cash flow.
My question to you guys is..
#1 Do you think its worth keeping my current rental and refinancing for my next move or should I dump it and start fresh local?
#2 Should I buy what I can now as long as its cash flow positive or should I wait and save up for multifamily deal where cash flow will be more?
#3 when I do get a loan is it better to max out my amortization so I produce more cash flow to start off, or in your experience is it better to pay less interest in the long run?
I appreciate any comments/thoughts
You've asked some good questions. I don't know all the facts about your current rental, but if it's not cash-flowing, I'd probably "trade it" for one that is. In other words, yes, sell it. If it's $50k and renting for $600/mo or less, that's not great. There are places like Indianapolis and Milwaukee with $50k duplexes that rent for $600/side.
If your property isn't losing money and you want to keep it, I'd try to find a way to increase your rent (renovations, etc) or cut your costs (change insurance, refi, etc).
As far as amortization, my feeling is that you either want no loan, a very short loan (so you will own it free and clear soon), or a very long loan (so you can cash-flow better). If you're worried about the cost of interest over time, well, you have the option of making additional payments towards the principal, but it's nice to have a low minimum payment when you don't have much cash, or you have a vacancy.
Sorry if I haven't answered all your questions, but I'm sure there are other members with better ideas than mine.
Thanks for taking the time to respond, yeah I think in my case for now is to have a long loan so I can free up some Cash now and hopefully be able to make extra
Payments in the future to make up
@Account Closed all pretty good questions. However I'll just speak to the cash flow portion. If a property does not cash flow what is it doing for you? If you, based on market indicators, believe that there will be appreciation then hold on however we all know that's a gambling mans game. I'll drop that property personally or sell it on a land contract to another investor at a mark up or lease option it to the current tenant. Otherwise that "yet" is going to hit you like a ton of bricks.....All the best to you my friend.
Makes total sense I think I already new the answer I just needed to here it from someone els.
thanks for Your time!
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