Whether to buy wholesale or put money down

8 Replies

Hi, My name is Jeffrey, and I’m a veterinarian living in North Dallas area. Me and my wife worked and saved for the last 15 years to accumulate a little over $650K. We are currently in a situation where I will be purchasing the practice ($1.6M) within several months that I’m working at (owner finance), and we (my wife) decided to build a $600K home. My question is: Do we buy the house fully with cash or do we spread the money and invest? Since we’re pretty new at this, we’re thinking of putting $300K to the house then purchase a townhouse or an apartment with cash. That way, we may be able to purchase it at a cheaper price and get better cash flow. What do you guys think? We have never invested in any property; so advice will help.

Jeffrey,

You are asking a hard question because there are so many ways to approached this and, will vary from person to person.

The only way I could answer your question is, what would I do?

- I would put 25% down or whatever % you need to get the home loan amount to the conforming limit, I think it's around $453,000. When we bought our house last year the conforming limit was around 427,000. That would keep you in a conforming loan, over that, it would be a jumbo loan.

That would leave you with $500,000 to invest in RE or RE deals and, if needed, to have a down payment on the business you are buying.

Money sitting in a personnel resident is dead equity, it's not making any money.

When the time comes when you are ready to invest in RE, you will have the funds available.

Just another thought on your plan, at least in my market cash buyers do not get significant discounts on property, ask around with local realtors to see if this is the case in your area as well, it could change your thought process.

Mortgage money is still cheap, absolutely leverage it where you can.  But be smart about it.  Put down around 25-30% and invest the rest into other properties and do the same, putting 25-30% down.  I also suggest doing 15 year loans as opposed to 30 year loans when it's comfortable.

Zack Karp, Lender in (#NMLS 197896)
847-387-5513

@Jeffrey Suh , "we (my wife) decided"... LoL.

It'll be a long, slow road to "bigger pockets", building a brand new personalized $600k home for yourselves. ie. When emotions/fashion influence decisions, that's just the way it is. 

But congrats on your savings regimen, and ongoing high income. I generally support your idea of owning the bricks and mortar of your business, rather than leasing. All the best...

Thank you so much for the advise.

Can you give any advice on what types of properties are good to invest in as a beginner?

@Jeffrey Suh

I would suggest developing relationships with investors in your area, through bigger pockets or local RE group. You have the capital and looks like the credit, all you need is a place to start.

Single family is the gateway, you could always start there. However, I would recommend jumping into multi-family. Find someone in Plano (develop a trusting relationship) that could guide you or, you could team up with on a deal. So many ways to invest.

Also, sit down with your wife and work on your long-term and short-term RE goals.

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