300k equity how and when to start

[Aiyman Khan]

Hi I have just started my career in real estate investment and also just got my real estate license. I currently live in the NE Atlanta region, and have an equity of 300k, and am more interested in fix and flip to get to a point where I can invest in holds later. Should I invest by refinancing  my house or buy foreclosure homes cash by selling my house? Should I sell my home and buy a multifamily and re finance my equity from there ?Also should I wait for the so claimed crash that is coming up? Any suggestions? Thanks.

[DJ P.]

Hi Aiyman, this is a great problem to have. In general I believe it depends on *your* specific objectives and precise metrics: ROI/ yield, cash on hand, timeline, your time investment, skills you could leverage/ take advantage of (your strengths/ level of experience / skills to add value at each step e.g, hands-on remodeling vs. hiring a team), etc. You really have to evaluate /analyze the numbers (play around with the parameters) to see which scenarios will help you reach your realistic monetary and non-monetary targets. More than one may work for you.

If you sell to unlock your equity, you incur transaction costs (not as high since you have a license now); if you refinance, you incur refinance costs; if you buy a property in cash no bank will be involved to perform a risk analysis for you so you will have to be prepared to lead that process on your own; if you are fixing and flipping, you have to invest time managing / overseeing the work on site almost daily; ... the point here is simply that each scenario and each step has pros and cons that you have to determine how best they work for you (or visa versa).

As far as the "anticipated property market crash" it is hard to predict.  The last crash occurred about 4.5 or 5 years after the metrics/indicators were tipped out of whack.  The latest news says interest rates are forecasted to go down, jobs / unemployment has great stats, and housing shortages /demand abound in multiple markets.  Determine your risk profile, and what minimum returns / safety net you need to feel comfortable with your investment.

In summary, I personally believe that you have to step through scenarios, run the numbers, evaluate timelines, determine your time investment (you only have 24 hours per day at your disposal) and see which option(s) work best for you and your metrics... and live with.  

...Oh, did I mention that you should evaluate the numbers/scenarios against your metrics / parameters to see what works best for you ?  :)