Maximum profit is cheapest multi family not more buldings

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So i get that once the mortgage is done you are sitting nice with equity and a profit boost, but to make any real money now i feel like you have to flip or wait until mortgage paid or keep buying buildings with 1k a month profit. Do it 4 times and you are sitting nice with 4k profit.

For me i think finding cheap building is way to go. Then i put down 70k, end up with tiny mortgage and profit boost plus pay off mortgage in 12 years not 30.

so i have an income source with 5k disposable per month, was putting in stocks. I could put that towards house. 300k price or less. Rental income covers mortgage, then take my 1k profit plus another 1k to fast track mortgage. So instead of paying 1700/month, i pay 3700 per month. Mortgage will be paid in less then 10. Save a ton in interest too.

Your thoughts? What would you do starting out with 5000 per month disposable income to create to most passive income the fastest. Id like to make 2000 to 3000 per month in less than 3 years

Thank you

I don't like the cheap stuff primarily because it's in the 'worst' neighborhoods and tends to only attract lower-income tenants. Now if you're buying hairy properties in decent areas and fixing them up, that's much more appealing.

If you're bringing in $5k a month you'll need to start setting some aside for a downpayment and renovation costs. Do not cheap out on renovation costs if you're going for lower end properties! What market do you live in? Have you priced out deals in your local area?

Using your Math, 5k a month consistent. 60k a year to invest.

Buy 3 SFH rentals a year. 100k value with 20% down, Either fix and flip or fix and rent, use any profits to fix or pay down the next one. At the end of a 5 year period. You would have 15ish SFH, assume rented for now. 150 cf per house avg after expenses. Your numbers are now with no appreciation or loan paydown added. 1.5 million in rental value with 300k equity. 2000-2250 a month in CF. Compared to 325-400k stock portfolio value. Add in any appreciation, flip profit, and loan pay down as guesses but that may be difficult to predict.

Cheap stuff does not have to be in bad areas. It's a matter of location in terms of proximity to the city. So instead of within 30 minutes of New York City it might be an hour or an hour and a half from New York City.

keep in mind the five thousand a month is money that I was previously putting towards my Investment Portfolio every month. Mostly buying stocks. Once Trump started his tweeting I disabled my automatic transfer and I'm not pushing it into a high interest savings account. So that's the money I have to play with. As far as a down payment I have about 20,000 already saved up for that. I'm talking about 60 to 70 thousand. I keep hearing online about getting this 3% down deals but I think that only works for long term. To get immediate returns you have to get the mortgage down. I'm even considering instead of a multi-family get a single family.

if I can get a single-family under 300,000 then with my down payment I can probably make 1800 or more a month. I might be missing something but i dont see how the multi family money can ever compete for immediate returns. Mortgage is just too high.

So maybe single family now, then in a couple years get a 4 unit. Diversify my portfolio. Get to near 3k a month profit in 3 years?

Thanks for the suggestions. I like what you did there but if I find a single-family for $250,000 in my market that is a really really really low price. How to find much below 300,000 in the New Jersey New York area.

Originally posted by @Brendan F. Nagle :

Using your Math, 5k a month consistent. 60k a year to invest.

Buy 3 SFH rentals a year. 100k value with 20% down, Either fix and flip or fix and rent, use any profits to fix or pay down the next one. At the end of a 5 year period. You would have 15ish SFH, assume rented for now. 150 cf per house avg after expenses. Your numbers are now with no appreciation or loan paydown added. 1.5 million in rental value with 300k equity. 2000-2250 a month in CF. Compared to 325-400k stock portfolio value. Add in any appreciation, flip profit, and loan pay down as guesses but that may be difficult to predict.

 

What about if housing market crashes soon? Anything I need to worry about if I go single family under $300k vs 4 family for $700k? Only thing I can think of is, the 700k place has a higher mortgage so if economy fails and I loose my job and I loose a tenant and have to pay mortgage, I might be in trouble and eventually end up foreclosing.

Also, why go further from NJ/NYC?