What would be the next step?

3 Replies

Hi BP,

I am closing on a million dollar property with 12 renters this week with 200k down.  I should be able to get 50K a years  in Free cash flow.  I think its a good deal and hopefully in 2 yrs, all rent rates will be raised, and I could get 75k/yr in FCF.

I do not need any of this cash as my job is stable and provides me with a great living.

Where would you go next?

1 Use the FCF to pay down my 30 yr note?  If I did this, I could have the property paid off in 10 yrs

2. Use FCF to buy more rentals?

3. Finance someone's flip?  Let someone else do the work and just be an angel investor?

4. Any other ideas?

My current idea would be to use the cash flow to buy more rentals. Maybe leverage 2 more per year and have about 25 rentals in 5 yrs? If I have equity in 5 yrs, maybe do a 1031 into a larger complex or bunch of SFH/Multi family homes?

If I have 700K equity in 5 yrs, why not use this as down payment (30%) on a 2.5 mil project?  If the deal is right, I could retire on the income.

I have also heard about buying apartment complexes.   Is this even realistic at my stage or somewhere in 5 yrs.  If I have 1 mil in equity, could I do a 1031 into an apt complex?  Is there alot of money in the apt complex?

@Michael Win  

@Michael Wincongrats on the new acquisition! I personally would let the dust settle on this one and while for 6 months before jumping into my next one. I suspect there will be a couple things that you didn't expect with the property that will require your attention. 

That said, I'd continue to buy large multifamily properties because they tend to be the best long-term investment in my opinion. Single family homes are great too if you have a system that helps you scale it properly. It really depends on what YOU enjoy most - sounds like it should be more passive due to your full-time job therefore perhaps looking into investing in other people's flips, deals, etc or even note buying. 

Again, all depends on your goals, time commitment and thing you enjoy most. 

Originally posted by @Joe Fairless :

@michael win 

@Michael Wincongrats on the new acquisition! I personally would let the dust settle on this one and while for 6 months before jumping into my next one. I suspect there will be a couple things that you didn't expect with the property that will require your attention. 

That said, I'd continue to buy large multifamily properties because they tend to be the best long-term investment in my opinion. Single family homes are great too if you have a system that helps you scale it properly. It really depends on what YOU enjoy most - sounds like it should be more passive due to your full-time job therefore perhaps looking into investing in other people's flips, deals, etc or even note buying. 

Again, all depends on your goals, time commitment and thing you enjoy most. 

 I will definitely be taking a break as this process alone was very time consuming.

So how do people with money get involved with other's flips, deals?  What is buying a note?  Is this a networking situation where you just have to get out and meet people?

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