Using $70,000 to buy one investment property or two?

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Using $70,000 to buy one investment property or two?

Curtis Davis
Investor · Boston, MA · Member since 2020 · 4 posts · 8 votes

Hello fellow real estate investors! My name is Curtis and I am currently researching how to enter into real estate investing. I have $70,000 to use for a down payment however, I cannot decide whether to split that up and buy two properties or use it all to buy a single property. I have been contemplating this question for quite some time and I thought it was time to turn to the wonderful BP community for advice. 

Where I currently live makes it difficult to buy a home for $70,000 as a down payment so I am stuck looking for real estate as a long distance investor. Some areas I am considering are Atlanta, Raleigh/Durham, Charlotte, Ohio, Alabama; but I am always open to suggestions!  Any insight or guidance that anyone can provide will be extremely beneficial and is immensely appreciated!

All my best,

Curtis 

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Sean McDonnell
Real Estate Agent · Surf City, NC · Member since 2017 · 648 posts · 597 votes
5y

@Curtis Davis I know this is not the most helpful response but it really depends on what your goals are. Have you thought through and written down what your goals for real estate investing are and what strategy you are pursuing? 

If your goal (like many BPers) is to eventually have cash flow from real estate to replace your W2 income, I would say it would probably make sense to try and buy multiple SFHs or a multi family. If your strategy is focused more on the longgg term wealth building, you might want to just buy one property that will likely appreciate a ton in the next 30 years. Sorry if I am muddying the waters. Hope it helps.

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  • Blake ParkBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2020 · 126 posts · 121 votes
    5y

    If you are looking to do out-of-state investing, I would check out Columbus Ohio! You will be able to find deals within your price range that have great cash flow. 

    [email protected]614-762-9232
    5Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    5y
    Originally posted by @Curtis Davis:

    Hello fellow real estate investors! My name is Curtis and I am currently researching how to enter into real estate investing. I have $70,000 to use for a down payment however, I cannot decide whether to split that up and buy two properties or use it all to buy a single property. I have been contemplating this question for quite some time and I thought it was time to turn to the wonderful BP community for advice. 

    Where I currently live makes it difficult to buy a home for $70,000 as a down payment so I am stuck looking for real estate as a long distance investor. Some areas I am considering are Atlanta, Raleigh/Durham, Charlotte, Ohio, Alabama; but I am always open to suggestions!  Any insight or guidance that anyone can provide will be extremely beneficial and is immensely appreciated!

    All my best,

    Curtis 

    I recommend you read this article on OOS investing. It explains the importance of creating your core four. You will need to get a local, rockstar Realtor, contractor, lender, and property manager.

    https://www.biggerpockets.com/blog/core-four-real-estate-team

    I invest locally in Columbus, Ohio

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
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  • Jordan Whitworth
    Rental Property Investor · Charlotte, NC · Member since 2017 · 48 posts · 24 votes
    5y

    Hi Curtis, @Curtis Davis

    Awesome you taking the plunge into real estate to get your investing career started and you have a great starting point with $70,000 in cash for a down payment. How you spend that money depends on the goals you want to accomplish. What kind of returns are you looking for from a cash flow perspective, ROI, etc... Do you have a particular type of property you are looking to buy? There are many different way to invest that $70,000 into real estate.

    1Reply
  • Sean McDonnell
    Real Estate Agent · Surf City, NC · Member since 2017 · 648 posts · 597 votes
    5y

    @Curtis Davis I know this is not the most helpful response but it really depends on what your goals are. Have you thought through and written down what your goals for real estate investing are and what strategy you are pursuing? 

    If your goal (like many BPers) is to eventually have cash flow from real estate to replace your W2 income, I would say it would probably make sense to try and buy multiple SFHs or a multi family. If your strategy is focused more on the longgg term wealth building, you might want to just buy one property that will likely appreciate a ton in the next 30 years. Sorry if I am muddying the waters. Hope it helps.

    6Reply
  • Bonnie LowPro Member
    Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
    5y

    I'm sure this sounds like tired advice, but like all things in real estate, it depends. Primarily, it depends on your goals, on your risk tolerance and on the scale of growth you want to achieve. Are you looking for cash flow or appreciation? That $70k could help you buy a nicer property in an area that will appreciate if that's what you're looking for. Conversely, you could buy multiple lower cost properties (which usually, but not always means less appreciation) in markets known for cash flow. To do that, you would be leveraging your $70k. Are you comfortable with the risk of leverage? Are you more or less comfortable spreading your risk over multiple properties via diversification?  And lastly, how quickly do you want to grow? Buying a single property for cash will not help you scale. This is where the power of leverage comes in. Either way, you're in a great position with a lot of options. Good luck to you!

    [email protected]
    3Reply
  • Curtis Davis
    OP
    Investor · Boston, MA · Member since 2020 · 4 posts · 8 votes
    5y
    Originally posted by @Remington Lyman:
    Originally posted by @Curtis Davis:

    Hello fellow real estate investors! My name is Curtis and I am currently researching how to enter into real estate investing. I have $70,000 to use for a down payment however, I cannot decide whether to split that up and buy two properties or use it all to buy a single property. I have been contemplating this question for quite some time and I thought it was time to turn to the wonderful BP community for advice. 

    Where I currently live makes it difficult to buy a home for $70,000 as a down payment so I am stuck looking for real estate as a long distance investor. Some areas I am considering are Atlanta, Raleigh/Durham, Charlotte, Ohio, Alabama; but I am always open to suggestions!  Any insight or guidance that anyone can provide will be extremely beneficial and is immensely appreciated!

    All my best,

    Curtis 

    I recommend you read this article on OOS investing. It explains the importance of creating your core four. You will need to get a local, rockstar Realtor, contractor, lender, and property manager.

    https://www.biggerpockets.com/blog/core-four-real-estate-team

    I invest locally in Columbus, Ohio

     Remington, 

    Thank you for sharing that article and your insight!  I will give it a read now. 

    ~Curtis

    1Reply
  • Curtis Davis
    OP
    Investor · Boston, MA · Member since 2020 · 4 posts · 8 votes
    5y

    @Jordan Whitworth, @Sean McDonnell, and @Bonnie Low,

    Thank you all for your advice! I should have stated in my original post my investing goals; I'd like to create passive income to hopefully achieve financial freedom. I am open to the idea of buying multiple SFR's however I'm wary to do so because of having to pay multiple closing costs. I obtained a pre-approval through better mortgage and the rate seemed high closing costs were quite a bit for a 60k house. Are there better options out there for mortgage lenders?

    Again, thanks for your time and guidance everyone!

    ~Curtis

    0Reply
  • Marci Stein
    Rental Property Investor · New York, NY · Member since 2011 · 956 posts · 510 votes
    5y

    I’d use the cash for a down payment on the biggest multi family units in the best area possible . Can’t lose. 

    3Reply
  • Brandon SturgillBusiness Member
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    5y

    @Curtis Davis ...buy the largest C-class MF property you can afford...

    This may put things in perspective: https://www.biggerpockets.com/...

    937-979-7000
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    5Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    5y

    If you want to have a better return on equity (which is what most sophisticated investors want) you get two and leverage.

    My article on return on equity - 

    https://www.biggerpockets.com/...

    1Reply
  • Satish Chandra
    Member since 2021 · 18 posts · 9 votes
    5y

    Hello Fellas,

    I'm in the same boat as Curtis and I've zeroed in Charlotte area to invest in. Searching for the class A properties in Class B locality. I'm considering a good school district and accessibility to amenities as my primary parameters. Experienced BP gurus can correct me here.

    Hope to find some good deal.

    0Reply
  • Matthew CrivelliBusiness Member
    Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
    5y

    If it was me, I would try buy find a couple of good brrrs. If you can find the deals you should be able to buy at a discount and put some lipstick on them. This will build in equity and raise the rents If you just let enough people know you're on the hunt the deals will find you. My mother call me last week, (she drives a school bus) and guy in the garage was chatting with her and what's the chances. He's an older gentleman, widowed and has a new girlfriend. He's looking to move in with her and was telling my mom he just wants to get rid of "this house" so he could be free of it. Well this house is a two unit in an area where houses are 300 plus, but his needs work and he doesn't owe much so he's willing to sell it for 175k. My brother and I are going to look this weekend. 

    Anyways lol FIND DEALS and BUILD EQUITY is what I would do first over anything else!

    [email protected]413-348-8346
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    1Reply
  • Jordan Whitworth
    Rental Property Investor · Charlotte, NC · Member since 2017 · 48 posts · 24 votes
    5y
    Originally posted by @Curtis Davis:

    @Jordan Whitworth, @Sean McDonnell, and @Bonnie Low,

    Thank you all for your advice! I should have stated in my original post my investing goals; I'd like to create passive income to hopefully achieve financial freedom. I am open to the idea of buying multiple SFR's however I'm wary to do so because of having to pay multiple closing costs. I obtained a pre-approval through better mortgage and the rate seemed high closing costs were quite a bit for a 60k house. Are there better options out there for mortgage lenders?

    Again, thanks for your time and guidance everyone!

    ~Curtis

    Curtis,

    If you are looking for strictly cash flow I would look at MF to try and max out your cash flow and keep your closing cost low from purchasing multiple units under one loan. What markets have you identified as potential fits? I would reach out to local lenders in the area. They usually can keep competitive and keep closing cost low. I bought a duplex in Chattanooga last year for $174,000k with 25% down and closing cost were around 5k. I used regions and my rate was 2.75%. Monthly rents are $1875 gross and my cash flow is around $800 per month after expenses,cap ex, PM, and mortgage payment. Hope this helps! 

    3Reply
  • Stephen Brown
    Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
    5y

    Hey Curtis. I think your better option would be to buy two properties as long as you have ample amount of reserves. You need to have sufficient income to cover for when a large expenditure comes up. If you put $70,000 down on one property, you may not have enough income coming in to cover that expense unless it's a large multifamily, but if you have two properties that you put $35,000 down on and let's say they're duplexes, you'll have 4 units paying you which should be enough to cover you.

    3Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    5y

    If you can get two good houses with the $70K down payment, do that.  Also look at duplexes.  But if splitting it means two houses in not so great areas...buy one.  If you buy one, you don't need to use all of the $70K, you can always save some for the next deal.

    1Reply
  • Daniel Molina
    Member since 2020 · 117 posts · 56 votes
    5y

    @Curtis Davis

    I would agree with others that it all depends what your goals are. Are you looking to manage multiple properties and/or focused on supervision long term? Go with sfh. Want great cashflow with only having to manage one property? Go mfh. Are your goals to be passive vs active? Active, look for flips/rentals near you so you can manage yourself. Passive, hire property management anywhere and focus on cash flow. You’re in a really great position with the 70k and your doing the smart thing to invest that money and for seeking advice here on the forums. Take what others have suggested and align it best to what your goals are with real estate investing.

    1Reply
  • Alecia LovelessPro Member
    Member since 2019 · 3k+ posts · 2k+ votes
    5y

    @Curtis Davis When I first bought last May I got a great deal on a SFH. Now you can't touch one that needs a total rehab for $100,000 more so I've turned to multi family housing. I got an A class 4 Plex in February and am about to close on an A class Tri-plex at the end of the month. The Tri-plex needs a ton of work but I'm getting it at a $100,000 discount.

    Neither of my multis are cash flowing cows but they are solid and should the market drop I will continue to get full rent from them because they are beautiful apartments.

    I would recommend looking for multi family deals. I have a duplex that is a 3/1 & a 3/3 that rents for $1400 & $1600 cash flowing about $2200 a month. While you won’t likely find a deal like that you might get something that cash flows $800 - $1200 with some of your money left over if you put 25% down. Then today have maybe $15,000-25,000 leftover to save for the down payment on the next one!

    2Reply
  • Alexander Hogarth
    Illinois · Member since 2014 · 49 posts · 15 votes
    5y

    @Curtis Davis last year I sold 1 property and used the $100k profit to purchase 14 units; rental roll for the entire portfolio was approximately $14 000 per month.

    I tripled my cash flow. So I’d think less about the number of properties and more about the cap rate and return on investment.

    Creative financing was perfect for me. I used a combination of owner financing and commercial lenders.

    2Reply
  • Jaquetta T Ragland
    Real Estate Agent · Winston Salem, NC · Member since 2014 · 486 posts · 303 votes
    5y

    @Curtis Davis you can try for a multi family.

    2Reply
  • Delbert Standifer
    Rental Property Investor · Carson, CA · Member since 2019 · 185 posts · 74 votes
    5y

    @Curtis Davis

    Multi family

    1Reply
  • Nabu Khan
    Ashburn, VA · Member since 2021 · 6 posts · 7 votes
    5y

    @Blake Park I’m interested let’s connect, do you also do property management?

    0Reply
  • George Munoz
    Real Estate Agent · Fort Lauderdale, FL · Member since 2018 · 360 posts · 213 votes
    5y

    JAcksonville.FL , Brevard ( County ) FL  could work too .. and polk  county FL

    1Reply
  • Will Gebbie
    New to Real Estate · Morristown, NJ · Member since 2020 · 17 posts · 26 votes
    5y

    @Curtis Davis

    Brrrr method and get most if not all of your money back. Then you can buy a lot more than 2 properties.

    1Reply
  • Nate Sanow
    I​nvestor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes
    5y

    @Curtis Davis

    If it’s your first go round I suggest getting one and keeping some $ leftover. Get comfortable for a few months at least with the down payment not in your pocket anymore and getting used to random expenses that may pop up with rentals. Then if it feels good in your gut, sure; get 2.

    1Reply
  • Curtis Davis
    OP
    Investor · Boston, MA · Member since 2020 · 4 posts · 8 votes
    5y

    I am absolutely grateful and stunned at the outpouring of all therecommendations. This is what makes this community so special! 

    I would be happy to connect with anyone through dm's if they'd like to talk more about MF investing. Lately I have been browsing Roofstock for deals because I'll be a long distance investor; 70k won't get me far in the Boston area....Haha. In regards to my investing goals, in the future I would like to leverage my properties to continue building upon my real estate portfolio. Now after reading all your recommendations, I think I might be best suited investing in a multi family because of being long distance. By purchasing one MF and not two SFR's , I'll be reducing closing costs and property management costs.

    Honestly, I cannot thank you all enough for taking time out of your day to contribute on my post!

    2Reply
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