The best approach to starting my investment journey the right way
Hello, first time rental property purchaser here. If I have about $20,000 to spend should I attempt to cash purchase a renter ready home (it will probably need something done before I rent it out) that is selling for around $15000, or would it be more beneficial to get a mortgage on a $37,000 renter ready home (may need something done before I rent it out) rent it, pull the equity and buy my next property? Best option?
Your numbers seem really low… I’ve never even seen a house for that cheap that was capable of being lived in!?!
A $20k down payment could get you an $80k investment property financed. To pull equity out, you have to leave 25% equity in the property… so on a $100,000 house with $25k in equity there is ZERO money you could take out of it, because the first 25% has to stay in the property. So you have to have significant appreciation or the note paid way down to don cash out refi… plus the refi is going to cost you $3-6k as well. Getting a loan will always yield you better cash flow.. so would likely recommend financing to let your money go the furthest.
Randy
Hi @Jiminia Rhymes, your best route is to go FHA and put 3.5% down. Not sure what closing costs are like in your market, but you could buy a $300k home with that.
Since you have really cheap homes in your market, you should look into 2-4 unit properties. Rent out one side and live in the other side for at least a year. That way, you can build up capital for your future properties while building equity in your current home.
That would be my advice.
Hope this helps!
Thanks!