40k... How to make the most of it?

2 Replies

Hello,

I been more and more active around here asking and learning from experience real estate investors. I posted before my goal was to buy 5 houses this year.... I'm about to close 1 deal next week. That will leave me with 4 houses... I'm pretty much set for my fourth finance deal... I know after the 4th, things get harder. I'll deal with the 5th finance once the type comes...

Here is my dilemma:

I have 40k to invest with. I'm looking at properties between 70-85k. I know I could make around $400 bucks after mortgage per month on a single family property. (I would have to make a 20% down) My debt and mortgage payment would be less as well... I could also buy another property, assuming I can find a bank which would finance the 5th deal.

I have also been looking at a triplex that cost $150k. The triplex is currently rented and produces $1,600 per month. I assume the mortgage would be around $800.00 plus $200 in water and trash service. ( I would have to make a 25% down). However, I would have to save a little more to make the down payment, meet the reserves requirement for all 4 properties and also for closing fees.... I would be left without a "cent" in my account--- Only reserves. The triplex has been on the MLS since last year....

I know it's not a lot, but what would you guys do if it were your money? What is the best alternative? I would really like to get the triplex and 2 houses, lol.

I estimate both rental properties ( the one I have and the deal I'm about to close will leave me with $1,000 after both mortgage payments plus $800 from the deposit)

I'm still learning.. And really, I'm into renting not flipping.

Thanks again...

Updated almost 4 years ago

The listing for the triplex just expired today.... Any advice?

You'll be able to find financing for the 5th as long as you qualify, there are lenders that will loan on conventional loan numbers 5-10. There is always the option of using a portfolio lender.

$40k would be better if it were making you money rather than sitting in your bank account, so I'd say find a deal and pursue it! Just don't rush into a marginal deal just to get one more in your portfolio. Take your time.

If the triplex listing expired, that means there is an opportunity to negotiate a much healthier sales price. Remember, if it's listed at $150,000, that doesn't mean it costs that much. There's got to be a reason why there were no takers, so do your due diligence. It won't hurt to throw out a low offer with an inspection/appraisal contingency to be safe.

If you haven't already, be sure to check out the 50% rule here on the forums. Your estimate of $400/month cash flow seems pretty high for a SFH, but who knows. I just want to make sure you're anticipating all the expenses associated with holding the property long term.

Hope that helps!

@Mehran K. thanks for the help. I read and someone told me about the 50% rule. I haven't really applied it yet. However, I understand that in order to get to the 5th or more financing, one has to be more organize...so, I'll have to apply it sooner or later. What I usually do is merge the rents together... from there I pay the property taxes or insurance or any other expense.

I'll see what happens during the month...

Thanks again

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