How should I invest 40k ?? Flip? Rental? Notes?

5 Replies

I’m going to refinancing one of rental properties very soon and should be able to pull out up to 40k. Looking for some ideas of what you guys would do with it and how you would invest it. Would you put Into another rental ? Use it for a flip? Or do something different with it. Looking for your thoughts and ideas

For me and my plans, I would find another rental property.  Preferably couple that with some other capital and get a multi-family property with multiple doors to start growing my portfolio.

Originally posted by @Dwayne Lee :

I’m going to refinancing one of rental properties very soon and should be able to pull out up to 40k. Looking for some ideas of what you guys would do with it and how you would invest it. Would you put Into another rental ? Use it for a flip? Or do something different with it. Looking for your thoughts and ideas

 Without a direct or immediate need for the capital, I'd leave the equity alone.  It's not free to refinance. It will probably cost you 10% to get to plus the PITA a refi is.  You will be starting out needing to earn 10% on your money just to break even.

I used to try and refi my cash buys asap. Then I agreed with myself to find another deal or purpose for the money first.  By that time, the cf from not having payments re-stocked my dry powder.  It's a nice upward spiral to be in. There are times in the  market cycle it is well worth it to be liquid. I find deal-flow and margins tight in my area these days.

Its a lot of work and costs a lot of money to keep every dollar of equity earning 'high returns'.  The $16k a year I don't spend in refi costs sounds like more freedom to me. I'm ahead of  most just taking naps, leaving equity alone.  Good luck!

@Steve Vaughan Yea it definitely cost money to make money. The ROI for rental properties in this area that I invest in is usually much higher than 10%. For example my first deals ROI was 30%. So I typically don't mess with anything less than 15-20%. Appreciate your feedback

Originally posted by @Dwayne Lee :

@Steve Vaughan Yea it definitely cost money to make money. The ROI for rental properties in this area that I invest in is usually much higher than 10%. For example my first deals ROI was 30%. So I typically don't mess with anything less than 15-20%. Appreciate your feedback

 Cool. Some markets still have high returns available to them.  Lots of deals.. if you have the capital. I would be inclined to refi several things if that were the case for me.

I'm just old and lazy and my market is tough. Just know you're starting down 10% plus pain and suffering.

So what are the terms you have now and what will the new loan look like?  Are you getting a long-term, fixed rate? 

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