Rental property for cash flow

[Besnik Kadriu]

Hello everyone , I’m sitting on $100k , and this money will be used as a down payment on a rental property.

Currently own a coffee do and this will be my first investment property. With that being sad also once I go back to work. I’m worried that I won’t get much of a loan do to not working 40 hours.

What would be some of my options. Just looking for general advice if anyone can share !

Appreciate it ,

And by the way I love BP!

[Michael Thach]

with 100k you might get better terms you might qualify with a 25% downpayment than they will ignore your income. 

But as some of the other investors are saying its about levering your money. I am not sure about your market over there but if lets say you can use the 100k for 2x  180k home with 25% down on each than its  90K + closing cost which brings you close to the 100k or little over. So if your paystubs are better you might be able to put little as 15% down for investment property and you can get 3 properties, your cashflow might be around the same but you have more appreciation on 3 properties vs 2. 

But overall here comes a less riskier idea....

1. Cashout Refinance your Condo as a owner occupied. Example your Condo is worth 180k , you get 75% LTV from the Lender so is 135k cashout.

2. Use the 135k + 100k ... buy SFH house in an ok area where the rent is about 1% of your purchase price. And make sure to negotiate hard because you want to have some equity in the house. It comes handy when you want to cash outrefinance it. When you buy a 200k house which is worth 200K you can only get 150k out with a 75% LTV, but if you buy a house which is worth 250k you can get 187.5k out.

3. Find a tenant for your Condo, let him pay of your REFI of 135k. Which is around 650 USD with a interest rate of 4% and 30 years period. I am sure your condo is netting more cashflow than that. 

4. You live in a new SFH and get a positive cashflow. And someone is paying for your mortgage and you got the loan cheap as owner occupied.

5. After at least 6 months you can repeat it and cashout refinance the new house you bought, and rent it out. So you can live in a new house every 6 months and someone is going to pay for you. 

Overall this might be a slower approach, you are not buying 2-3 properties at once but this approach will not really tied up your money where you can not move. When you buy 2-3 properties at once, and next year the market is crashing or you find a great deal you can not just sell them, because closing cost eat all your profit. But when you have a house and can cashout refinance than you have cash in hand and can buy the new one. Cash is king, so dont tied up your money in to many properties. You want to get the properties for nearly free even if it means it takes 6 month per house.