I live in SoCal and own Triplex plus primary home in SoCal. Looking for advice on how to best leverage $500k in cash. Question is around committing cash resources for a build vs leveraging into two additional out of state fourplexes.
Option 1
Use California SB-9 law to split my primary home (760 sq feet--3 kids and spouse) into two lots (7700 sq ft lot) and build out duplex (approximate 400-500k build out cost) Projected income from duplex would be $3.6k a month once complete after paying annual taxes and maintenance expenses.
Then 60% cash refi duplex (estimate built value $1M) and pull money back out for primary home expansion and next investment.
Option 2
Invest $350k in a couple out of state properties multi family income properties (Tucson market) that will have about $1k of monthly cash flow.
Directionally it would seem that option 1 would be yield the best ROI and allow for some flexibility in improving our primary residence living situation, but I am probably overlooking some items.
Lender · OR ID AZ CA WA CO NV TN MT · Member since 2018 · 599 posts · 312 votes
4y
@Carlos Mendigochea I would definitely invest out of state in Tucson, AZ! You could leverage your capital in more properties there but also still get to take advantage of west coast appreciation.
12k cash on cash off a 350k investment is not very high. But while Tucson can offer decent cashflow in certain neighborhoods, I feel as though most of Az will be an appreciation market, with rental increases to follow over the years.
Are there other parts to option 2 which you might be considering that you didn't list in your post? E.g. if you plan to Brrrr and pull most of the capital back out, 1k per month in CoC might be pretty good!