Have cash and equity, what to do?

Question

Hey all! I currently own a condo and a SFR out of state. Both were purchased last year as investments. I paid cash for the condo and put 20% down on the SFR.

I want to increase the number of properties I own in order to increase cash flow.

Condo (local) - Paid - worth about $70k

SFR (out of state) - Owe $28k - worth about $40-50k rents for $625/month.

What is the best way to buy a couple more SFR's out of state?

• 1. Line of credit, maybe unsecured?
• 2. Sell the condo, use that as 20% down for 2+ rentals.
• 3. Save and buy one as I have the down payment.
• 4. BRRRR - Main problem is that I'm far away and don't really want a big rehab where I can't be there to hire/step in.

Suggestions? Am I missing a good option? Thanks in advance for your thoughts!

Brent Coombs · Answer

@Brandon Hopkins, what was your strategy regarding the Condo? (Condos are notoriously difficult to consistently make money from as pure investments - largely because of the high service costs, and values being highly affected by the roller coaster economy). So, would I rather have a Condo valued at $70k, or $70k cash? Yes, you guessed right. I recommend your option 2, which will allow you to quickly get into option 4.

Nothing stopping you from also doing Option 3 at the same time? Don't forget, you are trying to pay LESS for Real Estate than it is ALREADY worth! Cheers...

Nothing stopping you from also doing Option 3 at the same time? Don't forget, you are trying to pay LESS for Real Estate than it is ALREADY worth! Cheers...

Brent Coombs · Answer

A friend of mine in Australia bought a home in Youngstown late last year for around $8k, which we visited in May. It needed more work than hoped for, but through contacts made here at BP he was able to line up Contractors and a Property Manager, and get the utilities going. It is now generating $465/m and he is well on his way to BRRRR if he so chooses - even if he never visits Youngstown again. It CAN be done. Cheers...

Joe Villeneuve · Answer

REFI the condo...you'll get better terms than the LOC.

Brent Coombs · Answer

@Brandon Hopkins, when you say "properties that I think can be purchased under ARV", I hope you mean "properties that I think can be purchased (significantly) under ARV - R" (the "minus R" is really important to calculate correctly). Cheers...

Brandon Hopkins · Answer

Thanks Brent, being on site would definitely make BRRRR possible. I won't be on site (and don't want to be!). I've found a few properties that I think can be purchase under ARV and will look into them along with possibly selling the condo.

Thanks guys!

Brandon Hopkins · Answer

@Joe Villeneuve Sell or refinance? The returns are not that great and I'm not opposed to selling. Rents for $700, HOA of $220, PM is $70. Some friends are renting and he takes care of the minor repairs.

@Brent Coombs The condo was my first investment. It was available and I had the cash. Definitely a learning experience for me, one I wouldn't buy again. You said option 4. Can you do a rehab at a distance without people in place already?

Anyone else?

Have cash and equity, what to do?

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