1 Primary and 1 Rental, Low Cash, Next Move?

Question

Hi all,

Since the last time I was here, I purchased a primary home in Northern Virginia.  I backed into a rental property a few years ago by taking a job in Washington DC, so I relocated without selling my California home.  Now it cash flows $700 per month, which I'm grateful for and inspired by.

Now to the question: After purchasing my primary I don't have a lot of cash. A few hours away from me in various states (PA, MD, VA) there are duplexes for $50K or even lower sometimes on Zillow. I'm more interested in cash flow than equity because I want to build up my cash reserves, but I'm sure there are other ways besides searching Zillow. Have any of you succeeded with alternative strategies like auctions or driving for dollars, or creative partnership deals I'm not thinking about? I'm handy so I can offer sweat equity in a partnership, and I will have some cash to bring to the table as well (right now about $10K to $20K). Any advice or success stories you can share is appreciated, I need to expand my knowledge and imagination on what's possible.

Russell Brazil · Answer

If you want to keep getting rich, keep buying that high quality DC real estate and ignore those low quality properties that are less than my car. They are that cheap for a reason

Da Shiek Woodard · Answer

That sounds good to me, what is your current situation?  Or if you'd rather not share, go ahead and DM me.  I hope you can give some background here as well though because the viewers tend to have great advice.

Linda S. · Answer

Petersburg, VA is where I invest in.   It's all off market deals through wholesalers.   The super cheap houses are very hard to come by, as flippers are now driving up the ARVs, lots of sharks in the waters now!

Lee Whitford · Answer

@Da Shiek Woodard I am in a very similar boat as you! Would love to connect and keep up as we continue our journey!

Da Shiek Woodard · Answer

Partnering is something I am exploring now, I think it may be the quickest way up for me.  If rents rise a little more in my area I will consider continuing to buy a primary and then make it a rental.  It involves moving a lot but it's a quick way to acquire properties at low interest rates so I totally agree with your suggestion.

Da Shiek Woodard · Answer

This is a great real life scenario, thank you for sharing this.  I would actually not mind this scenario at all as I am pretty good with repair, but yes I would want to know exactly what is wrong with the house so I could fix it.  Your numbers sound like they worked out for you, where the heck did you find a house for $17K though?

Andrew Syrios · Answer

Partnerships or private loans are definitely something to consider. However, if you're low on cash and 1) have lived in your own home for more than a year and 2) it would make for a good rental and 3) you are open to moving, the best option might be to buy a new personal residence and rent out your current place. The financing terms are a lot better for personal residences than investment properties and with rates going up, that is even more important now.

Linda S. · Answer

@Da Shiek Woodard,

As someone who bought those cheap houses over the past 6 years, let me just remind you-- where ever you buy them-- they are cheap for a reason.   My most recent purchase was a $17K cinderblock 1bd SFH with literately an inch of sewer it in-- the landlord wouldn't fix the sewer line. ..  $5K later, I'm getting $725/mo, and the tenant is very happy everything is fixed.

The reason is very likely deferred maintenance, and you'll be buying some's problems.      Go for value, and make sure, especially with cheap houses, you have a contractor/inspector do a full inspection so you know what you're getting.  A lot of people chase the cheap houses and then exit within a year when they realize how much it actually needs.

Just remember-- it's not cheap because the other person is stupid, it's likely cheap because the seller is aware of all the stuff wrong with it and thinks that's the most they will ever get.

1 Primary and 1 Rental, Low Cash, Next Move?

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