How to scale

Question

Ive got 80k to invest and am interested in getting started with a duplex. What i dont understand is how to scale up from there. I need a roadmap for what happens adter my first purchase. It will take years until i save up enough cash to use for a downpayment for a second putchase and indont want to wait years. How can i scale up to a goal of 10 units. I have a w-2 job. How did you do it? I appreciate any insights.

Brian Cauldwell · Answer

If you are okay with rehabbing a property that would be the best case scenario and how most investors start.

Scenario below

Purchase Property for $100,000.

Rehab for $50,000.

After-Repair Value $215,000.

Purchase and Rehab Loan- 90% of purchase price + 100% of the rehab. With that 10% down and closing costs you are into the property around $20,000.

Once the rehab is completed, you can do a cash out refinance. Most places will do a 75% cash out on the value after the rehab is completed.

So your initial loan was $140,000 ($20,000 of your cash invested), the refinance loan would be $161,250. Difference of $21,250 to put back into your pocket, but you have closing costs again. So of that $20,000 you would probably but around $12,000 back into your pocket.

So you are in the property when it is all said and done at $8,000 + holding costs.

The goal would be to find a property with either less costs or a higher after-repair value, that way when you go to refinance you break even or better.

If you don't want to do rehab, you are going to have to be okay with putting a larger down payment and parking your money into the property for a little while.

Austin Goetz · Answer

From my experience working with investors, one common starting point is buying a duplex, triplex, or fourplex and living in one unit while renting the others. FHA allows as little as 3.5% down, and eligible conventional options allow as little as 5% down on 2–4 units. This can help you preserve more of your $80K for reserves and future purchases.

Scaling usually involves combining savings from your W-2 job, rental cash flow, and potentially accessing equity you’ve built through improvements. A refinance could help fund the next purchase, but the property needs to support the new payment, and you’ll need to meet the lender’s equity and seasoning requirements.

DSCR loans can also be useful for future investment purchases. They qualify primarily by comparing the property’s rental income with its mortgage payment, including taxes and insurance, rather than your W-2 income. Select programs offer as little as 15% down, depending on the borrower and property. You’ll still want to account for vacancies, repairs, and management when evaluating actual cash flow.

If you’d like to run through scenarios and see what your qualified for, feel free to use me as a resource.

How to scale

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