Buy one or use P2P and buy two?

Question

So taking the feedback that I got from the first thread, I adjusted my price range down to something I could afford without much financing on the down payment.

With that in mind, I found two more properties. (I'll skip the details unless people actually want/need to know)

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Illinois Avenue: Mostly young, established professionals or brand new families. About a B+ to A- neighborhood.

3 br/2.5ba

Price: 75,000

CoC vs 50%: 23%

Cap Rate: 8.3%

Allin: ~$12000

ARV: 90,000

Built in early 2000's

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Connecticut Avenue: Next door to the university, crime isn't an issue in the surrounding area but can be if you go too far out. Mostly college kids

3 br/1.5ba

Price: $40,000

CoC vs 50%: 16%

Cap Rate: 12.3%

AllIn: ~$11000

ARV: 55,000

Built in late 1950's

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I can afford one with no problem, but ideally, I'd like to add both by using P2P financing through lending club. I'd ask for 15K, buy both, do some minor repairs, appraise it for full value, cash out after awhile, pay lending club back, and repeat the process with the 10K left.

TLDR: But does that sound feasible? Am I going for too much as a first timer?

Chris Martin · Answer

Just curious as to where these are located... since they are not in Cary, NC. These almost look like monopoly cards. If you can get Indiana Ave and Kentucky, you can put up hotels. BTW, my company has property on Kentucky ... but it is in Garner, not Cary.

Adrian DeGraff · Answer

Illinois: $1100

Connecticut: $700

And the issue with using LendingClub would depend on the lender right? And if it's been seasoned for a month or more, who'd object?

AFAIK, my DTI would be fine (I'd still be under my prequal amount)

On expenses, I'm using the following numbers

10% Vacancy

10% Capital Expenses (each backed by a 3K cushion to start)

10% Property Mgmt (though I might initially try do this myself)

Taxes - Illinois at $100/mth | Connecticut at $33/mth

HOA: only Illinois which is about $150/mth

Insurance: $60 each

After all that, I was still around 50% for both (Illinois - 47% and Connecticut - 54%). I just didn't post the entire thing up front to save space until someone asked.

Jean Bolger · Answer

I'm assuming these are these buy and hold? What would you expect to get in rent?

What's the 15k P2P for? downpayment? that's not going to fly with a lender, they want your own money for that. It will also pinch your DTI to have that extra loan (perhaps you have a high paying W2 job and that's not an issue for you, I don't know)

You'll want to have cash on hand for vacancies and unexpected expenses (really- you want this,whether you think you do or not, haha). If you can afford one, just buy one... for now. Which one would depend on rents, condition, location, your long-term game plan.

Adrian DeGraff · Answer

Oh yeah lol, the monopoly thing is just to obfuscate until I have contracts in place.