What should I do? - Posted by Ron

Posted by Lin (NC) on March 20, 2006 at 09:02:24:

Hi Luke,
I’ve been reading your posts for awhile, and I’d like to get your thoughts on the Charlotte market. Can you drop me an email with a good way to contact you? There’s a donut in it for you, and it’s a jelly! : )

What should I do? - Posted by Ron

Posted by Ron on March 19, 2006 at 23:57:32:

What’s best?..investing most of my money in 1 unit for a rental and have the unit payed for and sock the monthly cash or put a 20% down (bank requirement) on a couple units and not have nothing but a small cash flow (if any) but be in two units?..what should I do?

Re: What should I do? - Posted by decide goals

Posted by decide goals on March 21, 2006 at 16:36:04:

If you can put all of your money into one unit and have it payed off that means that you could buy 5 units instead of 2 units if you put 20% down on each unit. (20% is one fifth of 100%)

What you really need to do is decide what your goals are. For a retired or a very security-oriented person who can’t spend any time landlording putting all the money into one unit might be a good thing. You’d get the desired cash flow and there would be little landlording hassle and you’d get a better return than a savings account. However, if you are younger or wish to make a better return on your money and you have no problem with working as a landlord you could leverage your money for a much better return by investing into more units.

As has already been said you also need to focus on finding good deals. Find deals that will cash flow with only a minimum down payment and/or are under market price for instant equity. You can also find lender or seller financing where you only need to put 10% down. That way you could buy 10 units instead of paying 100% for just one unit. The cash flow from the 10 units could add up to the same or more than the cash flow you’d get on one paid-off unit. Much depends on how you buy and whether or not you buy good bargain deals.

Re: What should I do? - Posted by spideymanrdpd

Posted by spideymanrdpd on March 20, 2006 at 22:18:59:

If the bank wants 20% down then go to another bank.
I prefer to get my equity by buying at a discount .

Re: What should I do? - Posted by DSmith

Posted by DSmith on March 20, 2006 at 09:28:35:

Your down payment shouldn?t be the reason you cash flow. Your purchasing at a large discount should be the reason you cash flow.


Re: What should I do? - Posted by Ed Garcia

Posted by Ed Garcia on March 20, 2006 at 09:16:07:


What we have here is the tail wagging the dog.

Your focal point seems to be on how to invest you immediate cash.

It Real Estate Investing, its finding deals that make economic sense.

Ed Garcia

build more cash - Posted by lukeNC

Posted by lukeNC on March 20, 2006 at 08:17:36:

I’d wait till I had more cash, then put some of that cash into multifamily rentals that you can buy way under market for all cash.

Build your cash position, buy el cheapo long term cash flow vehicles. (multifamilies WAY under market). And just keep doing it.

Re: What should I do? - Posted by Frank Chin

Posted by Frank Chin on March 20, 2006 at 07:29:23:


Real estate is local.

I’m in NYC, and it’s been a high appreciation area for the last 20 or so years. Properties I picked up for 150K - 200K 20 years ago is worth over 800K today.

While I started with little or no cash flow, I would’ve lost out on the appreciation had I ONLY gone for cash flow.

Does it cash flow now after all these years. Sure does, but returns are low.

If you go to upstate NY, a 70K house can cash flow $700/month. You won’t get much appreciation.

The whole trick in RE is to learn what works best in your area.

Frank Chin

Re: What should I do? - Posted by Joe Kaiser

Posted by Joe Kaiser on March 20, 2006 at 01:28:20:

Depends . . . but I vote neither.

Landlording is not something you do for a hobby. You’d have to have a
pretty good reason to go that route.