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! : )
Thanks.
Lin
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?
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.
Posted by Frank Chin on March 20, 2006 at 07:29:23:
Ron:
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.