Looking for some general advice here…
I have two duplexes completely paid off, maybe worth about 500K or so. I bought them back in the early 90s. I have perfect credit. I would like to buy additional investment properties, with the idea of leveraging some of the equity in my current duplexes.
I would like to buy bigger properties, thinking minimum of 3 to 4 units, up to maybe 12 units. I would love to think about living off just the rental income at some point in the next 10 to 15 years.
I’m thinking of joining the local real estate investors club. Just looking for some general direction here, on how some of you experts might approach and maximize my situation??? I just feel I haven’t done enough to really take advantage of my situation. Very much appreciate any input you have.
If the property is worth $500k total you should be able to get a new loan for somewhere between $350k to $400k, the question is would it be better to get it as a HELOC line of credit or straight out borrow as a 15 year loan.
You would probable have to look at what terms and conditions for each option in your area and compare the mortage payment to your income and expenses on your current property.
When you invest I would find good area’s with a good location, unit’s in good to great condition and low vacancy rates, and look for added value features.
I would try to buy in to properties where you can negotiate a purchase with 20% down where you don’t have to service or refinance a second in 5 years.
Try to negotiate a seller contribution to closing cost’s and a seller contribution to down payment or contribution at close for defered maintence that way you can leverage your buying dollar.
Get a 15 year mortgage on the property or properties you purchase so you are setting your self up to own everything free and clear when you retire in 15 years.
Remember to save a prudent cash reserve for unexpected expenses, defered maintence issues or for negative payments caused by any number of factors. I think I would keep at least 10% of what you borrow for reserves.