Hey there fellas…
Ok, so I have this property that has 25,000 equity. Where do I put that money to make it grow?
I know I have options, like a downpayment toward another rental. Actually I could probably put two downpayments down on two rentals. So is it smart to be fully leveraged like that?
Do you have any thoughts on investing in private mortgages? Or would it be a better use of that money to do a rehab and sell?
What would you do?
Thanks for the input. I appreciate it.
JayDee
Personally, I don’t 100% leverage my investment properties…I run about 78% overall…if (God forbid) anything should happen, I can get out relatively quickly and not take a real bath! Oh, yeah and I won’t pay PMI…ever.
I only do rehab and hold.
Keith
Denny Crane!!!
Denny Crane for Mayor???..Interesting. ;D
Jaydee…
I would sit on the equity for now. Investing equity for more fun when you have atleast 6 figures to play with.
Hey Keith,
Thanks for the input. How many years have you been doing rehab and hold? I am assuming that you still have to use the banks money because your comment about being leveraged…so when you buy these fixer uppers, do you initially go with hard money lenders? If so, do you refi after a certain period of time with fixed terms?
Do you manage your own properties or do you hire out to do that? One more curious question…what kind of homes are your rehabbing? Single families. muliti units, commercial?
Thanks again Keith! I am trying to get all the different perspectives that I can, so I will realize all my options.
If anyone else would like to share their investment method, I would really appreciate that too. 
JayDee
Patrick,
Thanks for your input as well. You suggested that I should sit on the equity for awhile…so what would you suggest my next real estate endeavor be? My desire is to continue to make my money and equity grow. At this time, the only fnancial resource that I have to work with is the equity in this new duplex. Is there another way that you would go if this were your situation?
Thanks again and I appreciate all your replies!
JayDee
JayDee…
I have been investing, on and off, for 10 years or so but have owned property for 30 years…
I buy cash, rehab, put a tenant in on a strong lease, do a cash-out refi at 80% of the new (and much higher) appraised value. With the cash-out refi, I generally get all or most of my cash back out and then move to the next.
Keith
Keith,
Good deal! I suppose if I were to make a strategy like that work, I would have to first figure out what kind of cash I can get my hands on, and second, find a fixer upper within that amount.
Have you outlined specific guidelines on the homes that you will and will not rehab? I am assuming that a good deal would be one in a good neighborhood with good appreciation rate and with a strong rental market. Am I on track here?
Also, do you manage these rentals yourself or do you hire out for that?
If you don’t mind me asking…how many homes have you rehabbed? And do you still own all of them or have you unloaded some here and there?
JayDee
We buy 2/1, 3/1, 3/2 (would buy a 4 bedroom but they are scarce here)…only buy in this Parish (the schools are better, crime is lower)…only below $75K. The property has to be reparable (I won’t completely rebuild) and in a decent “blue collar” neighborhood. Rents are strong here…I bought a house for $64.9K, put about $1K into it and it will rent for $850.
I manage all of my own properties.
I have rehabbed quite a few over the years – I was in the military and we always bought at our new location and sold when we left. we just moved here a little over a year ago and have four properties here…
Keith
I see. Sounds like you have a good strategy that works. Hope I can be as successful! When you say that you get renters in on strong leases, what exactly do you mean by that?
Renters with good credit (usually military drawing a housing allowance) 12-month lease…good cashflow.
Keith
Thanks Keith. Always appreciate feedback and success stories.
JayDee