what to do?

Here is my delima. I will be receiving a settlement in Feb. I will have about 150k to invest in real estate. My problem is I want to use this money as leverage. Use it as a down payment (20%) for a flip. My husband, however, wants to pay all cash. His philosophy is to save money on the loan orgination fees and own the property free and clear.

Which is the better approach? If you had this capital how would you use it?


Use leverage as much as possible, specially when you are a first time investor. The more money you put down, the more risk for you.

I’m only interested in apartment bldgs for cashflow so If I had that kind of cash, I would probably keep it in the bank, use it for closing costs and reserves and still get 100% financing.

I think as you read the posts, here and throughout the site, you will find that the general consensus is;

use OPM Other Peoples Money

Just curious … If you go with your husband’s way, you’ll probably buy just one - maybe two - houses. Then what? You won’t have any cash for anything else, and I doubt even owing a property free and clear and renting it out will give you a whole lotta cashflow each month. So then to continue, you’ll have to borrow anyway.

His stragedy is,

Buy a home…Do the repairs…then sell…Do one home at a time, especially starting out.

Thanks for replies!

Angela, Your husband’s startegy can work. The only thing to keep in mind is that once the money is spent it is not liquid anymore. If you need to fast, you are out of luck. If you borrow, you can still get at your cash if you have to get your car fixed or take an emergency trip to Hawaii.

If you have 100% financing from a lender, won’t your monthly mortgage be high? How do you get positive cash flow? I guess you would have to do the math first to see if you make some profit. Also, can someone explain to me their interpretation of “leverage”.

If you’re goping to do a short-term fix and flip, your strategy is OK…I do something similar.

I buy a house all cash, close in a week. Sellers like this…I can usually get the price down some, too. Then I fix, put a renter in it, and then do a cash-out refi based on the higher, fixed up appraisal. I do an 80% cash-out so there is no PMI and because it is a refi, a lot of the fees are lower. I usually wind up with all (or nearly all) of my cash back out, a 20% equity position, and a strong positive cashflow.

If you do buy all cash, be sure that the purchase price reflects that!



I like your method a lot. I dont have a problem doing this. I, however, wanted to put the 20% down to begin with on a mortgage loan to have less fees.

I dont plan to hold the property, but flip it and build more capital in order to get the point where I can buy and hold. I would like to buy several houses this way.

My credit isnt the best, but with the settlement I do plan to pay off all my existing debt. I know my score will improve.

With 150k to work with and a novice investor, what would be reasonable to start with. One, two or more homes? My husband thinks this is too ambitious…He likes to start slow and careful…What are your thoughts?


Actually I came across the 15 hour weekly schedule from another investor forum…This isnt actually me, although I wish it was!

I thought it would be helpful to have a schedule like this one to follow. It gave me some great ideas and where to start.

Ofcourse it would be higher then if you were to put something down. For 100% there are certain markets that are better then others, obviously. You want to look for higher Cap rates. Look for assets that perform on their own, have property management in place and cashflow at full list price. It’s a good place to start and gets you familiar with the numbers.

I’d use part to put money down on a fixer upper for him to work on. Once he was started on that I’d be looking for a couple of cash-flowing triplexes that I could get working for me. I’d also plan to use some to pay down high interest debt and improve your credit score if that is something that can be done, not sure if you owe money or not.

That settlement money doesn’t do you any good tied up in bricks and mortar.

If the property calculates to be profitable:

Get the bank financing for the 80 or 90% and let your tenants pay the mortgage off while the bulk of your money is still available to be put to work for you.

Life can throw some pretty expensive problems your way these days. It’s good to have some moeny where you can get at it.