Best strategy for scaling up our RE business/hobby

[Landon Dean]

Would love to get some input from people in regards to our situation and what the best strategy is to increase our real estate investing strategy. Here are some details:

1.) We have a SFH paid $113,500 for in March 2013 with 20% down conventional financing. Using BP's investment calculator on this property we cash flow about $150/month (actual's show more but staying conservative).

2.) We just purchased a duplex a week ago for $108,000 with 25% down using conventional financing as well. Once again using BP's investment calculator on this property we have an estimated cash flow of about $210/month.

3.) Total monthly cash flow = $360. Annualized = $4320. This would take about 7 years to accumulate enough cash (roughly $30-$32K) to purchase another rental in our Oklahoma City/Edmond market.

So my major question is should we take the cash flow and let it increase until we have enough to buy another rental or take the cash flow and put it towards the duplex which has the lower loan amount and cash flows the best. Thanks in advance BP members!

[Theresa Nicoletto]

Hi Landon,

Welcome to BP!

Careful on Zillow - their estimates are all over the map and not accurate. If you don't have access to the MLS, tap a realtor buddy to do a CMA for you so you have a better idea of where you stand. In OKC, one block can make all the difference in terms of school district, gentrification and desirability. Zillow doesn't take that stuff into account at all - they don't have an algorithm to handle that complexity.

I'm with Rhett - I'm a big fan of having properties that are free and clear. But there are many schools of thought on this. Also, starting with SFH and moving up to multi-families is a strategy that many investors do and is not silly....quite the contrary. Getting your feet wet learning how to deal with tenants, contractors, property mgt, etc on a smaller scale (SFH or duplexes) and putting your systems in place is the smart thing to do before you scale up to multi-families.

Good luck and again, welcome to BP!

Best,

Theresa