Equity what to do with it!?

[Kevin Gonsalves]

Hey, so I’m new in the game and was wondering your opinion on a few things. First, I have about 250k in equity from my primary residence. I want to get into the game of investing. Should I be trying to buy a 3 or 4 plex to start or would utilizing a good chunk of equity and looking for a much larger investment like a 15+ unit be better?

Thanks in advance! Sorry for being so green.

Kev

[Jason Wray]

Kevin,

I would avoid anything over 4 units for now because it opens up a lot of requirements when it comes to the underwriting approval. You are required to have landlord seasoning usually at least 12 month some lenders require 2-3 years. You also are required to put 25%-30% down and larger reserves are required and the building itself can cause issues if it has vacancy ratios. If you focus on a 2-4 unit you only need 15% down as an investment.

Once you have owned a 2-4 unit for 12 months you can consider moving into the 5+ commercial world. Having $250K is a huge chunk of change to be able to spread that out over multiple 2-4 units depending on your target area. You also have to explore the STR versus LTR in that area to see which may offer a great NOI.

If you ever have any specific questions feel free to reach out I enjoy helping and talking REI.