What would be the best use of 80K?

[Viktor Stakhov]

Hi guys,

I need some words of wisdom from those who've done it.

I've bought myself a primary residence in 2012 and now it's been over two years since I live there. I am half way done with rehabbing the place and plan to finish everything up and put it on a market in March 2015. Having a fixer-upper to start with I will be able to clear around 80K.

My log term goal is to have enough rental properties to replace my day job income. I really need some help to start it right. Living in Greater Seattle area doesn't leave me with too many options and returns are not the best.

So here are my ideas:

1. 1. Sell the house. Move to apartments and buy 4-plex to start with. Something that would require some TLC (being a carpenter I can do a lot myself). It would be my primer residence and would rent other 3 units. 80K would be used as a down payment and money to bring it up to shape. Since I only can have 4 loan on my name I though it would be good to maximize the use of them.

1. 2. Pull out equity and use it as a down, but keep a primary residence. This way I won't have 80K since bank usually evaluates lower than selling price and give only 80-90% of home worth.

1. 3. Sell PR, buy a duplex, keep some money in pocket and look for next duplex in 6 months.
2. 4. 1031 Exchange? 

In case of getting 4-plex as a primary residence, I would consider something within 1 hour of drive to Seattle, since I work there. If I were going to keep my PR and use equity I would consider anything within 2 hours of drive, which would give me a chance to get something for a better price and manage the property myself.

What you think would be the best way to reach the goal and am I on a right track?

Please share your thoughts and advice.