What should I do with my first two properties?

[Ryan Betzing]

Hello BP,

My name is Ryan and I’m a new investor from San Angelo, Texas. After listening to the audiobook “Hold” and reading BP non-stop for about 2 months, I finally dove into the investment game head first and I love it. I just purchased my first two investment properties here in San Angelo. Here are some quick details:

Property 1:

ARV $95,000

Purchase price - $40,000

Repairs - $15,000

I financed this property through a local bank with zero down and was able to finance the 40k purchase price plus the $15k for repairs over 20 years at 5%. I think I can rent the property for $850 a month which would give me about $30 a month in positive cash flow.

Property 2:

ARV $105,000

Purchase Price - $50,000

Repairs - $10,000

I financed this property through the same bank with zero down and was able to finance the 50K purchase price plus the $10K for repairs over 20 years at 5%. I think I can rent the property for around $1000 month which would give me about $10 a month in positive cash flow (this one has much higher taxes).

So here’s my question – I think I followed the steps outlined in “Hold” and now have 2 properties with zero down which should provide a small positive cash flow. On the other hand – I think I could sell the properties pretty easily and probably walk away with around $70K in capital. My long term goal is to buy and hold and achieve financial freedom through rental income. I have a good paying full time job, so I won’t use the capital for anything but additional investments.

Both rehabs will be complete in a couple of weeks. What would you do if you were just starting out? Rent for a small monthly cash flow, or flip to build some capital?  

Thanks,

[Joe Villeneuve]

$30/month, and $10.month isn't possitive cash flow...it's a teaser.  It's negative CF waiting to happen....forever.

Based on your money in/ARV numbers, I would sell these two as fast as I could. It looks like you have about $80-85k in cumulative profit. Now take your original cash back and profits (after sales) and go buy:

1 - properties that do cash flow with the profit (only)

2 - properties to flip with the returned cost/principle.