How would you start in Real Estate if you had $100,000?

[Pat Alford]

I would love to know the answer from people with experience. If you lived in Central Arkansas, where house prices and taxes are lower than average. Would it be better to use the money for 20% down payments of 4-6 houses? Or buy smaller houses for cash, and then refinance, and repeat as often as possible? Or buy one house and rent it for a large cash flow? In my limited opinion, these are the obvious options. But I would like to know what people with more experience think. My goals are to use real estate for my retirement, with rental properties. For the next 5 years or so, I’d rather have tax deductions than extra income. Also a bonus question. If you earned about $100,000 more than you planned in 2017, how would you invest to best limit your tax liability?

[Soh Tanaka]

My suggestion is to buy multiple properties. There's a lot of reasons for it. For example, if you buy one $100k house and goes up 3%, you made $3k in application. If you buy 5 houses with $20k down each, you have five $100k houses with mortgages. If they go up the same 3%, you made $3k X 5 houses = $15k, 5 times more than buying one house. How about the risk? If you buy one house with $100k, if the house is vacant, you lose 100% of the income. If you own 5 and lose one tenant, you only lost 20% of the income. With mortgages, you get to write off the interest, so effectively the mortgage becomes really cheap, cheaper than the rate you get. Also, a lot of equity in your house means it's easier to become a target of a lawsuit.  

If you can get a really good deal with cash purchase, that may not be a bad thing, as long as you refinance, and take the cash out.