Whether to buy wholesale or put money down

[Jeffrey Suh]

Hi, My name is Jeffrey, and I’m a veterinarian living in North Dallas area. Me and my wife worked and saved for the last 15 years to accumulate a little over $650K. We are currently in a situation where I will be purchasing the practice ($1.6M) within several months that I’m working at (owner finance), and we (my wife) decided to build a $600K home. My question is: Do we buy the house fully with cash or do we spread the money and invest? Since we’re pretty new at this, we’re thinking of putting $300K to the house then purchase a townhouse or an apartment with cash. That way, we may be able to purchase it at a cheaper price and get better cash flow. What do you guys think? We have never invested in any property; so advice will help.

[Dave Chapa]

Jeffrey,

You are asking a hard question because there are so many ways to approached this and, will vary from person to person.

The only way I could answer your question is, what would I do?

- I would put 25% down or whatever % you need to get the home loan amount to the conforming limit, I think it's around $453,000. When we bought our house last year the conforming limit was around 427,000. That would keep you in a conforming loan, over that, it would be a jumbo loan.

That would leave you with $500,000 to invest in RE or RE deals and, if needed, to have a down payment on the business you are buying.

Money sitting in a personnel resident is dead equity, it's not making any money.

When the time comes when you are ready to invest in RE, you will have the funds available.