Single Family Home Vs Rental Property

[Raul Morales]

Hey Everyone,

       I am considering branching out into the RE market. My initial plan would be to build a medium size home ($120K) and selling it for 

( $165-170K). The profits would then get re-invested into the next home and continue the trend until I am able to able to build the next home with the profits that were made from previous sales. My plan would be to build two homes in the initial year.

  Or

I can purchased an older SFH and converted into a duplex for rental income. Older properties in my area are available for $50k and sometimes even lower. The way I see it , is that I can invest $50K to purchase the house , invest around $15K to convert it to a duplex type structure and lease it out at $700 per unit. I would then put this property as collateral and look for another property to continue the trend.

My main question is how to get started?  How do I approach the lender?  How are investors able to keep on financing property after property?  I was the main contractor when my house and apartments were built, so I am very familiar with the construction/remodeling phase of the project.

I currently have a 4 unit multifamily apartment building that is debt free and fully owned that I would like to use a collateral ($225K Appraised Value )to get a loan to begin my project.  I would appreciate if you could please guide me on what type of loan would work out best for my project.  Any feedback would greatly be appreciated. Thanks

Estimate on Monthly Finances

4 units leased at $2600 ( $650Each)

Monthly  Income $2200.00

Total of $4,800 

Credit Score 747

[Michele B.]

If you lived in the multi you could get a HELOC.... Since you do not then I would say use a cash out refi to get your money out... It is an equity deal.