Our First Investment Deal

[Zack McMillan]

So my wife and I are starting on the process of buying our first investment property here in Louisville. Over the last two years we have forced equity into our residence by doing a live-in flip. We don't want to cash out refinance because our interest rate is ideal so we are leaning toward a HELOC. we have found what seems to be a great deal from my grandmother. She wants to sell her current single family house rental property to us for 125k. It's in a desirable neighborhood and everything in the neighborhood is selling for 200k or more for the most part.

The house has drabby but practical vinyl siding so I’m thinking about putting 19k down, plus 5k to update the siding and bring it from an eye sore to a stand out. 

We can't decide whether to update a little more and be all in for 150k to sell at 200k, or if to just do the siding and try to cash out refinance to pay back the HELOC and keep 20-25% equity in a stable rental for the long haul.

In other words- do we take a 40-50k profit now, or wait fifteen years to sell with a stable rental property, principal pay down, and natural appreciation?