I have $70k cash. What is the best way to use it?

[Neeraj Mahajan]

Hi guys. I am a newbie here and have been learning on this website plus google forums etc. I understand there are multiple ways to make secondary income but I would love to get some suggestions on what do you guys think is the best step forward if you have $70k in cash?

1. Get loan on $70k down payment as 20% for about $320,000 and try and buy multi-units in that price?

2. Buy a home for $70-$100k and pay it fully and put it on rent?

3. Buy a home for $70-$100k and then fix it up and sell it?

4. Put $20k in 3 different houses worth $100k as down payment and buy it that way and put them on rent?

Anything else you guys think would be better? I am in Atlanta, GA and would like to keep my first buy within this state. What do you think is my best bet?

I am kind of lost as to where to start from?

[Perry Farella]

I have seen new investors be successful in two different ways. One is to buy a 2 to 4 unit property and live there yourself for first 12 months using an FHA insured loan with only a 3.50% down payment ( if you qualify using future rents @ 75% of gross and adding funds needed to rehab if necessary in same 30 year fixed rate loan); or I have seen investors buy small single family homes to fix and lease or fix and flip using a 15% down rehab loan called HomeStyle. If you don't mind living with tenants then the first option is usually good because the rehab cost, if any, are projected up front and the property is appraised to its ARV in your area. If the deal doesn't make sense then the lender will not allow it to close. You know in advance before closing what future rents should be because lender's appraise rwillproject them and you know future value. SO can learn if you will live in your apartment for "free" and the other two or three apartments rents will fully pay the total monthly payment. Seen many first time investors win this way as opposed to BRRRR so promoted here that may not work in your market relative to values and expected rents. These days an FHA 203k rehab loan has at most a 4.75% thirty year fixed rate and an investor HOmeStyle loan has at most a 6% fixed rate for a single family so you can do the numbers yourself. Itds like $5 a month in payment for each thousand dollars borrowed or $6 a month in payment for each thousand dollars borrowed. You do need to have 3 to 6months payment reserves on hand but the FHA Loan allows you to borrow also first 6 months of payments in the loan while building is being rehabbed. So don't use all you 70k and use the lenders money in a deal that makes sense because you know in advance and will not close if it doesn't make sense. Happy to answer questions any time.