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Updated about 4 years ago,
New to investing: How to do I leverage a deal?
I'm a newbie looking to get into investment properties. In 2019 I bought my first home with no intention of getting into the real estate investment game. I purchased the home with the intent of living in it and selling it once I moved, which is every 4-5 years because of the Military. After learning more about real estate investing, I'm kicking myself for not buying a multi-family and house hacking. Unfortunately, I used most of my funds for a down payment, but I'm not giving up though. I've just been saving and researching ways to acquire funding and begin investing.
Fortunately, an opportunity has recently come up to allow me to purchase a duplex without having to get a loan from a normal lender. My Father recently purchased 5 homes from a judicial tax sale in Scranton PA. After selling 3 as is, he decided to hold onto 2 to flip. Offering my sweat labor and about $20k down, he agreed to sell me the house for $50k, which he originally purchased for $25k, after we fully renovated it. The plan is to put 20k down, then pay down the rest over the next 5 years with NO interest! Based on the comps in the area, the ARV should be around $70k and property managers are telling me I should expect about $550 a month from each unit, so $1100 total. Rather than continue to save for a multifamily property as I have been, I'll just send those monthly savings to my father as my payment. Now here's where I could use some help. I'm looking for advice on how to capitalize on this opportunity to continue to buy and grow my portfolio. My thought process is, I should buy it, it's already reno'd, it would already be rented, I'll refi, and repeat. I'll just use the cash from the refi which should be around $50k to continue the process. That's if all goes well with the reno and the property actually appraisals at $70k. Anyway, I had a few questions to help make sure I'm doing this right.
-Is there another method I could use besides the BRRRR to better maximize my purchase?
-I know this reno is not going to be easy, so to avoid a potential money pit on the next buy, should I use the $50k to put 20% down on a turn-key multifamily?
-Would it be better to take the cash flow from the first buy and quickly pay down the cashout refi, or to save and use it for another purchase?
-Also, any other tips to help out a newbie?
Thanks everyone. I'm looking forward to the responses.