How Would You Start?

[Samir Patel]

My wife and I are looking for alternatives to investing in the stock market to increase net worth long-term and while we value cash flow from an investment property, we have a 15 year retirement horizon.  

Combined we have an annual income around 1.2m.  Both max out 401k and cash balance plans at work (300k or so).  Cash flow from our business is good (80-120k monthly) and we have a significant amount of cash on hand (400k).  We are early-mid 30's

We own our primary residence, worth 650k with 330k left on the mortgage at 2.75%.

I have been looking at purchasing a home in a desirable neighborhood near our primary residence for 465k. A local property management company thinks they could rent it out for $3450-3550 monthly. I wouldn't want to spend my own money for the down payment, I'd rather take out a HELOC on my current property to cover the down payment and get a mortgage for the rest. My question is how you determine if this kind of investment is worth the risk, and if you were in my position, what alternatives would you consider to deploy capital and buying power?

[Jody Sperling]

With the income you and your wife have, you should look at multifamily. No question. Don't waste your time with single family.

You can get more doors, perform less work, earn more money, and take advantage of forced appreciation by improving the property. Find an apartment complex in the path of progress or one that has taken some hits over time and needs revitalized. Go to the bank and explore what it will cost to get a loan.

On a decent buy, not even a good one, you could double your yearly income. Best of luck!