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Updated over 3 years ago on . Most recent reply

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Moses Carrillo
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If you had 100k what would you do?

Moses Carrillo
Posted

If you had little to no debt (DTI: 5%-10%), currently renting, your initial REI goal was to fast track your way to be able to quit your 9-5 job with replacing it with positive cash flow, main goal was to acquire as many doors as you could, had 100k to start, and still had cash for reserves…

Would you continue renting and or seek out a primary residence where you could house hack (keeping your DTI low, so that your able to still acquire rentals) or would you first acquire income producing rental properties and then use that income to eventually help you qualify for a primary residence?

Which REI strategy would you use (e.g. Single Family, Multi-Family, Etc) or would you use several strategies?

What market(s) (e.g. local and or out of state) would you select to apply these strategies and why?

I know there’s tons of information and or specifics left out that still need to considered for a more detailed response, but a general one will suffice. 

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  • Specialist
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Replied

@Moses Carrillo - great exercise here.  A lot of the answers depend on the location.  I have worked with tons of people who's first property purchase was an investment property - even while they are still renting.  Really depends on the market you are looking in - if you are in a high priced, high appreciating market you just want to run the numbers on the income coming in from rent.  Could still be a great investment even if it broke even / had little cash flow.  Having said that - I am a big fan of diversification as well - getting into multiple doors as quickly as possible - with 1 door, 1 vacancy = 100% of your cash flow - the same is not true if you have multiple doors (3-5, say).  When it comes to SF, MF, etc - I let the numbers do the talking - there are plenty of arguments for or against a particular strategy of course - but if cash flow is your main goal, then that is exactly what I would focus on.  Markets - there are an abundance to choose from of course.  Some of the highest cash on cash returns I am seeing right now are in the midwest and the sun belt - states like Missouri, Indiana, Ohio, Michigan, Arkansas, Alabama - all have many offerings that can yield 13-15% cash on cash returns easily.  There are even some markets out there where you can build to rent - build a new house and rent that out - cash flow day one AND have immediate equity in the property after construction. 

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