I Need Guidance

[Russell T.]

I’m about to sell my house and will have about 250k. I wanted to get into rental property investing but have analysis paralysis, there are many routes to take. My wife wants to buy a property outright because the Cashflow is better. But I see on social media other ideas about possibly buying multiple properties with less Cashflow but could possibly have greater returns long term. What are some of your opinions? 

[Dustin Allen]

@Russell T.

There is no wrong answer here. If you and your wife are more comfortable buying rentals outright in the Dave Ramsey fashion, you’ll likely be able to save up for the next one faster or at least a down payment for the next one faster. You will have a higher cash flow and be able to handle any unexpected repair costs or capital expenditures.

Keep in mind that you could always put leverage on the property after the fact. It will be at a slightly higher interest rate than if you used a purchase money mortgage to buy in the first place. Nothing wrong with starting out safe. People will scream at you about “opportunity cost” but you’re also buying peace of mind.

If you do choose to leverage and buy more than one, be sure to hold some in reserve as you should for every property that you buy. Run the numbers and be very realistic. Make sure there is adequate cash flow to handle unexpected vacancies or repair costs (they will happen eventually).

Either way, you’re in a great position to get started. Run multiple scenarios and sit down and go through it with your wife. Pick whatever let’s you both sleep at night and learn everything you can along the way.