Investment strategey using cash from refi?

[Paul M.]

So I started out with 150k cash in July that I used for my newly formed real estate company. Instead of buying up as much equity right away I did something a little different:

I purchased a fully occupied 5 unit worth 120k for 100k with 6 unit potential (6th unit that needed to be redone from the ground up electrical, plumbing, drywall, flooring, cabinets, windows, molding, appliances.) I also entered into a land contract which began in August for an additional 3 duplexes that total 90k. I put $9k down and the remaining amount in the business account and $3600 is withdrawn monthly for 24 months at 6% interest. Titles were transferred but no lawyers and no real estate agents were officially involved. In January it will have been 6 months since starting the business and collecting rents and 5 months into the land contract payments.

I pay my property manager $75 per unit a month which totals $825 for now until the 6th unit is ready which should be by the 1st of the year and it should be rented at the latest by Feb or March at which point the fee will raise to $900 to manage the total 12 units. He’s a family friend and also the person I originally purchased all my properties from thus far so he knows them very well and he’s made a small fortune off of owning and managing his own (30 or so) properties locally for the past decade. He has his own staff and is excellent at keeping vacancy low. He’s in charge of the 6th unit being remodeled. When it’s all said and done that should total about 20-25k. He’s a really good human but besides that, motivated to make me money and save me money. That’s not only because I pay him a management fee for something he was already doing anyways but in addition to a monthly land contract installment, at the conclusion of 24 months if all else goes well we plan on entering into another similar land contract for another one of his properties. In the next 5-10 years he also wants to get out of the property rental business and try his hand at land development or possibly purchase a large apartment complex but he wants to do a partnership with someone and wants me to be his partner. For his plans inn order for that to occur I would need to build up the value and equity in my company. My main point is here that there’s quite a bit of incentive for him to make my business thrive. It works out well.

Revenue – management fee + insurance + expenses (not including property taxes) at the conclusion of the first six months at the end of December here when it is all said and done will yield 18-20k in profit total. I should still have about a 10k-15k cushion in the bank come January after the remodel which helps me sleep at night and then for the most of 2016, again the added revenue going into the new year and remaining 3/4 of the land contract. I’m the furthest thing from a business or even that matter a numbers guy. I'm just someone who had money to invest but from where I stand these numbers have and should continue to work out great.

Here’s my question to the experts here: I plan on doing a cash out refinance on the 6 unit I own 100% equity in as soon as the remodel is complete and I can get my building appraised. By then then it should be worth at least 150k with the added unit. So there’s about 4 other fully occupied 6 plexes I’m interested in around my area that my property manager has agreed to take on if I buy them after we inspect them. Should I buy 1-2 properties a year and slowly build equity with straight cash from the original refinance? Or should I put money down on a handful of different mortgages immediately? What investment strategy would you employ and how easy is the latter to accomplish with a lender?

Thanks, this place is great btw! Such a good resource.