Trying to jump right in

[Ashley S.]

I am a newbie living in San Diego, which is outrageously expensive to purchase any rental property. We finally have gotten to a place financially where we can buy rental property. My idea is to buy a little house for cash around $100,000 out of state and have it managed while it grows in equity and then eventually sell it. Is this a good place to start for a beginner you think?  Or is it better to hold on to my cash and finance the house? I'm trying to learn about investment rentals, but honestly I'm scared.  I don't want to make a bad financial decision, we work so hard for our money. I know everybody works hard, but I think you know what I mean.  With one kid in college and another one headed that way soon, any advice is appreciated.....

[Tony Castronovo]

Owning a piece of property out right does give you piece of mind...especially if debt scares you.  But you have probably heard the term "good debt".  Financing investment properties with historically low interest rates is "good debt", in my opinion.  You do have to consider your risk tolerance though.  If I had $100k in cash I would consider buying three pproperties...say at $100k purchase price each.  I would finance them...if you go the conventional route you would use $60k in down payments ($20k each)...look for properties with cosmetic repairs only and keep rehab costs around $10-15k each.  You should also consider keeping some cash reserves for capex items and emergencies.  My 2 cents.