Opportunity vs. Ease, Cashflow vs. Equity

[John Blythe]

Hi everyone.

I'm about to come into a chunk of money that is unexpected backpay for the last couple years due to a lapse in the payroll company my employer uses. As it's unexpected it's free to be used for an investment opportunity w/o pricking our current bank accounts.

We got into our first property earlier this year. It was a doozy and a near death experience financially at a couple points. We learned a ton and are wanting to get back in the game now that we have renters and have let our wounds heal up a bit from it all.

My question concerns the best means of moving forward. I love the idea of OPM and strategic sweat equity creating value ex nihilo, but there are of course the risks inherent in your calculations and assumptions being correct for that to work out w/o having to shovel money into it to keep it afloat (like we had to do earlier this year).

As such, I'm tempted to just take the cash and use it for a 25% downpayment on some duplexes that have tenants already in place. Snatch up that cashflow without any repair costs, estimations, dealing with hard money lenders, etc. The downside is that we don't create any equity out the gate.

Further, the type of property (solid C class) isn't one that would appreciate very well. At least not in the foreseeable future.

In either case we likely won't be able to invest for another 8-12 months or more while we slowly build our nest egg back up after it got demolished on property #1 this year. 

Our long term goal is to create wealth, not have huge cashflows anytime soon. But having an easy win will be a good feeling, too, and may be helpful on the psychological side of things more than anything else.

Would love to hear the thoughts of those who have a few under their belt and have had to wrestle with the variation of opportunity types.

Thanks for any thoughts!