Strategy advice for my next step.. Please0.

[Jason Young]

I bought a condo a year ago at an auction with cash. I renovated it and now rent it out, it brings in a pretty good dividend compared to having that same money that was just sitting in a savings account. I also already have roughly 40k in equity on it!!  

I like the buy and hold strategy but I see it's going to be harder for me to get more rentals without the cash. I'm now thinking about flipping to build cash reserves and then when the timing/deal is right keep one as a rental and keep doing this until I have enough rentals that will bring in a decent passive income. I'm currently in the process of getting a HELOC on my primary residence to use as capital to support my flip strategy, my dad also said he will throw in as well and basically act as a silent partner.

I like the idea of combing through the foreclosure auctions and maybe get lucky like I did on my condo. I feel this is the best way to get in below market value. I do understand the risks with auctions. I like to stick with condos because I feel they are a little safer from major issues, they cost less and don't have to worry about landscape/drainage/yard issues. 

I would ultimately like to quit the 9-5 and primarily do flips and the occasional hold. I feel like my strategy isn't bad, but I wanted to run it by the BP community to just get some feedback. At what time during this process would I want to start and LLC? Should I sell my condo now as to not use the HELOC funds or keep it as a hold? I don't think I need to do the HELOC and sell the condo, that would give me a lot of cash but I'm not ready to play with that much yet. It feels safer to stay small for at least a little while anyways. Any other thoughts, advice, suggestions would be greatly appreciated.

Thanks,

Jason

[Rob Barry]

The LLC is mainly to insulate you from liability, such as a tenant slipping, falling and lawyering up. A few hundred dollars to set up and a small annual fee depending on where you do it, and it protects your personal assets. But it is optional and you can set it up later. I do try to avoid commingling business and personal assets to be on the safe side.