Best way to invest my 70k in savings.

[Kelton Bajo]

Hello everyone! Im going to try and keep this simple. I have two rental single house family units in casa grande,az. Both bring in close to $800 cash flow. Equity approx 150k combined.

I have 50k saved and another 20-30k that i am considering to borrow from my TSP (401k) at 2% interest.

My question is whats the best investment i can do with that 70k plus potentially equity from my two other properties.

I have found a 4 unit in texas for 225k with already tenants occupied bringing in $2645 month. If i put down 70k as a down payment my mortage would be $1200. With hoa, managment fees im looking at 1500-1600 expenses. Cashflow of 1k to 1100.

Is this a wise investment? Or should i wait for a better deal? I live in San Diego and I know i have to find a very trustworthy management.

Thank you in advance for your input.

Respectfully Kelton

[Dan H.]

@Kelton Bajo For conventional financing you can typically have 10 SFR to quad properties. So if each property is a quad you can have 40 units conventionally financed.

As for the $150K equity you do realize that typically on refinance investment property you can typically only get 70% LTV. This implies that you will not be able to extract the full $150K equity through a typical refinance. ELOC are difficult to find on investment properties and probably will not desire to go above 70% LTV so likely will not be able to help.

I understand Texas to have high property taxes.  In general states with income tax (CA) should avoid doing RE investing in states with high property tax even though I know of some San Diego RE investors that appear to have done very good investing in Texas (@Cody L.).

Your cash flow on the Texas properties do not appear to have cap expense or vacancy factored in (and possibly not insurance or maintenance).  Cap expense is higher than most investors want to believe.  If I used my San Diego cap expense estimate numbers that Texas Property does not cash flow (or barely cash flows).  Do you expect the property to appreciate?  There are locales in Texas that have appreciated significantly in the last few years.

The cash flow on the property looks at best lean.  That is OK if you have confidence of appreciation or can add value in some way (sweat equity, etc.).  Only you can answer the question if you think you can do better but I would want to do better.

Good luck