Which is a better strategy?

[Greg P.]

Currently, I have some money to invest in property cash. Here's the deal.

Strategy #1 - I have a bank that is willing to borrow 70% of the appraised value if the property is rented out and if I buy with my own cash first. So for example, I buy a property with my own cash at 50k, put in 5k to rehab and then I call the bank and they appraise it at 100k. They are willing to let me cash out at 70k so they basically give me $15k extra then I started with. With this scenario, I would be able to buy more property this same way and cash flow around $400 including the debt service. The bank told me I could do this as many times as I wanted.

Strategy #2- I have another bank who is willing to borrow money on Rehab deals by financing up to 80%. Basically, I buy a property lets say at 100k and I put down 20% and they finance the rest.

I believe as Will said on his other post that rehabbing would create more money faster, but since I have this type of relationships with the bank, is it still better to rehab? I know how important cash flow can be for banking relationship for future deals (bigger deals) etc. Please advise.

Thank you again,

Greg

[Will Barnard]

Greg, If the scenario is as you state and they will do this over and over, do BOTH! Create cash flow and at the same time, build capital through flips.