Ideas for next deal, already own 2 houses in NJ

[Drew Slew]

A friend is looking for ideas for next deal, here is a financial snapshot - hopefully some of you w experience can give ideas of what you would do in this case. Lives in NJ, works in NYC.

- makes 120k, saves 5k clean a month, currently has 18k saved. 

- cashflow - 2 houses rented, overall cashflowing $1500 extra per month (2 mortgage and expenses all paid from it)

- debt: 19k student loan at 6.5%, car loan 25k at 2%, 2 mortgages 108k at 3.5% and 314k at 4.5%. 15k credit card debt at...19%

Basically has 15-20k cash atm and 5k coming in monthly, so could either wait, pay off all debt or buy another property.

Big on Jersey City, and potentially looking at areas like Palm springs / Miami for a vacation/investment property. Also heard good things about NC raleigh/ SC columbus areas.

Would be looking at his 3rd property - mainly condos, multifamilies in the 100-300k range - or just paying off all current debt. 

Thanks

[Krystal Todd]

Hello Drew! What it comes down to (at least for me) is the numbers. If he is looking to finance a deal the traditional way, he will need to quantify his monthly debt obligations and make sure he will meet the criteria for the debt to income ratio for a loan. Depending on his credit, the DTI percentage that a lender is willing to accept may vary.

If he finds a deal that is getting a return higher than the debt, then it may be worth while to go for the deal. Also, an additional deal, if done right, could provide cash flow that he can allocate exclusively to his debt to help pay it down faster. The credit card balance might be something he would want to tackle as the interest rate is 19% but again, if he pursues a property it's something he will have to consider as an opportunity cost. 

Also important to note that certain areas may have restrictions on vacation rentals. From what I've read around BP, people seem to have a tough time with Airbnb in Miami so just have him check and see the laws surrounding short term rentals. Some condos will have restrictions that will prevent short term rentals as well. Hope this helps!