cash offer or mortgage loan

[Ellen A.]

if you had $40k to invest would you

option 1. pay $40k cash for a SFH house that needs 25k in work

comps in the 120s. the property value is probably not going to go up but it seems it would always be rentable for at least $700 a month ($900 more likely)

OR

option 2. get ANOTHER mortgage with a hard money loan and get a property that would increase in value over time.

both methods will require rehab. both we want to buy and hold and rent out.

I currently have 3 rental properties in the $150,000 - $250,000 range that all have been increasing in value and should continue to do so.

option 1 would give us more diversified investment AND diversified experience. it seems like it would offer better cash flow but is also riskier 

[Michael J Scanlon]

Option A would allow you to put your $40k in, do the rehab, then put a 75% LTV mortgage on it and pull all of your money back out, plus some. Then you rinse and repeat. Classic BRRRR.