Which would you choose?

[Brad Hunton]

am at a crossroads at the moment and would like some advice. I was contacted by some family members that want to invest with me. We agreed on a debt service where I just pay them a fixed quarterly return for a five year commitment and I keep all appreciation at the end of 5 years and any left over return each month but I am responsible for any repairs and upkeep, etc. I self manage most of my properties and have pretty good systems in place to handle any of the following examples.

Scenario 1

Buy a $225,000 house with maybe $20,000 in repairs and rent it out for around $2,000/month. Appreciation has been on fire here like many other places but I would probably lose $100/month total. In five years I estimate it would be worth around $280k-$300k.

Scenario 2

Buy two SFH for $90k-$100k that I would basically break even on cash flow after paying out quarterly returns but would have moderate appreciation. After 5 years I estimate each one would be worth around $120k$130k.

Scenario 3

Buy a small SFH with cash ($50,000) that has long term (7 year) tenants that want to stay. I would have a pure cash flow of a total of $500 each month. So I would be personally making about $150-$175/month but appreciation is pretty low. After 5 years I estimate that it would be worth $60-$70k.

Which would you choose and why?