Balance between Debt and Cash for being Poised to invest

[Tony Gunter]

Hello BP Nation.

I would like some opinions from the experienced investors on the forum.

I have just sold my primary residence and we are in good shape now for our upcoming relocation to the Atlanta area. I also recently sold a rental property that was not performing like I wanted. We did well on both sales. So I am now looking at being free of all property holdings. From these two sales we now have about $200K cash to work with.

We will buy in Atlanta, as we just hate not having our own place to control as we see fit, and we don't intend to move anytime soon either. However, we are considering a modest place that fits our needs, but not excessively so. I have a well paying day job and no debt now that we are free of all our property. I don't have any real assets other than some retirement accounts and the cash.

My investment goals/plans is to flip a few houses per year to help build up cash to then invest into SFR, MFR, and MHP's. I want to collect "doors" and build my semi passive income steam up. A nice B&H income stream is the ultimate goal here, and long term increase wealth with the B&H assets I plan to buy.

My question to the BP Nation is:

Which is more important when seeking external funding to fund flips and buy and hold. Larger amounts of cash on hand, or very low debt levels?

My gut tells me "CASH IS KING", so it would be better to buy a modest home with as little down as needed. I can then keep the cash on hand to help fuel the flips that will help generate more cash short term. I feel I need the cash so I can have skin in the game. My income to debt ratio should still look good as I have a modest home but showing good W2 income. I will have skin to put in to get the first few flips funded and then after a few flips I should have a enough working capital to fund my own flips and then look toward loans, again with minimal down payments to fund buy and hold properties. Of course I can also fix the B&H's and refi to pull as much cash as possible back out to help keep powering the expansion phase. I have experience flipping in a house hacking type of way, having bought homes that needed some updates, living in it, and then selling it for more later. I have done this three time now and gathered a lot of experience along the way. I imagine we might do that again with the new purchase in Atlanta if the wife is not too tired of living in a work zone for a little while :-). We have the professional photos from both recent sales so we have experience in that aspect, and a photo portfolio started as well.

I have been so impressed by this forum since I found it. There are some real heavy hitters on here that I highly respect. You can feel and see their experience and thoughtfulness in how they answer and freely share information.

Thanks for your thoughts on the matter.