I have 60k to invest, what should I do?

[Rudy Brown]

Hello fellow investors! Here's my story in a nutshell: 

I am a long time lurker and third time poster. lol 

I own a SFR that I recently rented and I am itching to get more.

I have a full time job grossing about 90k a year (I'm not quitting don't worry). 

I have about 60k to invest and here's what I'm thinking...

I am looking at doing a buy and hold and it would have to be a conventional loan as my SFR is FHA. I have my eye on a property which is $240k. I'm budgeting a final sale price of $220k. Using the rental calculator here, it tells me that my total out of pocket costs will be 53k to acquire this property.

My cash flow for this property is projected to be $900 a month with a 20% COCROI (I know, seems too good to be true). 

My question is, how can I use my 60k to maximize my income potential. Should I seek cheaper properties and acquire more of them? Or invest in one expensive property and build enough cash flow to acquire another? Any advice would be greatly appreciated!! 

[Tony Castronovo]

I think it depends on your goals.  If you are looking for quick returns then flipping may be the way to go.  If you are looking for long term growth and want to build a portfolio of rentals then I would start with something with lower risk (e.g. more inexpensive, smaller rehab, less cash out of pocket, etc).

It also seems like $900 could be quite high for a cash flow projection? Your interest rate will be higher than your homestead property. Have you budgeted for all the main items (e.g. maintenance, vacancy, property management, capex, PITI). How quickly do you think you can get the property rented?

All things being equal, if you can buy one property at $220k and get $900 cash flow compared to two properties for $110k each and $450 cash flow....I think you will have one less headache (tenant) to deal with.  But in my experience, rents and cashflow are not linear compared to sales price.  My cheaper properties cash flow much better than my higher-value properties. But I do have more equity in the more expensive ones, so willing to give up some cash flow.