I have a property that is paid off. I am taking $60,000 cash out to buy more investment properties. Should I;

[Deville Nunes]

A.) Buy a 2 bedroom fixer for $38,000 in San Bernardino CA. and fix it up for $15,000. Rent for this would be $750 a month. It will be worth $70,000 once it's done.
With this house, I can borrow against it (because it's paid off), and keep re-investing.

OR

B.) Use the $60,000 as a down payment for 2 or 3 more investments properties that would rent for $750?
With these houses, I won't be able to borrow against them and re-invest.

[Joffrey Long]

Deville,

I can relate to your question - have been in the same position of choosing many times.

I think there is a correct answer to your question. The problems is, to find the correct answer, you have to know where real estate prices are going.

Under option A, you would have more security, less work, and could ease your way into more property. If the market flattened or declined, you might be safer.

Under option B, if the market keeps going up, you'll make a lot more. Also, if you don't buy all 3 properties, and the market goes up and keeps going up, you won't be able to go back and get the 3 deals you can get now.

I'm in SF Valley / Los Angeles, and we make hard money loans in both Riverside and San Bernardino, so I know how depressed your prices got. As you know, when there's a shortage of property, your area goes up.

Also, in your area, you're buying BELOW replacement cost, so the new tract of homes down the street can't compete with you.

Part of your decision probably depends on your other assets, income, debts, and your ability to maybe hang in there if you buy 3 and the market flattens for a few years.

Hope that helps,

Joffrey