Is It Time Time To Use My Savings To Buy Real Estate?

[Michael Lopez]

I am embarrassed to confess this, but I guess transparency would be the key to my future success toward anything that may resemble a retirement plan. I will be 49 years old this year and I would suppose that it would be better to start now than never start at all. I have some savings and am now wondering if I should use it for a down payment for a rental. (Approx. $42,000) I also live in a home with about $110,000 in equity and have considered doing a cash out refinance and use the proceeds for a down payment on two more homes. One that my wife and I would move into and another for a 2nd rental. We would also rent out the home that we refinance.

When our daughter graduates next year, our plans are to move from the city we live now and to move to the Boca Raton, Delray Beach, or Boyton Beach area.

We need to be extremely wise with what we have because we would like to create a roadmap toward retirement in 15-20 years. Please ask away if you have any good ideas. We don’t want that cash to be sitting in the bank not making any real money.

Any thoughts, ideas, or help?

Thanks!

[John Livingston Bullier]

I love using owner-occupied financing to make a good deal great. Even if deals are harder to come by now than they were 5 years ago, I think owner-occupied financing opens up many doors that are closed to other investors. Are the cities you're considering moving to more than 100 miles away from any real estate you currently own? If so you become re-eligible for FHA financing. This program is meant to benefit first-time home buyers and can only be used once *unless you're moving to a new city.

FHA financing is great because it allows for 3.5% down on 2-4 unit multi-family properties. The program has different maximum loan amounts depending on the county, but a quick google search will tell you what you're working with. I would be looking for a 4-plex with as many bedrooms as possible and 1 unit that you could live in yourself. The gold standard of investments would be cash flow positive WHILE you're living rent free, have opportunity for rent growth and value-add upgrades, and be a place you enjoy coming home to. The last point is never worth compromising on.