Landlord Newbie Looking To Invest A Windfall...

[Matt T.]

Landlord Background: I own one rental and it has gone well over the last 2 years. I was planning to start investing more since then, but life got in the way. My current rental is mortgaged. It is worth about $30,000 and I owe about $17,000 on it. It is currently rented for $550/mo. so my cashflow is about $300/month. Since I don't need that money right now, I am keeping it in the account we have set up just for the rental.

Current Debt Situation: I have one residence out of town worth $400,000 that I owe about $320,000 on. I also own a commercial property free and clear that my wife runs a bakery from. It is worth about $75,000.

Area: I live in a town that is depressed and used to be a manufacturing powerhouse. This means there are a lot of potential renters and a lot of property that can be had cheap. If I had the time and money, I think I could buy 50 nice houses for under $50k in the next year. That is how cheap and plentiful real estate is here.

Recent Developments: I work for a company that is about to be sold and I am expecting a windfall from the sale. I will have about $500,000 that I can use to invest and I think I have a great start to get my PM company up and running. I will also be working here for the next 2 years at my current salary of ~$200k. This will let me get things going while still bringing in a paycheck.

Question: I am in the infancy of developing a plan, but the big question I have is, "Do I go all cash, or do finance these properties?". The safe bet would be to pay cash, but if I finance them, I can buy 3-4 times as many houses. I will have to service all the debt, but the cashflow would be tremendous. I would also be worried about owing all that money.

What do you all think?