Newbie with funds but no rental experience.

[Angela Holmes]

Hi everyone,

This is my first post. I hope I am posting in the right place. I am a newbie to rental property ownership. I am fortunate enough to have a relative give me a substancial lump sum as a gift. She wants her heirs to enjoy their inheritance while she is alive.

I live in San Jose Califoria, and would like to buy a four plex with my recent wind fall. I don't want to buy a rental property here because it's very expensive. Nothing is priced under 1 million in Silicon Valley. I saw a fourplex in Modesto on the MLS that is located about two hours from San Jose. It is priced in the mid 300,000's. I will take my uncle who is a contractor with me, to see if it's worth purchasing.

My question is, Since I have the cash should I just buy it out right or get a loan ? I will still have a nice ammount left for savings even if I pay cash. I have family that lives in that area and would be able to check on the property for me when I'm not available. Thanks for any advice.

[David Fawcett]

@Angela Holmes It all depends. I would personally leverage myself. So I would put 20% down and finance the rest. See if someone handed me a lump some of 100k, I would not go buy one 100k property. I would go buy 4 of them with 20% down. Now you have 400k worth of property. 

This only works if the properties are cash flowing. Just my two cents.