New Investor, Low Income, Multi-Family Investing

[David Drew]

I am new to BP and I've been trying to absorb as much information as possible. My family and I moved to a bigger house and rented the old one, about two years ago. We've been extremely fortunate with our existing tenants and I'd like to buy another property. My existing rental is in a really good community, has 10 yrs left on a 15 yr mortgage where I owe $87k on $130k and rent for $1400. PITI is ~$1100 with around $550 going to principal, $300 to me in cash. It seems to be working out though if I apply a 2% rule, the rent actually looks a low. Thoughts?

I'm really interested in understanding the best ways to finance my next investment. I have a little cash (maybe $10k) to spend on a down payment and a large, untapped HELOC with a local credit union that I'm not sure how to leverage.

I'm in Vestal NY in Broome County and there are a lot of multifamily units for sale. I started looking at the 40-50k homes but now I'm wondering, since I've had good luck with a 'higher earning' tenants thus far, if I should I focus there. At this point, I think my decision is going to hinge on whether I buy a $50K multi-family and use $10K of the HELOC for the down payment / $10k Cash OR do I finance with a little more debt and buy a more valuable property closer in price (~$80-$100k) to the one I have now...which makes me less comfy.

Thanks!

Dave

[Michael Lee]

Hello and welcome to BP!  I do not really know much about New York since I am not much of a traveler that is from Texas.  You can probably get more rent from your existing tenant but I would check out the neighberhood or area it is in and see what other rentals are getting.  You might consider an equity loan to help you get something that works for you or consider getting some type of a loan that includes renovation expense and/or a low down payment or "house hacking" loan that you can live in for a year.  There are many options to use when it comes to borrowing and it keeps getting easier every day.

Have written goals and daily criteria to follow and learn when to just walk away from a deal when it does not feel good.  Have a written plan and stick to it.  Another option or two would be a sjmall multi family complex and owner financing.  You may consider more curb appeal or some other upgrade inside before you raise the rent.  Just take your time to do things right.  Good luck to you!