260k equity, ok job and excellent credit, what to do now?

Question

Hey all,

Ok I've been stalled for a while (well since I got my first triplex wich I still have), things are getting boring and I wanna get active again!  What I'm trying to find out is whats the most profitable way to go about it with my current situation.  So here are the numbers:

-I have 260k in equity in a triplex I've owned for some time (I also live there)
-I have a full time job earning 41 000$/year (been there 5 years)
-I get rental income of 850$/month from the unit that's rented
-My credit score always hovers around 740
-I have no credit card debt or any type of debt whatsoever except for the mortgage on the triplex (155k left to pay)

What's the most profitable way to take things from here.  I thought about rehabbing, but how should I go about financing? I can't sell the triplex to pull the equity out since it's also my house.  By the way there is no subprime mess and no real estate bubble here so banks make regular loans and properties go up on average 8% a year (18% in my area for the past three years!) wich makes it hard to find properties at 70% ARV minus repairs.  I was also wondering if it would kill all my profits if I hired all the repairs/upgrades out.  I'm willing to supervise workers but I would rather spend my time trying to find my next (great) deal in order to keep the ball rolling in an efficient (and profitable) manner.

Khaled Majouji · Answer

Im surprised no one else has commented, is my topic that boring or what  :protest:   :groovy:

Khaled Majouji · Answer

Thanx for the great info all cash!  No it was no typo, my triplex is officially a duplex, but the basement of the lower unit where I live has been outfitted as a bachelor pad, so it's got it's own bathroom, small kitchen, stone fireplace, and a nice shiny wood floor.  It's really a complete unit, but I'm taking care of my younger brother, so I gave him his own space so he could study and take care of his future comfortably.  So no i'm not getting any income from that unit, although if rented id easily get 550$ for it.

As for the "I would rather spend my time trying to find my next (great) deal " line, well let me explain.  Except for demolition, painting and landscaping I can't do much, at least not by myself, I am just not experienced enough in rehabbing, and I want some quality work done, so I am kinda stuck having to hire most of the jobs out.

I was planning on getting my first 5 houses done and learning from them, piling up more cash, and than basically just doing rehabs full time.  In my area, there are lots of deals if you know where to look; there are very few investors so competition for deals is close to zero.  Besides, people here run away from old houses that need fixing, they would rather buy something perfect that doesn't need any work.  I was even thinking of hiring my own crew after a while to take care of the contractor problems, since I'll have so much to do all the time anyway!

Lemme know what you think...

Frank Adams · Answer

You're in an excellent situation, but your post says your income is from "the" unit that's rented out. Are you living in two of them, or what that t typo?

First start researching what might be out there in the form of deals, with your long layoff this will take a few months. Think long and hard about the kind of work that you are comfortable doing. I used to do all my own work, except "heavy" electrical. As I've gotten older I've cut back, but last year on my 59th birthday I was putting a new roof on!

I always looked at what was time effective for me to do, and how good or bad I would feel about the result versus the cost. I never paid anyone to paint, until 2 years ago. I sold my compressor and texturing and painting gear and had a place that needed a lot of finish work on the texturing. Rather than buy new gear I got a couple of quotes and the one guy gave me a great price, including the paint so I paid him. Since then I've still done my share of roller and brush work though.

I always did my work in my "spare" time. You're young so it's easy for you to work a "second" job. That's the way I always looked at maintaining my rentals and working on my flips. If I were doing it over I might be inclined to keep more of the ones I flipped while in my 40s. The nice income stream from rentals allowed me to partially retire when in my 50s. I'm a workaholic so I can't truly quit, even though I don't need the money.

I'd borrow as little as possible, do as much work as you can yourself. You're sitting on a pile of cash I'd use part of that for acquisition and rehab to get a duplex or triplex up and producing for you. Then I'd slam every looney I could onto my LOWEST BALANCE mortgage to get rid of it. Then you'll really see your income jump. Paid off RE is the way to go.

all cash