What would you do? where to invest

Question

I've been debating with myself on where to invest my money. I presently have a duplex which was purchased on '06 as a primary residence/rental. I purchased this for $325,000 and presently owe aprox $280,000 at 6.5% it is on an ARM and should reset this December. Work brought me to a town where I purchased a REO property for $140,000 last December and owe aprox $106,000. I also have aprox $40,000 saved up to go in on another deal with a partner. I'm presently adding an additional $600 to the monthly on the duplex and $250 to the single family home. So my question is would you continue to do the same strategy or would you put the money towards one of the presently owned homes. Would you continue the early payment of both homes or pool the money towards one of them? 
Thanks in advance

James Hamling · Answer

Branden Raftery

Really it depends on a lot more factors. what is your tollerence threshold, what is your income working capital, time availability, knowledge base, financial goal, so on and so fourth.

For me personally, if looking to build, now is the time by far, all is on discount. But you sound rather leveraged already, so I would consider looking at how you are buying, not saying it's wrong per say, just defenently warrens some thought.

If looking to build, then I'd say what tools are in your basket of tricks, because that dictates what and where to invest. DO you have tons of cash, tons of know how, lots of hard money, financing, on and on, all this determines what and where. A person with lots of hard money will loose there shirt doing long term rentals, money costs will kill the deals. And those with only l.t. financing probably can't do well in flips.

For me, it's all about N.D. right now, it is the most insane money to be made hands down. A smart R.E. investor can very realistically make 1 mill in there first year, easy. It is absolutely bonkers out here.

So  tell ya what, if you have no clue what to do shoot me an e-mail if you think you can assist in being part of a property park I am working on, my spread is only about a 1,200 margin right now, no joke. I rent the trailers monthly for what I bought them for. I'm looking to take a jump up and place a 100 unit park. it is gonna be 3 or 4 years of insane profits.

Account Closed · Answer

Thank you to everyone who replied. It's a great help to get some more heads in on this!
A big thanks to Rich Weese and Nick Myerhoff. You guys helped me re-examine where I'm at and make a bit of a change of course.
Thanks James and Rob for the offers but for the time being I'm going to stay close to home with RE.
Rich, the current loan on the duplex will reset to 4.5% according to the bank so this will help from my current 6.5%. I'm going to use this to take advantage and save up some money which I will probably use to pay down the current balance to be able to re-finance if thats still an attractive option at the time. I do have a stable job which pays a reasonable amount which should help me through any bumps in the road I'm 30 now so I have some time until I need to realize profits from the properties.
I'm presently focusing my interests to Washington state as it's the area I know and also I like to be able to view a property in a couple of hours notice and also I like to know the areas so I can find properties which should hold a reasonable value for the future.
Nick, I do like your idea of placing the money I would be paying down the mortgage with into a separate account to build a reserve fund; as no one knows the future and if a property comes along that might be worth extending myself some more for the option would be there.

Account Closed · Answer

Unfortunately I'm out on the westcoast so I'm not seeing those rust belt type returns. The duplex brings in about 1800/month now. I basically break even when the tax breaks are figured in. In the current market it should be worth some where between 325-340

Account Closed · Answer

I feel that the investment property will have good long term prospects as it is in a fantastic location near a future waterfront development with potential to develop into 6 units. Unfortunately there isn't much in the way of options of re-financing at the moment as I still need to pay down aprox $20,000 to reach the magic 80%. 
If I do invest in another property with the partner I will live in my present house for 2-3years. If not I will live in it for another year then purchase a place to re-hab and rent out my current residence

James Hamling · Answer

Yup, N.D.= North Dakota, and the U.S. largest oil strike since Texas, look it up.

I am also in the building trades, and the requests have been insane, it is like how the gold rush was described back in school. There is a continuous caravan of people and trailers going that way. Right now, I could put 5,000 trades people to work 70 hrs a week for the next 2yrs guaranteed, but I literally have no where to put them, no hotels, no camp grounds, not even anywhere to park a camper.

If someone was good at working with local gov for rezoning, we could make 7 figures in the next 12 months. I am trying to finalize some land, and rezone, so on and so fourth. I have much in place logistic wise, just gotta do the face to face. 
Short story is, I can buy the units for 2,500-30K depending on level of lavish, and sell now for 150K-250K, by simply moving it. Or, rent for 4,500 mnth, rate is around 11 sqft.

Im telling you, it's insanity.

Rich Weese · Answer

Not positive,,,,but I think the reason for ND real estate situation is because of the construction on Giant gas pipelines. Anyone that can confirm or deny this is the reason? If it is, this big deal will eventually leave lots of properties and no buyers/renters. Rich

Joseph M. · Answer

Thanks Phillip , you are probably correct as it looks like James live in Minnesota and North Dakota is not too far from there. Talking about making $1,000,000 in one year makes me want to move there ....NOW!

Nick Myerhoff · Answer

Branden, are you talking about adding to the principal pay down? If so I would suggest squirreling away the money rather than paying down the mortgage. You can never have enough cash reserves when investing especially now. You may find a great deal and need that money. I would open a separate account and start saving again for another purchase down the road.

Phillip Gainey · Answer

N.D. probably is short for North Dakota.

Joseph M. · Answer

James ,

You mentioned in your post , "For me, it's all about N.D. right now, it is the most insane money to be made hands down. A smart R.E. investor can very realistically make 1 mill in there first year, easy. It is absolutely bonkers out here. "

Just wanted to get a little clarification what does N.D stand for? Thanks!

What would you do? where to invest

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