Best Way to Invest my 30k

[Jason Powell]

I've got 30k set aside to invest and would like BP's advice and what to do with it. For some background, I bought a 4plex using a 3.5% down FHA loan about 5 months ago and live in one of the units. It cash flows well at this point (assuming I'm paying the same rent that the others do). I have a steady job and am able to save about $1,250 a month on average. My goal is to build a passive income that covers all my living expenses as quickly (while not being stupid-risky) as possible. Should I continue saving for years until I can buy another plex at 25% down, pay down my existing loan at 4.25% interest, buy a house as a 2-year flip, or is there a better idea out there? I live in Portland, OR, and even a 2 bed/ 1 bath house will run around 200k or more, even in the suburbs.

Thanks!

[Jean Bolger]

Once you have rental income on your tax returns for two consecutive years then a lender will include that income when figuring your debt-to-income ratio to qualify you for a loan. (Actually, they usually use 75% of income to account for vacancy, etc. Conservative, yes, but probably a good idea...). So you'll have some boost to your buying power due to that, hopefully. Two years feels like a long time to wait, I know. But I actually think the FHA rules about length of occupancy are pretty specific, so be careful there. I haven't had an FHA mortgage for a long time, I don't remember the rules- and they may have changed. Anyway, it will all be spelled out in your loan documentation, or you could just check with a mortgage broker.

You may not be able to get another 3.5% FHA loan, but most conventional lenders will go with a 5%-10% down on owner occ.