What would you do?

[Mark Devereaux]

I bought a single family home, closed on it November 10, 2008. Bank owned, I knew the previous owner before the owner that lost it to the bank and knew the house. Got it for $15K, 224 in closing costs, $1000 in improvements and the renter signed the lease tonight for $575 per month for a year. I would live in this house with my family, so it's not some dump. Sold for $80K in 2004 (irrelevant, I know). All I did was paint the walls and clean the carpets!

I borrowed $13K from my 401k to make the purchase, the other 3 and change is my own. 401 loan is for 5 yrs at 5.5%, about 250 a month. Taxes about 1200, insurance about 525. Obviously this property is good cash flow right now, mechanical are solid and updated, roof is the worst will need repair within 2 years.

My original plan is/was to buy and hold this property, pay it off in 5 year then reap the benefits after. Today I was approached by another investor who basically told me to tell him what I had to have to sell it. I threw $42K out informally and he didn't walk away, but I told him I'd have to think about it. Am I freekin' nuts?

Cap gains are a consideration, future cash flows, future appreciation...

I think he will even work with me to avoid short term cap gains, do an option or something like that.

Our overall goal is to acquire a minimum of 10 properties and have them paid for within 10 year. I am also working on my first flip right now, which should net out $10K after tax.

Thoughts, ideas, yes I am freekin' nuts. Just a little overwhelmed by the opportunity to double our money in less than 3 months. :mrgreen: