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How could I use $200k to invest in RE?

I currently do not own any property. I'm interested in the San Bernardino County or Orange County area. I also don't have a steady source of income right now. So, investing in Multi Fam Unit maybe something I ought to pursue. 

Should I buy a condo/small home for myself? Or Should I buy a small Multi Family Unit?

Should I get something that I can pay off up front? Or should I use a percentage of the $200k as a down payment? And if I do that, should I use the remainder for something else or hold on to it?

I'm thinking financing a Multi Fam Unit might be best.

I'm open for ideas. Thank you. :) 
  • November 09 2010 - US
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Answers (8)

RavaPulse, would the purchase of tax liens and tax deeds interest you? Regards,
  • December 17 2010
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RavaPulse,

Without a steady source of income it will likely be very difficult to qualify for any conventional mortgage financing.  Bear in mind too that purchasing an income property is often not the easiest way to add additional income to support an approval --- sometimes a property management history is needed too.

If you'd like me to do a quick analysis of your scenario, free of cost or obligation, just let me know.  I can tell you how most lenders might interpret your profile.

Good luck!
  • November 10 2010
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If you do buy a rental...

What happens IF you get a non-paying tenant and then have some repairs that come up costing you $15,000 and you also have to pay to evict the tenant?

Just because a tenant does not pay does not give you the right to not have your house in proper operating order.

IF this was to happen could you afford it? Could you handle it?

This is only to say that investing in a rental could bring some problems with it so learn the downside and balance your risks.
  • November 10 2010
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I suppose a better question would be are you looking to solidify a retirement income or build up your liquid reserves, no matter the goal both markets are very lucrative at the moment
  • November 10 2010
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I would spend some effort educating yourself on basic real estate investment.  Hit up your local library or bookstore.  After reading a few books on the subject you will have more of an overview and hopefully be a bit more prepared to find a solid investment.

As to investing out of the area...there can be advantages...but there are also MAJOR disadvantages.  I feel it is much easier for investors to have their first purchase to be closer to home.

Also in some areas of Central California you can find great cash-flow right now...
  • November 10 2010
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I would certainly consider investing outside of California. I guess I don't need to live near my investment property. 
  • November 09 2010
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Consider how much leverage you want.  You will get the least amount of leverage in SoCal because of the high property prices.  Compare that to some of the other markets where our clients invest in, such as Atlanta or Kansas City, and you can get 4 to 8 as many properties for the same investment capital.

The other factor to consider is your return on investment.  As far as cap rates go, you will find double-digit returns in many other markets.  Same is true for total ROI.  That's the reason a lot of investment capital flows out of California and into other markets.

Marco Santarelli

  • November 09 2010
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I also have minimal expenses, no dependents, and no debt. 
  • November 09 2010
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