Well Rounded Investor

My journey of becoming financial independence by 35 years old

Another Rental Property in the Work?

What’s up, everyone? I’ve been working through the holiday. But I’d manage to get myself an early X-Mas present, a Macbook Pro 2015 version. So this is my first blog from the Macbook Pro Retina. I’m excited about it, and hopefully, I can provide better web experience with a full functioning computer instead of from the iPad.

With many crazy things going on in the world and in America, I pray for peace, and I hope everyone stay safe. (Holidays are the worst for suicide rate, please check with your family members, we have a couple of 13 yo and adults cases this holiday weekend. It was super sad.)

To keep you guys inform on my portfolio, I’ve cashed out BAC (yields is now ~1%). And now sitting on $200K of cash (lurking for better investment opportunities). And I’m weighing the options.

Well, I’m trying to decide whether to use my $200K in cash to buy $155K duplex, or $200K as a down payment and fixing to buy side-by-side quadplex.

To be inclusive, there is a quadplex for $150K which is already bring in $2800/mo (this one is out of the question for me as the property is surrounded by 3 different cementaries, I fully respect dead people, but I’d prefer to have my properties far from where people are burried). Plus, one time when taking a short cut through town, Siri suggested a route through this neighborhood, and there were gun shots on the street, I thought kids were popping balloons, before Mr.W, and the people in the neighborhood open their door to check out the shooters. Yikes!

Option 1:

$155K duplex. It’s a foreclosure, so the process might take awhile even with an all cash offer. 2700 sqft, 4 beds, 2 baths. (2beds, 1 bath/unit), rent probably could go for $900/unit. ($1800/mo for 2)

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Option 2:

$400k – 2 duplex, side by side. Each half is a duplex – unit 1 – 1 bed, 1 bath ($700), unit 2 – 2 beds, 1 bath.($900). $3600/mo for all 4.

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Well, there are always other options:

Option 3:

keep the money LOL 🙂 Mr.W is always favors this position.

I’d like to take my time to look for opportunity in REITs are the rate are set to go up.

The DOW is at the all time record high, crossing the 19000 and marching toward the 20,000. I have no doubt that it would cross this point approaching the holiday, as optimism is all the all time high. Violence and crime are generally down during the winter months. Bad news/views won’t come into play until March (US debt ceiling is up for debate this March, and the UK is set for the Brexit in March if they haven’t already decided.) 

Option 4:

5000 sqft building $300K, the the prime real estate area. But it’s a mixed-used property, and I’m about $40K short of buying it outright. After buying that, every month, I don’t get it rent out, I’d still have to pay business real estate tax, and home real estate tax. The bigger the size, the more it’d cost to renovate, that is for sure.

This one is hard to say, But the bottom can be separate in 2 units of a store front of some sort. Rent for a business is in progressive model – $1500/unit the first 2 years, then increase up once their business is establish.

Rent upstairs could be split in 4 units or in 2 units – Each could go for another $1500/unit.

But I would be a fool if I think it’s that easy! hahha… to get each and everyone of these unit to run, I’d at least put $15-$25K into the them. Yikes!!

Another thing to consider is “mixed used” property is super hard to sell, as no many people would be qualify to buy mixed used. It’s a little harder to find underwriters that could write mixed used property loan, per se. When they do, they’ll charge an arm and a leg for interests.

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I still haven’t decided which options I’d go for yet. As of now, my then 8, now 7, rental units have been keeping me rather busy. Taking on more renovation projects, probably would leave me no time for enjoyment, it’s something I don’t know I want to do, considering I’m already FI.

Oppotunities are very where, you’d just have to look and hustle. Notice, I only say it’s might be “harder” to get the loan, but I didn’t say “impossible” heheh… 

As for now, I’m letting it to sit in and still keeping my cash. What do you guy think?

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7 comments on “Another Rental Property in the Work?

  1. Len
    November 29, 2016

    Hi, great blog post and thank you for sharing. Just wondering, where are you based in the US? All of those options above look awesome but I reckon the first one is the safest. Assuming that you would buy this property outright

    I am from Sydney, Australia and have invested in real estate in Florida since 2011. Do you have any thoughts on the property market there?

    Like

    • Vivianne
      November 29, 2016

      Hi, I blog anonymously, as I’m not ready to reveal my identity to the world just yet. All I can say is it I’m within 2 hours of DC.

      You agree with you on option 1 being the safest. The surrounding homes are super nice brick turn of the century/victorian houses, making this one look bad, but for the value, it’s the best, and I wouldn’t have to take on any more debt, and ROI is great. Maybe after fixing $180K and renting for $1800/mo.

      Florida market is exploding since 2011. Florida was in the deep water. At one point it was cheaper to buy then rent. I remember back in 2009-2011, there was a little girl buying a house for $10K. Granted the house she bought needed a lot of work, and her parents are flippers. LOL 🙂 It looks like you’ve done well for yourself for buying the house at the right time.

      Best of luck! If you do decide to go to the DC area, give me a shout, we’d hang out. LOL 🙂

      Like

  2. Investment Hunting
    November 29, 2016

    Nothing like having $200k burning a hole in your pocket. I like option 1, but I’d put 25% down and finance the rest. The remaining money would be invested in REITs. Maybe those REIT yields could help cover monthly mortgage payments.

    This is what I’d do. What will you do? 😉

    Like

    • Vivianne
      December 7, 2016

      Option 1 was no longer available. I chose option 4. I’ve just made a new post about that. I’m excited about the opportunities. More most to come regarding the property.

      Liked by 1 person

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