First Rental Property: ONE Large Down Payment or Multiple Rentals?

Episode #977
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Every investor would love some extra cash flow…but at what cost? Does it make sense to go all in on a large down payment so that more money trickles in each month? If you want minimal debt, have no plans to scale, and are confident that your new property will appreciate, perhaps. But if your goal is to buy more rental properties and build your portfolio as quickly as possible, there are much better ways to leverage your cash position. In this Seeing Greene, we help a new investor navigate this exact scenario when buying his first property!
Next, we hear from someone whose earnest money deposit (EMD) is wrapped up in a failed medium-term rental. Should she cut her losses and walk away from the deal or weather the storm until the property can cash flow? Stick around to find out! Finally, we chat with an investor who has gone over his rehab budget and finds himself knee-deep in high-interest credit card debt. David and Rob walk him through the steps that will allow him to consolidate his bad debt and turn a ROUGH situation into MORE rentals!
00:00 Intro
01:30 Which Rental Should I Buy?
07:34 The Medium-Term Rental Fiasco
15:23 Comment Section Callout
19:06 Help, I’ve Gone OVER Budget!
33:05Ask Us Your Question!

[@MelissaHobbs-qm8wi]

Retirement planning can be quite overwhelming, especially when it comes to choosing the right investment options.

[@gisellmorales5007]

In Florida, between crazy HOAs and crazy insurance prices is hard to get to even 3% ROI.

[@theoliverpuma]

Have you considered equity build up, appreciation, leverage, and cash flow. Not just cash flow.

[@Ditronus.]

HOAs and cdd fees are killers. Outside areas with them are usually less desirable, too. I'm not saying you have to have homes in nice areas to make money, but yea. I think Florida's name as a RE goldmine is gone in large part to foreign companies buying up land, and also people like Mr. Green who have mined here long and hard. Much new inventory near or around cities are in master-planned communities.

[@makethingshappen8427]

Where I’m at duplexes have a 2k plus mortgages while you get 1700 from tenant you still end up paying out of pocket.

[@dianahappywise3030]

Thanks so much! As always, a lot of useful information! Really appreciate your help and time!

[@sbf-gf1ky]

Thank you guys for this amazing podcast! Is very helpful and makes people going forward with there dreams and goals! Keep on going! God bless you guys!

[@annettewebster982]

What would I need IN TOTAL for a 120k house with 3.5% down? I wanna know every cost to close the deal including required upfront MIP, taxes, upfront home insurance, and any fee necessary to close. Thank you to anyone who can help

[@Ditronus.]

I'm not sure there's a lot of new RE investors having an issue with this dilemma. Properties cost way too much nowadays compared to what they rent for. I got what I could pre 2020 in FL, but sheesh, seemingly nothing brings good cash on cash returns from what me and my agent sees. You're much better off in the stock market nowadays (that apparently increases with no end in sight) instead of the meager returns and large amounts of work and capital RE requires, it seems.

[@makethingshappen8427]

Yes there’s bubbles everywhere. No deals out there. Careful with the stocks, something seems off. High rates and stocks keep climbing signals the rates haven’t kicked in yet.

[@Ditronus.]

@makethingshappen8427 Oh, I hear you with the stocks. They keep climbing in large part due to the advent of AI. I'm not saying things are valued correctly, but AI is a big deal for many companies and a big deal for the world. I don't think people have grasped how market and life altering it is. This is all in spite of the rates, which are now going to start lowering, easing pressure on stocks. REITS like Realty Income or VICI have close to 6% dividends right now, which is a lot more of a coc return and a lot less headache than any house I've seen listed. I'm sure you can get better deals by being a pest to society, harassing people through robo calls and texts, like many people on Bigger Pockets engage in (including Mr. Green, I think), but I dont do that. Harassment campaigns are really bad in FL.

[@stevend481]

​@makethingshappen8427 of course there's deals, you just have to underwrite different and be creative. Stock market doesn't go up always lol. That's crazy to say

[@helloromie]

I am happy to hear the recommendation @david that you don't like to see people putting down a massive amount of money just for cash flow purposes - unless one anticipates appreciation over time. I was thinking to put down a bigger down payment, but like Rob said, I'd miss out on opportunities to buy more properties.

[@kregexsterstein]

Awesome advice

[@starletcarbins9222]

Well, I am new to this game and hearing all of this scared me to death! Nevertheless by the end of the year, I’ll be ready to move forward on my first house hack great information thank you all for doing what you do

[@gregorylewis9442]

Awesome show always with David and Rob!💯😎

[@RiskOnTrading]

With say 100k , duplex is the buy box , but it’s 50k down for 500k property for me currently. Do I buy 2x 250k duplex’s further away or 1x 500k one in the nicer part of town ? (Will have 50k left in reserves)

[@JevonMusicGroup]

My situation is very similar. My 100k is not cash though, it's in a HELOC. I would love to house hack a fourplex with as little down as possible... but multifamily, in general, is difficult to come by in my market. Good luck with everything!

[@tracy3066]

Or what about trying to get more rent by renting it furnished? I know it will cost money to do that but see could try to buy as much as possible on FB Marketplace or get things from Family/Friends.

[@Sangreaalstube]

So I buy a place for $75k of my own money, rehab costs $25k, and I then rent it out for $ 1750 mo. ARV is now approximately $225k-$250k. How much can I cash out in order to buy another place, rinse and repeat?

[@ImJoegath]

That’s an insane set of numbers. Like the greatest deal I’ve ever heard of, but for arguments’ sake, you can generally refi out 75-80%. So if the ARV is 225, you’d be able to take out about 170k. If those are numbers you’re projecting on an actual deal and not a hypothetical, please get a professional to review your estimates, because those are very much “too good to be true.”

[@IssacEinstein]

@@ImJoegathFacts

[@BrianOgilvie79]

I need a RE mentor in dayton ohio...i have $$$ and ideas but no experience

[@matiassaenz6346]

I’m in California looking to invest in Ohio. Looking for multi family ?

[@sarahb8073]

2:46 I'm sorry, did they say he could get into a house for 3-3.5%? When was this podcast recorded? Or am I missing something?

[@ericknutson9557]

3.5% is referring to the down payment

[@matiassaenz6346]

FHA loan 3.5 % have to live on it for a year then move out

[@gregorylewis9442]

Sell me apartment, so I can retire David.🤔😍💯