Have 200k to invest in real estate. Which option is better recc. Pros/cons?
CONT: For options —>

likeuplifting
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Option 1: 635k 4 unit at 5% down (~35k), and then buying an 800k 6 unit at 20% down (~160k). That’s 1.435M In controlled assets

OR

Option 2: 1 Million property multi-room 6 unit at 20% down (~200k). 1M Controlled asset.

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Option 1 has more units and option to leverage debt to access higher controlled asset but that’s 2 closing costs, 2 roofs, 2 properties to manage/sell later

Option 2 is only 1 property to manage and exit, 1 closing cost but lower value in controlled asset.

Thanks!

If you don’t own any other rental units, option 2. As mentioned earlier, managing 2 properties out of the gate could get overwhelming. Start with 1 and if you like it and want to stay in, you’ll have the money in a few years to get another.

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Pw1 - I was thinking the same. I will say I will be owner occupied to get the 5% down but then “change my mind” and just rent out all units.

I would want to deal with fewer tenants and units.

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More units = more cash flow! Gotta build up to more! Also, gotta work the numbers so that you can hire a property manager to deal with tenants for you.

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Why don't you Liquidate it

What do you mean? I’m trying to use the money to buy assets, not free up money

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Is the real estate market as hot in your area as it is in many other places?

I’d wait it out and buy when the prices normalize.

It is, but the numbers are solid enough to park my money in. As multi family properties the income will dictate the property value, not as much as primary homes are overpriced. I could be wrong though.

People have been saying home prices will crash for years - I’ve wait like 3 years now to pull the trigger because “housing market will crash/cool”

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I don't think we have enough information to provide useful advice. First one being more valuable doesn't mean much if it doesn't cash flow.

Fair enough. Let’s assume all properties cash flow similar margins. So if option 1 first property was bought for 20% down, it would cash flow similar percent as another property with 20%. With only paying 5% down, I would certainly expect a much smaller cash flow.

Check out REIT funds with good yield and no heavy lifting. Global X fund SRET for example

Thanks, but not looking into REITs. I’d like to take advantage of the real estate tax incentives with owning and building my own portfolio!

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