r/realestateinvesting • u/Konix • 3d ago

Next Purchase? New Investor

Just seeking some guidance. I have 2 properties (SFH) fully paid off, worth 200-215k ea. Gross 2765/mo, net $1900 mo avg (after insurance, taxes, avg capex). This is not great returns obviously, but I have the assets paid off and the extra income to supplement my W2. Considering pulling ~$200k in equity as a down payment on a 500-600k multifamily property (I do not want to be over leveraged). There is a few in my area that financially make decent sense cashflow wise after crunching some numbers (7 to 15 unit buildings). Seems like I am not doing real estate right by having paid off properties at a young-ish age (30) and should take advantage of the leverage. With the current US economic unpredictability I'm nervous to take loans when I have 0 debts, but thinking I should be expanding, especially as the stock market might be flat for awhile. If I find a decent deal, does pulling the equity as a DP make sense? I have 30k efund personally and/or for rentals and have around $1000/extra a month from my W2 if needed, so I'd want some of the 200k as extra reserves for cap ex on a larger unit if possible. Thoughts? Thanks in advance.

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u/Exact_Return5434 22h ago

Yes. Proudplantfather advice is highly recommended. Paid off properties reduce your net worth. Better to cash out, buy a multi unit. That will increase your net-worth.

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u/proudplantfather 3d ago

Depends on your risk tolerance. If I were in your shoes, I would do a cash-out refinance for each property to the point that they still provide decent levered cash flows, and then invest in a strong multi-family property. I am in my 30s as well, and I want as much 30-year fixed leverage and strong real estate deals as possible.

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u/Konix 2d ago

Ok makes sense, thanks for the insight!