In a few weeks, I will have roughly $40,000 coming in from a flip that I can do with whatever. I have a few things to look at and am going to present some #'s for you folks to chew on. What would you do?

I could do another flip and create another 20,30,40k from this $, then rinse and repeat.

I could use it to fix up my current project without getting a mortgage and have around 20k left over.

I could pay off some of my wifes school loans. A combo of loans totaling 40k would save us around $228 a month.

I could pay off 2 small rental mortgages totaling $22,000 and have $204 freed up a month with some $ left over. Both houses are worth 75-80k combined.

I could pay off one rental with a mortgage of $36,000 and free up around $200 a month ad have 6k leftover. House is worth around $115,000.

I could pay off one house with a mortgage of $41,000 and free up $326 a month. (this is one house I've been leaning towards selling, its worth $100,000)

Bury it in the desert?

Go to Vegas?

Just looking for some ideas and different perspectives. My biggest concern with paying off some of the bigger mortgage is that once the money is spent, its years to get it back with no money left to do flips for a while.

You are rather young so I am inclined to believe you will want to grow the business. At the same time, the market place has been good for a while and I tend to believe we are closer to a market turning point than we are form a real estate upswing.

Around here lots of folks are doing flips......and that scares me when so many new faces enter the game. Since flipping is the rage, how about locating some whole sales to sell to the flippers?

Its that or you can reinvest the money using the second most popular ground hog in Pa.

all kidding aside I will suggest you putting say 10 to 20K into buying [and holding] into real-hold- in-your-hand gold.

SOLID gold is harder to get, but 14 & 18K gold jewelry [the kind with no stones], i.e. chains/bracelets can very often be bought at just under the current melt value.

there are many auctions in your state and with a little education you could build up a solid stock. Right nowe the price has been a bit on the low side and [IMO] there will be inflation and subsequent weakening of the dollar which will result in gold prices rising.

Interesting choices.

What matters most is what's missing from the info.

What are your short and long term goals and plans? Without working this info into the equation, tough to make the call on what's best.

Lunch kitty!

I am all for being debt free. That said, on this forum you report on very profitable flips, and you report on not so great rental experiences.

I advise keep your $40k at the ready for flips, and extract yourself from your current collection of rentals.

Ok, here's what I'd do.

First, make sure I'd have 12 to 18 months of all expenses set aside. Half in cash or equivalents half in something I could cash out in under 3 months.

Then I"d assess my local area as to how flips and rentals are doing. How much competition, etc.

I'd use whatever was left over to do more flips, using max leverage and as little of my own money as possible. Much better to pay a few dollars in interest than put your personal funds at risk.

Then I'd consider larger projects if they are feasible.

As other have said you are still young. I would keep X% liquid to make sure you have a well funded stuff happens fund. With the rest i would put it back into the business to create more $$$.

Since you have success with flips, I would be inclined to rinse and repeat. As far as your wifes student loans what is the effective interest rate (interest rate LESS tax savings) and compare that with the rate of return on a flip.

Paying off a mortgage would create a 5% ((or whatever the mortgage rate is) LESS tax savings ) rate of return/savings.

Dave Ramsey would say pay off the loans. If you can reinvest and make another $20k, how about doing that then taking half that profit toward the loans. Keep building the business, so long as the lans are covered.

Or you could buy a pretty nice Rolex.

And gift it to me. ;-)

Dave Ramsey would say make sure you have an

emergency fund set aside which I agree with.

Pay off some of your smaller debts to free up

more cash to buy more rentals if that is what you

I can't comprehend how you're making 40k out in the boonies in low income areas after closing costs and capital gains on a flip. God bless, I know I'm jealous. Any property out here under 150k with those types of potential gains are bidded up through the roof. Only gains I see like that are on properties with a lot of foundation issues. I now have my basement guy/structural engineer on speed dial these days to look at houses.

To answer your question I would buy a small sfh rental outright with that cash. Put any rehab on 0% interest 18 month credit cards and rent it out. The first year will pay the credit cards off. Probably would put some money into Amazon as well. I hear they're going to revolutionize(in a bad way) grocery shopping as we know it. Gratz on the great returns.

I'm pretty sure you already have a emergency fund worked out so from my perspective, like others have mentioned, I would use the money to fund more rehabs and keep churning that back into more rehabs to build more capital and look at taking a % (like 10% - 25%) to get any personal debt paid off like the student loans.

I wouldn't want to use a large chunk of capital outright unless I knew I could continuously generate more capital on a regular basis (wouldn't want to kill the business momentum), so personally like the idea of using the capital to fund more deals and use a portion to pay the personal debt off ASAP.

NE,

As your business gets larger you need larger savings to support it.

Personal emergemcy fund AND a large cushion for the biz.

Caution with consolidating loans. Those companies do it because it because they make money doing it - from your wallet. Keep your pencil sharp.

At your level you do not need money to make money with RE.

And having a fat wad of cash in the bank gives you a new level of confidence when negotiating - you are no longer desperate and the sellers sense that - They sense you don't NEED their property and can walk away.

Cash in the bank brings deals to you. Opportunites come to you. - Earl Nightingale

BRAD

NE,

As your business gets larger you need larger savings to support it.

Personal emergemcy fund AND a large cushion for the biz.

Caution with consolidating loans. Those companies do it because it because they make money doing it - from your wallet. Keep your pencil sharp.

At your level you do not need money to make money with RE.

And having a fat wad of cash in the bank gives you a new level of confidence when negotiating - you are no longer desperate and the sellers sense that - They sense you don't NEED their property and can walk away.

Cash in the bank brings deals to you. Opportunites come to you. - Earl Nightingale

BRAD

NE,

As your business gets larger you need larger savings to support it.

Personal emergemcy fund AND a large cushion for the biz.

Caution with consolidating loans. Those companies do it because it because they make money doing it - from your wallet. Keep your pencil sharp.

At your level you do not need money to make money with RE.

And having a fat wad of cash in the bank gives you a new level of confidence when negotiating - you are no longer desperate and the sellers sense that - They sense you don't NEED their property and can walk away.

Cash in the bank brings deals to you. Opportunites come to you. - Earl Nightingale

BRAD

Why not paying down your primary residence loan and create a nice equity and use that as line of credit for next flip?

As long as your rentals are cash flowing and the mortgages are low interest fixed I'd keep the money rolling doing flips.

Generate a nice pile of cash. If you have a lot of cash you can make money no matter what happens with the market.

I would take the 40K and do another flip to make 20K, 30K, 40K.

I guess I am a little confused on the flipping. Why would you take $40K that you will have free and clear and invest in another flip that you could make 20k-40k on? If you invest 40k and make 20k on the flip, how have you made money? It seems to be a 20K loss to me, not including the time and money spent on the 40K investment.

I am not a flipper so maybe I am misunderstanding how it works.

Personally I would not do a flip with it. What happens if the market drops unexpectedly and all of the sudden, you have to sell the flip at a loss.

Personally I would pay off the student loans and put any extra you have in the bank to use for emergencies. An extra $228 is not a lot of money generated BUT it is a personal expense and even though it may be deductible,I think that sometimes expenses that you can deduct from income, is helpful.

I paid off some rentals once and then really missed that interest that I had been deducting and had to pay more income tax.