What would you do with your money?

Question

If you had about $300,000 to spend, what in your opinion would be the best possible way (and place) to spend it today (2017-). I know there's no one right answer, but it helps to hear experienced investors' opinions as to what they personally would do now if they were beginning again in their career. We are in our young to mid 50s, so don't have a lifetime of time. We are considering the gamut, including storage rentals, etc. We are also open to going out of our area. We would really appreciate your experienced insights. We would expect to use a combination of cash and financing at some point.

Anthony Gayden · Answer

I would use that money to invest in a business, possibly a franchise, that has a high amount of cash flow. I would use all of the cash flow from that business to buy real estate.

Cody L. · Answer

Talk to a local multifamily broker and try to be put in a good 6-8 CAP apt building in the 1-1.5m range which you should be able to finance with your $300k Say it's. 1.2m property and a 6 cap and you pay 5% for the funds (75% LTV). You'll make 6% on your $300k and 1% on the 900k borrowed. So closer to 10% return with leverage. If the property goes up just 2% a year you gain another 2% return on equity gain on your $ down plus 6% due to leverage. So you're closer to 20% return on your $300k And that doesn't factor tax savings. And that's with a 6 CAP, 1.2m, 75% LTV, 5% rate. If any of those figures are better, so is your return.

Ray Bartle · Answer

I would buy rentals

Antoine Martel · Answer

Kathryn. I would buy rental properties as well so that you can begin to create some passive income for yourself and your family. I'll PM you.

Bill Goodland · Answer

If it was me, I would use the BRRRR method as much as possible. I'm assuming you are not maxed out on personal Fannie May loans? You clearly have the cash to buy a house in need of rehab and pay cash for rehab depending on your market. Even in your 50's, doing one BRRRR a year is very doable even with the 6-12 month "seasoning" periods banks want. Given that you are paying cash and I'm assuming good enough income and credit, I would think there would be plenty of lenders willing to give an 75-80% LTV note on the property right away with a tenant in place. Then of course repeat. You get the same benefits of flipping by essentially rehabbing it to add value, however none of the tax DISadvantages on flipping and all the tax advantages to buy and hold. Given that SFR's and small multi's are usually more liquid and easy to find then larger commercial, I would utilize the good Fannie may financing options first with that before trading up to something bigger. Always room to scale up, but I just wouldn't personally put it all into one business or leverage commercial property.

James Triano · Answer

@Kathryn BowdenThis scenario is not actually much different (albeit I had less liquid cash) than my own personal situation. Here is what my current strategy is:I have one rental property (SFH) which is getting my feet wet in residential property investing. I have developed numerous system through reading (BP books, and forums) and by trial and error. You can use a portion of your money for a down payment on a 1-4 unit building as your first rental. Use this time to develop systems and build relationships with property managers and local contractors. Then play Monopoly and move up to larger properties and increase your portfolio. Simultaneously, flip a house. You can use your funds to buy a property in disrepair for cash either on the open market or at a sheriff's sale or the like. This, again, will allow you to build systems, relationships and a business in flipping houses. Your goal here should be a 20% cash on cash return for your flips (since you say you have experience, this should work). Then, use your profits from flipping to buy another rental and so on. Of course, this is just my own personal strategy. My goal is to flip 2 houses, buy 1 rental, flip 2 houses, buy 1 rental in perpetuity until I have enough income from the rentals to retire on. It's a slow process but I believe it's going to be the best way for me to go. Plus, it's going to be fun, I simply enjoy the work I'm doing in real estate right now.

Kathryn Bowden · Answer

Oh, one other thing is we do have some flipping experience in our background, so we have some experience with what all that entails. We like the flipping business, but would want to do that in conjunction with something else, as we want something that will grow and produce passive income and equity/value. I didn't really think of the idea of a franchise - say like the coffee kiosk business or something. Something we could expand ....

Michael Vallee · Answer

One option to stay liquid and still see some double digit gains on your money is robotic trading software - give u Hedgefund level automated trading and it mitigates downside Rick - pulls you into cash position if any stocks get outside normal dips. http://flipstockmarket.com I've held my money here (15%) return and just pulled some out for a commercial deal. Cuz once money gets into real estate - can get stuck in down payment, repairs and such. As an option... Michael