I have 600K to invest

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I have 600K to invest

Lindsay G.
Member since 2018 · 10 posts · 5 votes

Hello,

I'm wondering what my next/first move should be. I have about 600k to start real estate investing. 250k of that is savings and 365k of it is a HELOC. I am interested in buy and hold multifamily investing but am really open to anything. I work full time making over 500k per year. I currently own my home.

These are my goals:

1. Ultimately to make enough money in RE so that I can cut back on my hours and scale quickly

2. Buy another primary home (will rent out my current multifamily) within the next year or 2

3. Buy a second vacation home which will also be a STR which I want to do immediately

I was planning on using my savings for the vacation home and my HELOC to start buying properties. Would you put 20% down towards multiple properties at once? Use the entire amount as a down payment towards a larger property? buy places cash and refinance? Become and investor on other projects? I just don't know where to start.


Any advice would be great and I am not limited geographically.

Thanks!

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Greg R.
Investor · Dallas, TX · Member since 2016 · 887 posts · 1k+ votes
4y

Please not another "I have 'x' to invest what do I do" thread. Rule #1 don't tell anyone how much money you have to invest. If this is even a real scenario you are just going to attract the vultures by telling the whole world that you have over half a million dollars to invest. 

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  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    4y

    With how much you make I would look for 10+ units on multi family. You could also look into syndications. I think STR's are great too just find the area you want with a PM to manage it. You could look into SF's in OOS markets but it'd take more time/deals to get to where you want

    1Reply
  • Patrick DruryBusiness Member
    Real Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
    4y

    @Lindsay G.
    Decide on the market you will be investing in and get to know it. If you are investing locally and the numbers make sense, then do that or if it's too expensive, no cash flow, and not favorable landlord laws, then look out-of-state. In both situations, network and build your team. If out of state you will rely heavier on BP to build your,r team. As someone in the state, you can go to meet-ups and join a local REIA.

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  • Greg R.
    Investor · Dallas, TX · Member since 2016 · 887 posts · 1k+ votes
    4y

    Please not another "I have 'x' to invest what do I do" thread. Rule #1 don't tell anyone how much money you have to invest. If this is even a real scenario you are just going to attract the vultures by telling the whole world that you have over half a million dollars to invest. 

    6Reply
  • Alex Russell
    Lender · Boca Raton, FL · Member since 2022 · 40 posts · 24 votes
    4y

    Hey there @Lindsay G.!

    One of my favorite options that I always recommend to new investors is actually being the Lender on a hard money loan. This gives you the ability have 100% passive income  - beginning the day you invest, without the hassle of doing the renovation, get permits, contractors, find a renter,  etc

    Every deal has equity at closing, and in many cases, there is usually 20-30% of equity, making it extremely safe.

    What's the downside?

    The downside is actually the upside. In the event of a default where if you did have to take back the property, you can simply resell it and get the equity spread or even keep the property for yourself which you essentially purchased at a discount. 

    I hope this helps! 

    Feel free to reach out if you have any questions.

    2Reply
  • Austin Steed
    Real Estate Agent · Columbus, OH · Member since 2016 · 593 posts · 664 votes
    4y

    Heloc's are great for an operating account. BRRR strategy is how I really got my portfolio rolling in Columbus OH.

    Use heloc to purchase property, renovate and get perm financing on the property and then use the Heloc again. BRRR are a little tricky right now not knowing where interest rates will be in 9 months (usually takes me 9 months for full rehab) nonetheless, it's a good way to put your money to use.

    1Reply
  • Ricardo Hidalgo
    Real Estate Agent · Member since 2019 · 569 posts · 257 votes
    4y
    Quote from @Lindsay G.:

    Hello,

    I'm wondering what my next/first move should be. I have about 600k to start real estate investing. 250k of that is savings and 365k of it is a HELOC. I am interested in buy and hold multifamily investing but am really open to anything. I work full time making over 500k per year. I currently own my home.

    These are my goals:

    1. Ultimately to make enough money in RE so that I can cut back on my hours and scale quickly

    2. Buy another primary home (will rent out my current multifamily) within the next year or 2

    3. Buy a second vacation home which will also be a STR which I want to do immediately

    I was planning on using my savings for the vacation home and my HELOC to start buying properties. Would you put 20% down towards multiple properties at once? Use the entire amount as a down payment towards a larger property? buy places cash and refinance? Become and investor on other projects? I just don't know where to start.


    Any advice would be great and I am not limited geographically.

    Thanks!


     What are your desired cash on cash returns and appreciation when looking at an investment? Are you looking for short term or long term plays? 

    0Reply
  • Don SpaffordPro Member
    Investor · Idaho Falls, ID · Member since 2016 · 912 posts · 629 votes
    4y

    @Lindsay G. If your goal is to replace your income, it will take some time. Most people look to replace under $100k of annual income which even that can take some time. I am finally at that point after 5 years of investing. I went from 4 plexes to development, to now syndicating RV Resorts.

    So the question is what do you need? Are you looking for cash flow now? or building wealth to multiply your investment in the near future? If your job requires a lot of time you may prefer to invest in syndications, as someone else mentioned. For me personally, I find the highest returns with RV Resorts which provide both great cash flows and equity multiples.

    However, if you want more individual control then with that amount of cash you could purchase a medium sized property, possibly a 12-20 unit depending on the location. My opinion is that if you want to directly purchase a property, unless you are doing STR, you will be better off with one good sized multi-family than with several single families. But I would not buy cash with any of them unless you plan to BRRR or if it can get you the best price and then refi later. But then your money is tied up longer to keep you out of other opportunities.

    Lots of options, but really nobody can tell you what is best, that is for you to decide based on your needs now and your goals for the future. But if you are interested in investing in some build to rent multi-family or Value-add RV Resorts, I will be happy to tell you about what I am doing.

    2Reply
  • Adam Bartling
    Lender · Rosenberg, TX · Member since 2022 · 286 posts · 130 votes
    4y

    @Lindsay G. all depends on how risk adverse you are!  That is the correct answer. 

    Rental, Flip, Syndication, Development (hint) All your decision.

    0Reply
  • Scott Sklare
    Real Estate Broker · Beloit, WI · Member since 2015 · 232 posts · 60 votes
    4y

    Hello Lindsay.

    I sent you a DM - please check your inbox.

    I have some specific, concrete recommendations for you.  Congrats on your accomplishments. 

    0Reply
  • Corby GoadeBusiness Member
    Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
    4y

    Sounds like a great problem to have!

    If you want to scale quickly and free up some of your time, I'd be BRRRRing with that HELOC. That's generally how I invest personally. You can reuse that money over and over. You can BRRRR multis, SFH and vacation homes.

    You can just put 20% down if you want, that's the simplest way to do it, but value add and refi's will help you scale whether you pay cash or do a conventional loan with 20% down, I'd try to keep recycling those funds until you are 100% FIRE. 

    Best of luck!

    2Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Lindsay G.:

    Become an accredited investor and put your money into syndications.

    Brandon Turner crunched the numbers a few years back. He discovered he was putting in a lot of effort and his return wasn't much better than people investing in syndications. So he sold most of his property and invested in syndications, dramatically reducing his workload while keeping healthy returns.

    You may want to investigate and learn from his experience.

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  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    4y

    One of the biggest advantages of real estate is the ability to use leverage, so I would lean toward using loans to buy properties. With the recent Fed increases though, it might be worth waiting and seeing a bit if rates come down early next year (we should know by whether they can move the dial much on inflation by the end of the year). Then maybe refinance after a cash purchase when rates are down. Getting a HELOC is a very good idea though.

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  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    4y

    Buy rental props below appraised value with 10% ++ net caps, with PM in place. 

    1Reply
  • Melissa Wesling
    Investor · Chicago, IL · Member since 2020 · 148 posts · 97 votes
    4y

    If you want to invest in STRs to build equity or cash flow, but aren't sure which market to look into, I am happy to discuss!  

    0Reply
  • Colton Hahn
    Specialist · Member since 2021 · 322 posts · 273 votes
    4y
    Quote from @Lindsay G.:

    Hello,

    I'm wondering what my next/first move should be. I have about 600k to start real estate investing. 250k of that is savings and 365k of it is a HELOC. I am interested in buy and hold multifamily investing but am really open to anything. I work full time making over 500k per year. I currently own my home.

    These are my goals:

    1. Ultimately to make enough money in RE so that I can cut back on my hours and scale quickly

    2. Buy another primary home (will rent out my current multifamily) within the next year or 2

    3. Buy a second vacation home which will also be a STR which I want to do immediately

    I was planning on using my savings for the vacation home and my HELOC to start buying properties. Would you put 20% down towards multiple properties at once? Use the entire amount as a down payment towards a larger property? buy places cash and refinance? Become and investor on other projects? I just don't know where to start.


    Any advice would be great and I am not limited geographically.

    Thanks!


     It depends what your goals are to be honest. If you want to buy single family homes, and actively manage them then start looking into different regions with fundamentals that point to future growth (income growth, job growth, population growth etc).

    If you want to passively own them, then you should look into syndicators in regions and asset class that you think will perform well (southwest, southeast, midwest etc, and you can target multifamily, retail space, single family etc) and start finding operators that align. For example we buy commercial multifamily in the midwest exclusively and know that region well.

    Hope you find what you are looking for!

    1Reply
  • Caleb Bryant
    Rental Property Investor · Huntsville, AL · Member since 2015 · 401 posts · 309 votes
    4y

    @Lindsay G. First of all, congrats on getting set up to invest! I was in a similar scenario as far as cash to invest at one point as well but my income was much lower than your yearly so keep that in mind. I did a mix with my cash as far as strategy. I put a couple hundred G’s into syndications as a limited partner (I had no active involvement in the deal beyond getting the sponsors and the property). The cool thing about this strategy is it may (talk to your cpa) help you offset some taxes from your income, all while providing cash flow with a pop of cash at the end of the deal. I also did some private lending with some of the cash with local investors. This is a little more active just because you want to make sure you’ve looked at other projects they’ve done, know their reputation, etc. Then finally I also invested in a couple of joint ventures with other investors to own smaller multifamily. I wanted this in addition to the syndications to have more control and to have an opportunity to learn more about how the operations of a deal work. Hope this gives you some ideas to move forward with!

    0Reply
  • Alex BreshearsBusiness Member
    Lender · Springfield, MO · Member since 2020 · 351 posts · 504 votes
    4y

    I don't know if you have thought about this, but since it sounds like you want cash flow from your investment so you can cut back on hours at work, how about cash flow NOT tied to a tenant making a rent payment or guests booking your home? The reason I ask is that if you decided to look into private lending, $600k could easily be about $6000 a month in interest income.  Not sure what your overall financial goal is, but this is a real estate business you can do from anywhere, rarely are there emergencies you have to take care of right then, and you are geographically free to live anywhere. I live part time in three different places and travel to conferences and to see business partners multiple times a year. That's really what I wanted and needed more than saying I had X doors to my name. My goal is actually to not own a long term rental ever again lol. It just doesn't suit my personality, lifestyle or investing goals at the moment.  Just a thought with that amount of liquid capital, it would be quite easy to get involved in private lending and make some immediate cash flow in the next 30 to 60 days.

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  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    4y

    Some people are probably looking for the swipe right function...

    1Reply
  • Paul Riley
    Investor · Philadelphia, PA · Member since 2020 · 82 posts · 36 votes
    4y

    Hi @Lindsay G.

    It sounds like a more passive approach is what you're looking for. I'd recommend passively investing in syndications and/or lending on RE investors' projects.

    If you start actively doing deals, just be prepared to put a lot of time and effort into it.

    My favorite "passive" asset are performing notes. You get the monthly cashflow of a rental without the headaches of repairs or property management.

    0Reply
  • Simon Ashbaugh
    Realtor · Columbus Ohio, Cleveland Ohio · Member since 2022 · 849 posts · 830 votes
    4y

    Are you wanting to BRRRR your long term rentals? or buy turn key?

    I would not dump all your cash into one property unless you can cashout refi most or all of it. split it up and buy multiple properties. 

    Have you determined a market to invest? id be happy to recommend a few if you need.

    0Reply
  • Paul MoorePro Member
    Commercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votes
    4y

    Hi @Lindsay G.! Congratulations on your success so far! I'm in my 3rd decade as a real estate investor and I am pretty sure I know what I would do if I were in your shoes. 

    While I'm still working a full time job, I would NOT start investing in active real estate on the side. I would not flip homes, I would not do short-term rentals, I would not do Air BnB. It sounds like you have a demanding job if I were to guess. I would not add to my hours and stress by doing something part time where you could lose money, time, health, etc. I would start by carefully investing this money in passive real estate syndications and funds. You are clearly accredited from what you said about your income. I would build up my passive income stream and over time, slow down, and potentially leave my job. Then, and ONLY then, would I consider leaving my job and diving into actively managing properties. Then you could do residential or commercial. Whatever you do at whatever point, I recommend diversifying safely across multiple operators, funds and asset classes. I hope that helps. Good luck and happy investing!

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