Instead of chasing after 5 separate houses, why not a quadplex with $100,000. I would do this in a heartbeat.

If this is the end goal within a few years, and you don't plan on actively investing for 5+ years to build out a team/structure, you may be better off as a passive investor from the start. Although total returns are higher in real estate, cash on cash returns are very similar to publicly traded REITs or dividend ETFs.

Read a few books on real estate investing to learn the power of leverage. I like the Unofficial Guide to Real Estate Investing. Here's a very basic explanation to get your juices flowing: Assume a house costs $200,000 and rents for $1,500. The market appreciates 3% per year. Buy one house for cash. In five years, you'll have Pay cash for one house and rent it for $1,500. After five years you'll have earned $90,000 in rent income and gained $34,000 in appreciation. Buy four houses with $50,000 down on each. Mortgage payment is $1,000 on each house, so you're essentially earning $500 per house or $2,000 a month. After five years you'll have earned $120,000 in rent income and gained $136,000 in appreciation. You've earned $132,000 more by splitting your money and leveraging it.

@Puett Willcox if you're getting 5 doors with 20k down per door, what type of properties are they, and what grade are they? (20k down usually means 100k purchase price, and I don't think there are many markets where you can get much for 100k...even in the midwest) ...but, I'd love to be proven wrong!

I would consider leveraging your money into multiple properties but I wouldn't be fixated on the number of homes. One home could cost 75k for down payment and renovation while anther could require only 25k depending on the deal. Cash is always safe but as long as you cash flow positive with a strong reserve you should be able to limit risk if financing.

Thanks for the advice William. Our goal is long term buy and holds. We are going to be empty nesters in a few years and would like to quit or jobs and move to South America and using the revenue to supplement some of our income. I'm retired military so I have a pension that can provide nicely in cheaper areas of the world.

I think this depends on what your ultimate goals are. I think that another option might be just to put a portion of it down for a property in the area you are wanting that is only 1 door but then spend half the year figuring out your team and getting everything settled. Then buy a quadplex or something else so you can get the economy of scale. Also depends on how much free time you and your wife have and the connections you have. Investing out of state takes more systems and you can't just go see the property whenever, unfortunately. If you haven't invested in out of state, make sure to go a bit slower so you don't lose your shirt if things go sideways.

I like the strategy - utilize leverage to grow/scale quicker... Maybe try to buy 3 doors and save the rest for reserves (CAPEX, maintenance, vacancy, etc.)

We have a load of multi by me. I think you just have to watch and wait.

@Puett Willcox educate yourself more before making a final decision without getting caught in analysis paralysis. Yes it would be better to leverage the banks money by getting 5 properties, but do you have the time and experience to manage all those properties?What are your goals in real estate? If you pay cash for a property at 100k, your return on equity would be low if you plan to continue growing. It depends on what your long term goals and short term goals are.

Followed Discussions Followed Categories Followed People Followed Locations

Starting Out

Market News & Data

Market Trends & Data

Buying & Selling Real Estate

Out of State Investing

Real Estate News & Current Events

Real Estate Technology

Investor Mindset

General Info

General Real Estate Investing

BiggerPockets Exclusive PRO Area

PRO

BPCON

New Member Introductions

Questions About BiggerPockets & Official Site Announcements

Off Topic

Starting Out

Real Estate Success Stories

Real Estate Horror Stories

Real Estate Strategies

House Hacking

Commercial Real Estate Investing

BRRRR - Buy, Rehab, Rent, Refinance, Repeat

Innovative Strategies

Mobile Home Park Investing

Land & New Construction

Multi-Family and Apartment Investing

Wholesaling

Rehabbing & House Flipping

Short-Term & Vacation Rental Discussions presented by

Tax Liens & Mortgage Notes

Medium-Term Rentals

Buying & Selling Small Businesses

Outdoor Hospitality

Landlording & Rental Properties

General Landlording & Rental Properties

Managing Your Property

Marketing Your Property

Tenant Screening

First-Time Home Buyer

Real Estate Professionals

Mortgage Brokers & Lenders

Contractors

Real Estate Agent

Financial, Tax, & Legal

Creative Real Estate Financing

Personal Finance

Insurance

Private Lending & Conventional Mortgage Advice

Tax, SDIRAs & Cost Segregation presented by

Foreclosures

1031 Exchanges presented by

Goals, Business Plans & Entities

Legal & Legislation

Real Estate Classifieds

Classifieds

Real Estate Events & Meetups

Reviews & Feedback

Ask About A Real Estate Company

Real Estate Deal Analysis & Advice

Guru, Book, & Course Reviews

Syndications & Passive Real Estate Investing

Updated about 2 years ago, 11/10/2022

10
Posts: 4
Votes

Puett WillcoxPoster

Starting Out

What to do with 100k

Puett WillcoxPoster

Posted November 08, 2022 09:51

I'm a newbie and looking for advice. My wife has recently received 100k from her employer. We are considering purchasing our second income property. My wife likes the idea of paying cash for a property in the mid-west and not having a loan. Our agent brought up a good idea that I like but my wife is hesitant about. Instead of spending all 100k on 1 door, buy 5 doors with 20k down on each. Thoughts?

3 Votes

26 Replies

Jump to Last Reply

Sort By:

Oldest

Loading replies...

Your Profile Views

Curious to see who's interested in your profile? Unlock your views with Pro

Connect with others

7 day free trial. Cancel anytime.

PRO

Upgrade to Pro

Market Finder - key investor metrics for all US markets

Deal Finder - investor-focused filters and notifications for new properties

Calculators - Unlimited access to 9+ property analysis calculators

Find an Agent

Find & Match With an Investment Friendly Real Estate Agent

Enter your market to get started

Rent Estimator

Address or ZIP

loading related articles...