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Updated over 1 year ago, 05/24/2023
Investment strategy: $500k liquid?
Hello BP members, I am new here and have been an infrequent visitor on bp over the last 4 years or so. I currently do not own any income properties but planning to take a plunge very soon. Here for advice, guidance and consultation.
Looking to invest up to $500k liquid to generate income, not restricted to any area/region - personal preference would be Chicago suburbs.
How do I best leverage my capital for cash flow? What would the seasoned and highly experienced investor do with $500k today? I am exploring various ooptions such as apartment buildings, single family homes, multi family homes, multiple condo units, reits.
I am not sure which route I will take yet. Any advice will be helpful.
#4 All Forums Contributor
- Lender
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#4 All Forums Contributor
- Lender
- Lake Oswego OR Summerlin, NV
Quote from @Account Closed:
@Kashif Khan Use the funds to be an equity partner on a small land development project.
while I personally like this and have done this for years .. If one has zero back ground or deep understanding of the process's this could be highly risky.
Wanna be land developers can be a pretty scary bunch and land development can be very unforgiving even to those of us with decades of experience and many projects behind us. Just my opinion on risk factor.
- Jay Hinrichs
- Podcast Guest on Show #222
Quote from @Jacob Valle:
@Kashif Khan Welcome to the world of real estate investing! As you look through the forums and online, you will find that there are countless ways to invest in real estate or to shape a deal. Because that can be overwhelming at times, I think the best way to succeed is to surround yourself with your own "team". This team could include a mentor, a mortgage broker, a real estate agent, a contractor, and a property manager. Together, in consultation with your team, you will find a confident path forward for a successful journey investing in real estate.
Feel free to reach out to me if I can be of any further help. Here in Ottawa, IL, we have all kinds of opportunities to invest in real estate, including new construction properties.
Quote from @Jim Biggs:
Connect with all the local meetups in Chicagoland. There is no right or wrong way. The most important trait is action. Remember the proverb "When is the best time to plant a tree" and make that your NorthStar. You will never know enough or be totally ready. BUT almost everyone who stays in the game long enough will move to multfamily for many reasons. My suggestion is start there either through syndication or if active.... start small and grow exponentially. ie start with a 4plex and if you add a new asset every 90 days you will do 4/5 deals in a year and own 124 units. Stay as close to home as possible and self manage the first couple deals if you can. But you are in a great area to invest.
I would use about 200K to get me into as many creative finance deals as I can.......i.e. sub to and owner finance.....and lease option them and just cashflow until market rebounds......
money now, money monthly and money later
Quote from @Kashif Khan:
Hello BP members, I am new here and have been an infrequent visitor on bp over the last 4 years or so. I currently do not own any income properties but planning to take a plunge very soon. Here for advice, guidance and consultation.
Looking to invest up to $500k liquid to generate income, not restricted to any area/region - personal preference would be Chicago suburbs.
How do I best leverage my capital for cash flow? What would the seasoned and highly experienced investor do with $500k today? I am exploring various ooptions such as apartment buildings, single family homes, multi family homes, multiple condo units, reits.
I am not sure which route I will take yet. Any advice will be helpful.
Much depends on your age. If you're older then I would look for fairly safe opportunities in the 5 to 10 cap range. I won't define what older means. But I'd invest in a fund.
In general though I recommend diversification Take a % of the cash and passively invest in a deal or two with other investors. If you are accredited you may be able to do this through a syndication.
While looking for the passive deals I'd recommend getting approved for a loan so you can become an active investor in deals of your own or even in partnership with others. Why a loan? Leveraging- Stretch your $500K for down payments and use other people's money, i.e. the bank.
Hey Kashif,
I used to live in Naperville - I miss the summers but DO NOT miss the winter time!
If you're not a home owner yet, have you thought about house hacking or doing a live in flip? If that doesn't work for you, I have heard of some folks doing successful MTRs in the Chicago Suburbs.
Another thing to consider is how active you want to be. If you wanna be active, it will be hard to do that out of state. However, if you want to be more passive - going out of state is a good way to make that happen.
Another option is going somewhere out of state where you can find a nice balance of cashflow and appreciation potential. Demographics in the South East are absolutely booming.
If you have any questions would love to chat - contact info is in bio!
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@Kashif Khan find a local investor who is an operator to partner with. Do an apartment deal or two where you use part (not all) of your cash and figure out how to do a value add JV deal where you get your cash back in a year or so on the refinance. Rinse and repeat. Naperville is close to Aurora and Joliet which are both nice submarkets for C class rentals. You also can head back towards the city towards more urban suburbs or even the city itself. You have a lot of options.
#2 Multi-Family and Apartment Investing Contributor
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#2 Multi-Family and Apartment Investing Contributor
- Rental Property Investor
- St. Paul, MN
That's a tough question to answer for you, without really understanding your goals. Are you currently employed or own a business? Are you looking to quit or add a 2nd job/business? Do you want to be passive? These questions and more will help carve the path.
You could make good money by passively investing in syndications, NNN Lease properties, hard money funds, etc. You could make good money by being active and buying commercial assets or small multi families.
Happy to talk advantages of being passive or active.
I think it really depends on whether you want to be an active or passive investor..
If active - choose an asset class, choose a market, connect with brokers, find a PM, look at 100+ deals, find one that works
If passive - investing in a syndication as an LP can be a great way to receive the benefits of real estate without having to learn the game/do the work
I am hosting a local meetup in Joliet at La Mex tonight at 630 if you would like to network with other investors and start building your team. The first event is free for all attendees. An attorney will be talking about the changes to the emotional support animal laws in Illinois which may be useful info for you - but the networking is where you will probably get the most value right now. People who attend my meetup have a wide range of experience, some of them full-time investors for multiple decades.
Personally I would look to BRRRR single family properties in the midwest. Find something for 50-100 that needs work, put 20-50 into it and refinance. Cash flow will be tight at current rates but you can keep reusing the 500k over and over and if it is too tight on cash flow or negative cash flow very easy to sell a renovated single family still.
- Jared Hottle
Quote from @Kashif Khan:
Hello BP members, I am new here and have been an infrequent visitor on bp over the last 4 years or so. I currently do not own any income properties but planning to take a plunge very soon. Here for advice, guidance and consultation.
Looking to invest up to $500k liquid to generate income, not restricted to any area/region - personal preference would be Chicago suburbs.
How do I best leverage my capital for cash flow? What would the seasoned and highly experienced investor do with $500k today? I am exploring various ooptions such as apartment buildings, single family homes, multi family homes, multiple condo units, reits.
I am not sure which route I will take yet. Any advice will be helpful.
It is entirely dependent on your goals, do you want to become an active investor? Explore options such as BRRR or house hacking. If you want to invest passively then explore other options such as syndication, just make sure you do your due diligence on who you park your capital with. Trust the jockey over the horse as they say. Good luck!!
Quote from @Aaron Mikottis:
I am hosting a local meetup in Joliet at La Mex tonight at 630 if you would like to network with other investors and start building your team. The first event is free for all attendees. An attorney will be talking about the changes to the emotional support animal laws in Illinois which may be useful info for you - but the networking is where you will probably get the most value right now. People who attend my meetup have a wide range of experience, some of them full-time investors for multiple decades.
Thanks for the invite. Unfortunately I am not available tonight. Hope to connect in the near future
Quote from @Jared Hottle:
Personally I would look to BRRRR single family properties in the midwest. Find something for 50-100 that needs work, put 20-50 into it and refinance. Cash flow will be tight at current rates but you can keep reusing the 500k over and over and if it is too tight on cash flow or negative cash flow very easy to sell a renovated single family still.
Thank you.
Quote from @Account Closed:
@Kashif Khan Use the funds to be an equity partner on a small land development project.
Sure. Help me get something aligned. I am open to this.
Can u dm me about future events. Thanks.
Quote from @Kashif Khan:
Hello BP members, I am new here and have been an infrequent visitor on bp over the last 4 years or so. I currently do not own any income properties but planning to take a plunge very soon. Here for advice, guidance and consultation.
Looking to invest up to $500k liquid to generate income, not restricted to any area/region - personal preference would be Chicago suburbs.
How do I best leverage my capital for cash flow? What would the seasoned and highly experienced investor do with $500k today? I am exploring various ooptions such as apartment buildings, single family homes, multi family homes, multiple condo units, reits.
I am not sure which route I will take yet. Any advice will be helpful.
I would consider building short term on the beach for a strong equity position and endless cashflow.
You could consider building new construction to sell immediately or BRRR.
Another strategy we are doing is buying homes or properties that need to be renovated or improved and turns into short term rentals to flip or potentially long term hold.
I never trade with more than 50% of my holdings so I have market exposure and can benefit from the long term effects of real estate or other forms of depreciation.
It depends on how much time you have:
A lot of time: Fix and flips, BRRRR, STR
Can devote some time: LTR, STR (provided you have a good management company)
No time at all: Syndication/silent partner