Currently have $800k cash and looking to get into real estate Need advice.

Member since 2023 · 4 posts · 5 votes

Good Afternoon Eric,

It is wonderful to hear of your success of your previous investments and management of your current assets. The next step should be investing in real estate! I work in Northwest Florida and recommend it as an area to check in to for rental investments. We are experiencing incredible growth here and it is an area that always does well despite market shifts and economy because we are surrounded by 3 major military bases. In addition, our beautiful beaches and tourism are flourishing. Residential rentals, house flips and vacation homes are hot in the area. If you want I would be happy to email you some comps. I am an investor and real estate broker myself.

Best regards!

2 Reply

Zachary Cain Humphrey

Investor · KY · Member since 2022 · 204 posts · 77 votes

2y

Quote from @Eric MacDonald:

Hello All!

I would like to provide a brief overview of my current professional and financial status. At 36 years of age, I am serving as a Vice President at my existing firm. My financial liabilities are confined to the mortgage on my primary residence. I have diversified my investments into the stock market and cryptocurrencies, both of which are performing exceedingly well. Additionally, I am the proprietor of a small business in the wedding industry, which is principally managed by my wife and generates approximately $50,000 annually.

While I have no intention of resigning from my current position, I am keen on expanding into the realm of real estate investment, an area I've long been interested in.

Together with my wife, we aspire to develop a portfolio that includes both long-term and, eventually, short-term rental properties. Our objectives for the next 2 - 3 years are as follows:

To generate a monthly cash flow of $6,000 - $8,000, though we are open to exceeding this initial target.
To invest in properties that will appreciate in value over time.
To diversify our investment portfolio to mitigate risk and maximize returns.

In pursuit of these goals, I am seeking advice from this group on several points:

Considering my available capital, would it be more strategic to purchase several properties outright, focusing on single-family homes in the $150,000 - $200,000 range that require minimal renovation? Alternatively, would it be wiser to leverage my funds by placing a 50% down payment and servicing the remaining mortgage over time?
While we are committed to learning as much as possible, we intend to employ a professional property management firm to oversee the long-term operations. I welcome any recommendations or considerations on this matter.
Finally, should we consider investing in a larger multi-unit complex, such as an 8 - 12 unit apartment building, instead of individual single-family homes?

I know there are pros and cons to single-family homes vs apartment complexes but would love to hear from this group

Your insights and experiences would be invaluable in helping us navigate these decisions and shape our strategy.

Your strategy is very well thought out! This is exciting to enter the real estate space. I highly recommend bypassing the LTR route altogether unless you invest in multi family. I would recommend investing in multiple STR's where returns are 20-30% vs. LTR single family where returns are next to nothing in the immediate phase. If cash flow of 6-8000$ is important to you, STR is really your best option. Much more fun and attractive as well to invest in the manner. Best of all people staying in your home do not obtain tenant rights.

1 Reply

Eric MacDonald

OP

Member since 2023 · 7 posts · 10 votes

2y

@Zach Great info! Do you have STRs?

0 Reply

Eric MacDonald

OP

Member since 2023 · 7 posts · 10 votes

2y

Quote from @Katie Peugh Davis:

Good Afternoon Eric,

It is wonderful to hear of your success of your previous investments and management of your current assets. The next step should be investing in real estate! I work in Northwest Florida and recommend it as an area to check in to for rental investments. We are experiencing incredible growth here and it is an area that always does well despite market shifts and economy because we are surrounded by 3 major military bases. In addition, our beautiful beaches and tourism are flourishing. Residential rentals, house flips and vacation homes are hot in the area. If you want I would be happy to email you some comps. I am an investor and real estate broker myself.

Best regards!

Yes please send me some information!

0 Reply

Eric MacDonald

OP

Member since 2023 · 7 posts · 10 votes

2y

Quote from @Zachary Cain Humphrey:

Quote from @Eric MacDonald:

Hello All!

I would like to provide a brief overview of my current professional and financial status. At 36 years of age, I am serving as a Vice President at my existing firm. My financial liabilities are confined to the mortgage on my primary residence. I have diversified my investments into the stock market and cryptocurrencies, both of which are performing exceedingly well. Additionally, I am the proprietor of a small business in the wedding industry, which is principally managed by my wife and generates approximately $50,000 annually.

While I have no intention of resigning from my current position, I am keen on expanding into the realm of real estate investment, an area I've long been interested in.

Together with my wife, we aspire to develop a portfolio that includes both long-term and, eventually, short-term rental properties. Our objectives for the next 2 - 3 years are as follows:

To generate a monthly cash flow of $6,000 - $8,000, though we are open to exceeding this initial target.
To invest in properties that will appreciate in value over time.
To diversify our investment portfolio to mitigate risk and maximize returns.

In pursuit of these goals, I am seeking advice from this group on several points:

Considering my available capital, would it be more strategic to purchase several properties outright, focusing on single-family homes in the $150,000 - $200,000 range that require minimal renovation? Alternatively, would it be wiser to leverage my funds by placing a 50% down payment and servicing the remaining mortgage over time?
While we are committed to learning as much as possible, we intend to employ a professional property management firm to oversee the long-term operations. I welcome any recommendations or considerations on this matter.
Finally, should we consider investing in a larger multi-unit complex, such as an 8 - 12 unit apartment building, instead of individual single-family homes?

I know there are pros and cons to single-family homes vs apartment complexes but would love to hear from this group

Your insights and experiences would be invaluable in helping us navigate these decisions and shape our strategy.

Your strategy is very well thought out! This is exciting to enter the real estate space. I highly recommend bypassing the LTR route altogether unless you invest in multi family. I would recommend investing in multiple STR's where returns are 20-30% vs. LTR single family where returns are next to nothing in the immediate phase. If cash flow of 6-8000$ is important to you, STR is really your best option. Much more fun and attractive as well to invest in the manner. Best of all people staying in your home do not obtain tenant rights.

Curious for those who opt to doSTR out of state for the first investment on how the logistics work out, building a team or resources to clean the home etc.

0 Reply

Katie Peugh Davis

Member since 2023 · 4 posts · 5 votes

2y

I would recommend hiring a local property management company for that. They would handle the advertising, tenant screening, legal paperwork such as rental agreements, perform property condition inspections and any maintenace or turnover work such as cleanings. They would also handle any issues with the tenants/guests and track your expenses and income for you. Some people do try to do it on their own, but sometimes it can be a major disaster and a lot of work.

0 Reply

Mya Toohey

Real Estate Agent · Tampa Florida · Member since 2013 · 630 posts · 303 votes

2y

I am in the Tampa, Clearwater and St Pete are of Florida. It is great for all investments for a rental portfolio. I am happy to help in my are or answer any questions you may have.

Best of luck!

Mya

1 Reply

Account Closed

Accountant · San Diego, CA · Member since 2019 · 1k+ posts · 552 votes

2y

Hello Eric!

Today I just had lunch with a friend in a similar situation. Bear with me here, ask yourself the following:

Could your wife be considered a "real estate professional" from a tax perspective?

To qualify as a real estate professional, a taxpayer must satisfy the following tests: Perform more than 50% of services in real property trades or businesses (“50% test”), and. Perform more than 750 hours of service in real property trades or businesses (“750 hours test”)

We want to know that to determine which real estate you should consider buying. Paying taxes is our highest expense, and if we can get those reduced or even eliminated, it will severely juice your returns in the positive direction.

If you have that much cash, you maybe able to buy a small apartment complex, around 1.5mil for example, and only put 25% down. Then with the remaining cash, you can put that into stocks, lend it out, buy corporate bonds with nice yields or even buy more real estate. The losses generated from that 1.5mil building via cost seg and depreciation would be more then enough to offset your income, and you could invest in other things if your not comfortable putting all your eggs in one basket. Our first few deals are rarely our best, so buying multiple deals allows you to learn quicker and make mistakes without to much at risk.

Please let me know if that helps! My wife and I were in a similar situation and this plan I described above is what worked for us.

2 Reply

Eric MacDonald

OP

Member since 2023 · 7 posts · 10 votes

2y

Quote from @Account Closed:

Hello Eric!

Today I just had lunch with a friend in a similar situation. Bear with me here, ask yourself the following:

Could your wife be considered a "real estate professional" from a tax perspective?

To qualify as a real estate professional, a taxpayer must satisfy the following tests: Perform more than 50% of services in real property trades or businesses (“50% test”), and. Perform more than 750 hours of service in real property trades or businesses (“750 hours test”)

We want to know that to determine which real estate you should consider buying. Paying taxes is our highest expense, and if we can get those reduced or even eliminated, it will severely juice your returns in the positive direction.

If you have that much cash, you maybe able to buy a small apartment complex, around 1.5mil for example, and only put 25% down. Then with the remaining cash, you can put that into stocks, lend it out, buy corporate bonds with nice yields or even buy more real estate. The losses generated from that 1.5mil building via cost seg and depreciation would be more then enough to offset your income, and you could invest in other things if your not comfortable putting all your eggs in one basket. Our first few deals are rarely our best, so buying multiple deals allows you to learn quicker and make mistakes without to much at risk.

Please let me know if that helps! My wife and I were in a similar situation and this plan I described above is what worked for us.

My wife could certainly move towards that path. Assuming she does get that status would LTR or an apartment complex be the better path in your opinion?

0 Reply

Travis Biziorek

Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes

2y

Eric, so much to unpack here. But first, I see you're in Ann Arbor. My wife and I nearly relocated there in 2017... we even had offers on several properties before we grew tired of being outbid and ended up moving to Troy.

I like the idea of staying local for you or, at most, investing in the Detroit market. I'm biased there as I have 12-doors.

In Detroit you could hit a 10% cash-on-cash return unlevered. That would hit your goal pretty easily. And if you are staying in B class areas of Detroit I believe you'll see appreciation as the city is on a major upswing.

That said, you probably can't go wrong staying in A2!

Starting out, I would recommend going slow and only buying 1-2 properties at first. Give it some time, see if it's something you enjoy, and then scale up. You have a lot on your plate... real estate could be more work or mental bandwidth than you realize/are wanting to expend.

Personally, I like starting with SFH's or small multi stuff like duplexes. It's a great way to learn while being hands on and much easier to exist if you decide it's not for you. As you gain experience larger MFH stuff may make sense.

But of course, everyone is different. Hope that's helpful to some degree!

2 Reply

Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

2y

@Eric MacDonald

a few random reactions below... (I always wonder about these "I have $XK cash" posts...i hope you're real!)

-your goals aren't particularly specific. just about everyone wants cash flow, appreciation, and diversification.

-start local.

-definitely employ a PM. there is no reason whatsoever not to based on your situation.

-LTR and STR are very different. which do you want? similarly, SFHs and small apartment buildings are very different. which do you want?

-if you buy on-market single families requiring minimal renovation, you won't cash flow - you might even be negative.

-find the local REIA meetings and go to all of them. if you have to drive 30 or 45 or 60 minutes to find a few, so be it. see what everyone else is doing.

0 Reply

Account Closed

Accountant · San Diego, CA · Member since 2019 · 1k+ posts · 552 votes

2y

Quote from @Eric MacDonald:

Quote from @Account Closed:

Hello Eric!

Today I just had lunch with a friend in a similar situation. Bear with me here, ask yourself the following:

Could your wife be considered a "real estate professional" from a tax perspective?

To qualify as a real estate professional, a taxpayer must satisfy the following tests: Perform more than 50% of services in real property trades or businesses (“50% test”), and. Perform more than 750 hours of service in real property trades or businesses (“750 hours test”)

We want to know that to determine which real estate you should consider buying. Paying taxes is our highest expense, and if we can get those reduced or even eliminated, it will severely juice your returns in the positive direction.

If you have that much cash, you maybe able to buy a small apartment complex, around 1.5mil for example, and only put 25% down. Then with the remaining cash, you can put that into stocks, lend it out, buy corporate bonds with nice yields or even buy more real estate. The losses generated from that 1.5mil building via cost seg and depreciation would be more then enough to offset your income, and you could invest in other things if your not comfortable putting all your eggs in one basket. Our first few deals are rarely our best, so buying multiple deals allows you to learn quicker and make mistakes without to much at risk.

Please let me know if that helps! My wife and I were in a similar situation and this plan I described above is what worked for us.

My wife could certainly move towards that path. Assuming she does get that status would LTR or an apartment complex be the better path in your opinion?

It would have to be "commerical property" where you can take advantage of a cost segregation study. These are usually not done on single family homes or properties with 1-4 units. 5 units and above your good to go

0 Reply

Eric MacDonald

OP

Member since 2023 · 7 posts · 10 votes

2y

Quote from @Nicholas L.:

@Eric MacDonald

a few random reactions below... (I always wonder about these "I have $XK cash" posts...i hope you're real!)

-your goals aren't particularly specific. just about everyone wants cash flow, appreciation, and diversification.

-start local.

-definitely employ a PM. there is no reason whatsoever not to based on your situation.

-LTR and STR are very different. which do you want? similarly, SFHs and small apartment buildings are very different. which do you want?

-if you buy on-market single families requiring minimal renovation, you won't cash flow - you might even be negative.

-find the local REIA meetings and go to all of them. if you have to drive 30 or 45 or 60 minutes to find a few, so be it. see what everyone else is doing.

Very real =)

We are going to stay local for the first few and decide on out-of-state. We will 100% get a PM to run these.

Currently, we are leaning a bit towards LTR single-family homes, I do see a future where I do STR out of state but that will be down the road.

You have a valid point that I started to hit is that it takes time to find the right home to get the best return. I do think I will buy the first 1 or 2 with cash just to limit my risk a bit.

Great points and feedback thank you!

1 Reply

Eric MacDonald

OP

Member since 2023 · 7 posts · 10 votes

2y

Quote from @Travis Biziorek:

Eric, so much to unpack here. But first, I see you're in Ann Arbor. My wife and I nearly relocated there in 2017... we even had offers on several properties before we grew tired of being outbid and ended up moving to Troy.

I like the idea of staying local for you or, at most, investing in the Detroit market. I'm biased there as I have 12-doors.

In Detroit you could hit a 10% cash-on-cash return unlevered. That would hit your goal pretty easily. And if you are staying in B class areas of Detroit I believe you'll see appreciation as the city is on a major upswing.

That said, you probably can't go wrong staying in A2!

Starting out, I would recommend going slow and only buying 1-2 properties at first. Give it some time, see if it's something you enjoy, and then scale up. You have a lot on your plate... real estate could be more work or mental bandwidth than you realize/are wanting to expend.

Personally, I like starting with SFH's or small multi stuff like duplexes. It's a great way to learn while being hands on and much easier to exist if you decide it's not for you. As you gain experience larger MFH stuff may make sense.

But of course, everyone is different. Hope that's helpful to some degree!

We are planning to stay with Michigan / Metro Detroit to include Ann Arbor etc. This would also include the suburbs of Detroit ect

1 Reply

V.G JasonPro Member

Investor · Member since 2022 · 3k+ posts · 3k+ votes

2y

It's not a ton of money to go ham, but what you could do after you identify a market that is pretty strong--not very or extremely strong-- but pretty strong. That's set up for growth.

1)Put 50-80% down on an A to A+ house($500k-750k). Less down if more fixes needed, more down if cleaner plus sliding scale with #2.
2) Put 20-30% down on a speculative property. No affordable housing, no HOA, no flood zones. This is starter home in a growing neighborhood(not gentrifying neighborhood, don't confuse the two) of that same market. In same market should be $225-275k ish. Less down if fixes needed, more down if less fixes and sliding with #1. #1 takes priority.
3) Hold healthy reserves for both. Not BP calc reserves, legit reserves.
4) Remainder put in debt fund getting you high single %s yield.

You'll make great cash flow & have excellent exposure to hard assets. Your major risk is a housing crash and #1 value crashes, but if you hold reserves you are fine and if you buy properly you'll be even finer. This is means buying deep or finding something that is just off with a house that requires a little bit of time & work to get it to market value in the local neighborhood.

1 Reply

Leroy K. WilliamsPro Member

Property Manager · Southfield Mi · Member since 2018 · 192 posts · 177 votes

2y

Hi Eric,

To generate a monthly cash flow of $6,000 - $8,000, though we are open to exceeding this initial target.

From the start the best way to accomplish this in the market conditions of 2023-leading into 2024 would be smaller multi-family properties in class B and maybe C in areas of the inner city. As communities change, demographics shift, new industries emerge or existing industries see growth the demand for housing spikes. Of course I am biased but I think Detroit's Midtown, New Center, East Jefferson, Corktown, West Village, Milwaukee Junction, Sugar Hill district, Eastern Market District, Detroit Medical Center, and soon Northend are where any investor stands to get a really great return on their investment since comparatively speaking these neighborhoods are hot and prices are still relatively tame compared to other cities seeing similar growth.

To invest in properties that will appreciate in value over time.

This can be accomplished multiple ways. You can comb through the MLS until you find the right seller who has a property in a great community in need of a rehab and add value and hold for awhile as a short term rental. Or you could target specific areas or pockets that are seeing a higher demand and place money there. As one of the other posters mentioned you may not see positive cash flow but if you buy right you will see the appreciation you are looking for. All that said I go right back to smaller Multifamily properties. This is the space where many investors are moving toward based on what we are seeing here on the ground in Detroit. The reason being is that the cities are in flux and population is moving around as I mentioned before and young professionals who are looking to relocate will not be looking for SFH in the core neighborhoods they will want to live, work, play in the center of the revitalization movement and where their jobs are within biking or walking distance.

To diversify our investment portfolio to mitigate risk and maximize returns.

Stay local and buy a SFH rehabs in the suburbs, and then buy multifamily in the urban cores.

Good Luck, before she had to retire my mother was a wedding coordinator and for those who may not know that's probably up there with the most stressful jobs on earth so compared to that Real Estate will be easy.

1 Reply

Zachary Cain Humphrey

Investor · KY · Member since 2022 · 204 posts · 77 votes

2y

Quote from @Eric MacDonald:

@Zach Great info! Do you have STRs?

We have two rental arbitrage units right now (STR's) and building a new construction 1700 sq foot modern a frame in the Red River Gorge Campton KY. We also purchased another lot to do another build on. All of which will be STR's on completion.

0 Reply

Zachary Cain Humphrey

Investor · KY · Member since 2022 · 204 posts · 77 votes

2y

Quote from @Eric MacDonald:

Quote from @Zachary Cain Humphrey:

Quote from @Eric MacDonald:

Hello All!

I would like to provide a brief overview of my current professional and financial status. At 36 years of age, I am serving as a Vice President at my existing firm. My financial liabilities are confined to the mortgage on my primary residence. I have diversified my investments into the stock market and cryptocurrencies, both of which are performing exceedingly well. Additionally, I am the proprietor of a small business in the wedding industry, which is principally managed by my wife and generates approximately $50,000 annually.

While I have no intention of resigning from my current position, I am keen on expanding into the realm of real estate investment, an area I've long been interested in.

Together with my wife, we aspire to develop a portfolio that includes both long-term and, eventually, short-term rental properties. Our objectives for the next 2 - 3 years are as follows:

To generate a monthly cash flow of $6,000 - $8,000, though we are open to exceeding this initial target.
To invest in properties that will appreciate in value over time.
To diversify our investment portfolio to mitigate risk and maximize returns.

In pursuit of these goals, I am seeking advice from this group on several points:

Considering my available capital, would it be more strategic to purchase several properties outright, focusing on single-family homes in the $150,000 - $200,000 range that require minimal renovation? Alternatively, would it be wiser to leverage my funds by placing a 50% down payment and servicing the remaining mortgage over time?
While we are committed to learning as much as possible, we intend to employ a professional property management firm to oversee the long-term operations. I welcome any recommendations or considerations on this matter.
Finally, should we consider investing in a larger multi-unit complex, such as an 8 - 12 unit apartment building, instead of individual single-family homes?

I know there are pros and cons to single-family homes vs apartment complexes but would love to hear from this group

Your insights and experiences would be invaluable in helping us navigate these decisions and shape our strategy.

Your strategy is very well thought out! This is exciting to enter the real estate space. I highly recommend bypassing the LTR route altogether unless you invest in multi family. I would recommend investing in multiple STR's where returns are 20-30% vs. LTR single family where returns are next to nothing in the immediate phase. If cash flow of 6-8000$ is important to you, STR is really your best option. Much more fun and attractive as well to invest in the manner. Best of all people staying in your home do not obtain tenant rights.

Curious for those who opt to doSTR out of state for the first investment on how the logistics work out, building a team or resources to clean the home etc.

Far as building out your team for an out of state STR investment I recommend buying with a realtor that knows STR specifically, and or has STR's themselves. Consider using the Short Term Shop with Avery Carl or Savvy Realty for purchasing along the east cost mountains and certain beaches. Far as a team: your most important member is a cleaner then handyman, then likely somebody (preferably your cleaner) who can run small errands when needed.

Sourcing a cleaner can be done through local oriented facebook groups, or on Turno BNB to find a cleaner. Of course you then need to interview them and pick one. You may fire one or two before finding a cleaner that really does a good job.

Handyman, I would have 2-3 on that you can call and use when needed.

If a hot tub youll need a contact to work the hottub when issues arise, hopefully your handyman or some local pool company.

Finally the question is, do you want to manage the property yourself by learning Air BNB, all the guest communication, calendar management, pricing daily, etc. It can be alot. You can learn it or you can hire a manager usually for no less than 20-25% of gross rents. So you would want to factor this in to your deal analysis to make sure the deal still pencils out using management.

Id be happy to chat further ! Just send us a message. We are investing in the Red River Gorge in KY and are looking to always work with others. I have a vacant lot now we are hoping to build on in near future with another persons investing with us. networking to create financial freedom

0 Reply

John WilliamsBusiness Member

Property Manager · Clarksville, TN · Member since 2018 · 443 posts · 210 votes

2y

The answer to this question will be largely market-dependent. For example, in my market, I would recommend using the cash to purchase 4-5 single family homes outright. You can buy properties right off the MLS for a 5-15% discount using cash and sellers are offering concessions to buyers. Historically, single family homes have appreciated greatly here and, given population trends and the favorable local economic environment, it is still a very hot market. You could probably gross $6000 - $7500 in rents on 4-5 SFH's.

[email protected]931-272-3065

Rent My Home - Property Management4.8209 Reviews

Website View Page

1 Reply

Sam McCormackBusiness Member

Real Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 834 votes

2y

Quote from @Eric MacDonald:

Hello All!

I would like to provide a brief overview of my current professional and financial status. At 36 years of age, I am serving as a Vice President at my existing firm. My financial liabilities are confined to the mortgage on my primary residence. I have diversified my investments into the stock market and cryptocurrencies, both of which are performing exceedingly well. Additionally, I am the proprietor of a small business in the wedding industry, which is principally managed by my wife and generates approximately $50,000 annually.

While I have no intention of resigning from my current position, I am keen on expanding into the realm of real estate investment, an area I've long been interested in.

Together with my wife, we aspire to develop a portfolio that includes both long-term and, eventually, short-term rental properties. Our objectives for the next 2 - 3 years are as follows:

To generate a monthly cash flow of $6,000 - $8,000, though we are open to exceeding this initial target.
To invest in properties that will appreciate in value over time.
To diversify our investment portfolio to mitigate risk and maximize returns.

In pursuit of these goals, I am seeking advice from this group on several points:

Considering my available capital, would it be more strategic to purchase several properties outright, focusing on single-family homes in the $150,000 - $200,000 range that require minimal renovation? Alternatively, would it be wiser to leverage my funds by placing a 50% down payment and servicing the remaining mortgage over time?
While we are committed to learning as much as possible, we intend to employ a professional property management firm to oversee the long-term operations. I welcome any recommendations or considerations on this matter.
Finally, should we consider investing in a larger multi-unit complex, such as an 8 - 12 unit apartment building, instead of individual single-family homes?

I know there are pros and cons to single-family homes vs apartment complexes but would love to hear from this group

Your insights and experiences would be invaluable in helping us navigate these decisions and shape our strategy.

Have you decided on a market yet? Or started research on certain areas? You clearly know what you want, any idea on where you want it?

If I may recommend, Northern Ky and Cincinnati are good areas to be in. I hear good things about Columbus as well, but if you like I can get you connected with someone there. Let me know!

[email protected]859-443-4952

Sam McCormack Realtor

View Page

0 Reply

Bryan Buckingham

Contractor · HI · Member since 2022 · 14 posts · 3 votes

2y

I'm not seeing 10% return yields in LTRs right now in my area. Whether it be a Brrrr or new construction. The fact that you have cash will allow you to be able to make a yield on the property or multiple properties depending on how much you choose to borrow per deal. When you are not actively contributing to the management or asset improvement I do not see profits on borrowed money at this time in LTR. You may be able to get a good return in STR, they are much less consistent and management intensive.

People like me are always looking for private money for our real estate projects though, a true passive 10-12% yield. That could be a good choice for you. Management of real estate is much more hands on than most think. It seems like the appreciation of the capital is your primary goal though so even if you cannot find much return it could align with your goals to be an active investor in real estate. My area is extremely supply constrained and getting any kind of yield/cashflow here is difficult if you borrow. I hope your area is better! Best of luck Eric.

0 Reply

Edgar Rodriguez

Real Estate Agent · Tampa, FL · Member since 2017 · 191 posts · 98 votes

2y

I would consider finding an experienced partner and using both of your capital to pursue something large such as an apartment complex, small shopping center, or something similar. Considering your already full plate, I would find it difficult to also manage a real estate portfolio consisting of several different properties in different locations. Using a property management company is also a good solution to that but I find that it is hard to find the right company without knowing what to look for and what questions to ask.

1 Reply

Bob S.

Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes

2y

Quote from @Eric MacDonald:

Hello All!

I would like to provide a brief overview of my current professional and financial status. At 36 years of age, I am serving as a Vice President at my existing firm. My financial liabilities are confined to the mortgage on my primary residence. I have diversified my investments into the stock market and cryptocurrencies, both of which are performing exceedingly well. Additionally, I am the proprietor of a small business in the wedding industry, which is principally managed by my wife and generates approximately $50,000 annually.

While I have no intention of resigning from my current position, I am keen on expanding into the realm of real estate investment, an area I've long been interested in.

Together with my wife, we aspire to develop a portfolio that includes both long-term and, eventually, short-term rental properties. Our objectives for the next 2 - 3 years are as follows:

To generate a monthly cash flow of $6,000 - $8,000, though we are open to exceeding this initial target.
To invest in properties that will appreciate in value over time.
To diversify our investment portfolio to mitigate risk and maximize returns.

In pursuit of these goals, I am seeking advice from this group on several points:

Considering my available capital, would it be more strategic to purchase several properties outright, focusing on single-family homes in the $150,000 - $200,000 range that require minimal renovation? Alternatively, would it be wiser to leverage my funds by placing a 50% down payment and servicing the remaining mortgage over time?
While we are committed to learning as much as possible, we intend to employ a professional property management firm to oversee the long-term operations. I welcome any recommendations or considerations on this matter.
Finally, should we consider investing in a larger multi-unit complex, such as an 8 - 12 unit apartment building, instead of individual single-family homes?

I know there are pros and cons to single-family homes vs apartment complexes but would love to hear from this group

Your insights and experiences would be invaluable in helping us navigate these decisions and shape our strategy.

Simple, buy rentals with 10% or so NET caps. Refi buy more, or if the 8kish net per month is good enough, go to the beach and enjoy your life. I live on the beach in FL and have all my rentals in the Cleveland markets

All the best

1 Reply

Jason Allen

Attorney · Columbus, OH · Member since 2023 · 193 posts · 145 votes

2y

Quote from @Eric MacDonald:

Hello All!

I would like to provide a brief overview of my current professional and financial status. At 36 years of age, I am serving as a Vice President at my existing firm. My financial liabilities are confined to the mortgage on my primary residence. I have diversified my investments into the stock market and cryptocurrencies, both of which are performing exceedingly well. Additionally, I am the proprietor of a small business in the wedding industry, which is principally managed by my wife and generates approximately $50,000 annually.

While I have no intention of resigning from my current position, I am keen on expanding into the realm of real estate investment, an area I've long been interested in.

Together with my wife, we aspire to develop a portfolio that includes both long-term and, eventually, short-term rental properties. Our objectives for the next 2 - 3 years are as follows:

To generate a monthly cash flow of $6,000 - $8,000, though we are open to exceeding this initial target.
To invest in properties that will appreciate in value over time.
To diversify our investment portfolio to mitigate risk and maximize returns.

In pursuit of these goals, I am seeking advice from this group on several points:

Considering my available capital, would it be more strategic to purchase several properties outright, focusing on single-family homes in the $150,000 - $200,000 range that require minimal renovation? Alternatively, would it be wiser to leverage my funds by placing a 50% down payment and servicing the remaining mortgage over time?
While we are committed to learning as much as possible, we intend to employ a professional property management firm to oversee the long-term operations. I welcome any recommendations or considerations on this matter.
Finally, should we consider investing in a larger multi-unit complex, such as an 8 - 12 unit apartment building, instead of individual single-family homes?

I know there are pros and cons to single-family homes vs apartment complexes but would love to hear from this group

Your insights and experiences would be invaluable in helping us navigate these decisions and shape our strategy.

Hi Eric,

Have you considered investing out of state? Investing here in Columbus, Ohio can meet you stated goals above. With businesses (such as intel) investing here, our economic base is growing substantially and resulting in significant appreciation. We have off-market deals here that have equity on top and exceed the 1% rule. This can also be enhanced by rehabbing the property to get market rents.

Regarding 1., I think this is a great place to start. However, why would you put 50% down? I suggest putting the minimal amount down so you have cash on hand in case of unforeseen repairs. Additionally, having this cash on hand will enable you to buy the right deals when the opportunities present themselves. I'd also suggest getting more bang for you buck by investing in small multi-family properties to start.

Regarding 2., you're absolutely right. Finding the right team to manage your properties and make them hassle free is well worth it. I am currently in contract with a highly motivated seller who decided to self-manage and is currently looking to sell 6 additional properties. All due to the stress of self-managing his investments. Although we were still turn this into a win for him through 1031, this is not a situation you want have to endure.

Regarding 3., I'd suggest starting off with some small multi-family properties first. This will give you the necessary experience to know how to spot the right commercial units when they come up and navigate the process with less on the line. Most of time it will come down to the price and cash flow (or potential cash-flow after repairs).

Let me know if you'd like to discuss or look at some of the opportunities we have here in the Columbus market.

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Michael Margarella

Investor · New York City · Member since 2020 · 164 posts · 75 votes

2y

Hi Eric, with your listed objectives, it looks like investing in a syndication or fund could be a good fit given your situation.

Pick solid operators and solid asset classes. We syndicate self-storage projects. Even if there is a crash, and people downsize, those people will have a need for self-storage, as evidenced by storage occupancy rates during past recessions.

And during inflationary times, our rental rates increase. We're also able to evaluate our rates, and keep pace with inflation, on a monthly and quarterly basis because of shorter term leases.

These syndication can provide an 8%+ cash-on-cash return - providing you monthly cash flow - and a 15-20% IRR over the length of the project. Feel free to reach out.

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Currently have $800k cash and looking to get into real estate Need advice.

Currently have $800k cash and looking to get into real estate Need advice.

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