If you had $300k liquid how would you start RIGHT NOW?

Starting Out
2yFollow

If you had $300k liquid how would you start RIGHT NOW?

Vernon Huffman
Member since 2024 路 13 posts 路 10 votes

Not a hypothetical. Goal is to replace W2 income, initially. 

6Reply
183 views

Most Popular Reply

Travis TimmonsPro Member
Rental Property Investor 路 Ellsworth, ME 路 Member since 2021 路 1k+ posts 路 2k+ votes
2y

Never sure how real these posts are, but I'll take the bait and answer. What does $300k liquid mean? You have the cash or you have equity that will be converted to a HELOC, a retirement account that you will pull money out of and be subject to 10% penalties plus your tax rate? Not all $300k liquid is created equal.

As for your goal of replacing your W2, it's going to take longer than you expect and be harder than you hoped. Step 1 is getting your expenses to bare bones, next to nothing cost of living beyond the basics. Step 2 is developing a real subject matter expertise to get outsized returns in real estate. 

I'm a fan of Wes Moss's work. If you want to retire, you need a paid off house, $500k+ in liquid assets (usually a retirement account or after tax brokerage), and more than 1 source of income (RE, retirement account, social security for those of qualifying age, part time gig, etc.). 

My path was short and mid term rentals alongside a successful business that I recently sold AND swapping houses (from Houston to small town Maine) to pocket the difference in price. The rental income is nice, but the pile of cash in an after tax brokerage account and our monthly expenses being around $3500 (post move) is why I am able to leave the day job, not real estate. RE income is about $35k in a normal year, which is nice, but I'm one busted furnace was from that number essentially being cut in half. I also have a very part time contract gig that pays $8-10k per year as a supplement.

I hope that was helpful. I'm happy to connect and talk in more detail if you think that it would be productive. I have nothing to sell, am not an expert, but have made good and bad investments, gone slowly, and learned a thing or two along the way.

10Reply
See this reply in the discussion

53 Replies

Jump to latestLatest
  • Vernon Huffman
    OP
    Member since 2024 路 13 posts 路 10 votes
    2y
    Quote from @Nicholas L.:

    @Vernon Huffman

    -joining the landlord association isn't silly at all - kudos to you for doing that.  meeting people and going to meetings is actual work, and shows me that you are not in analysis paralysis.  most people want to sit in the dark and look on Zillow and call that 'investing.' it's not.

    -creative financing is its own thing.  you can start looking for creative financing deals - i highly recommend seller finance, where the property you're purchasing has no mortgages on it - now, or wait.  they're hard to find, but the more work you put in, the more people you meet, and the more you know what you're doing, the more likely you are to find one. it took me 3 years to find my first.

    -there's no issue with financing anymore, or a bank saying 'no,' as there is no limit to how many DSCR loans you can get. they weren't a mainstream product 20 years ago, and now they are. so there is no limit to how many mortgages you can have. i have a mix of conventional and DSCR on my portfolio.


     Thats awesome. Would you suggest a product for finding land contracts or is that even a thing? 

    With the DSCR route: Whats stopping an individual from going out and buying a ton of properties with that approach? Why not just go out and buy 1,000 sfh's and live off of your cash flow(s) of $100-$200 a month? If I can buy a million of them why would you not? I hope that makes sense in my extremely over exaggerated example ha ha

    0Reply
  • Engelo RumoraBusiness Member
    Investor 路 Toledo, OH 路 Member since 2013 路 4k+ posts 路 2k+ votes
    2y
    Quote from @Vernon Huffman:
    Quote from @Nicholas L.:

    @Vernon Huffman

    those are paper numbers - it won't actually turn out like that in practice.  maybe in 5-10 years, after you've improved, stabilized, refined, sure.  but not in year 1, or 2, or 3...

    if that's something you're interested in, start with 1, hire a great PM, and see what happens.

    here in Pittsburgh you can buy 50K houses in decent neighborhoods... and they have years or decades of deferred maintenance and need lots of work.


     What about fixing those issues up front? I see a lot here that are around that $40-$60 (even less) number that would take $5-$15k to get modern and current. I would do quite a bit of the work myself as I'm pretty handy. I built two rooms onto our current home etc. And with my current W2 gig, I have all the time I need. In theory my idea is to address any deferred maintenance up front and continue mission. 

    You're saying that practical applicability only shows (has proven) that will only be profitable after a decade? Thank you for the response.  


    Hey mate,

    I'd advise against $50,000 houses unless you are full time on the ground.

    Turnkey houses for $50,000 tend to be in rougher parts.

    C or D class.

    High crime, lot's of volatility, boarded up homes, no upside from an appreciation standpoint, cars with no wheels lol and PM collects rents with a bullet proof vest and shot gun.

    Works well for some and the hustle is real. But you gotta be on the ground.

    Great on paper and some years you might get 15% returns and next year -15% returns.

    Plus, there is no true value in such areas as homes sell for $1,000 and others to unsuspecting out of state buyers for $60,000 where the provider makes a $20,000+ margin.

    Then it goes vacant, vandalized and back to a $1,000 house

    Looks for areas with a more consistent sales value where homeowners also live and not just investor owned.

    B class in my eyes is:

    1) Close to infrastructure like schools, hospitals, shopping mall, larger employer, etc...
    2) Mix of homeowners and investor owned (leaning toward more homeowners).
    3) Well kept yards and no boarded up homes. Very few vacant.
    4) Tenants employed and pay rent online.
    5) Consistent and stable sales prices.

    Just to name a few.

    Also, sub $100,000 properties need volume to work.

    10+ properties in your portfolio as the likelihood of 1 or 2 being vacant at any given moment is high.

    Been plugging away at this game since 2012 and lost my A$$ in the ghetto of Rochester buying sub $50,000 and also bought A class condo's in Chicago North of $500,000 which was a breeze but return was 3%.

    1,000 flips later I guess I could call myself a veteran 馃檲

    Wishing you well

    Podcast Guest on Show #89
    Oz Realty4.5369 Reviews
    WebsiteView Page
    2Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber 路 Pittsburgh 路 Member since 2018 路 6k+ posts 路 5k+ votes
    2y

    @Vernon Huffman

    DSCR loans - that's what lots of us are doing! But I can't work full time and do more than 1 project at a time =)

    so it's a grind.  I bought 3 last year and sold 1 that didn't work out when I went to refi.  so 2 steps forward 1 step back.

    seller financing - not a land contract, you just find a house that's owned free and clear and the seller is the bank.

    0Reply
  • Vernon Huffman
    OP
    Member since 2024 路 13 posts 路 10 votes
    2y
    Quote from @Engelo Rumora:
    Quote from @Vernon Huffman:
    Quote from @Nicholas L.:

    @Vernon Huffman

    those are paper numbers - it won't actually turn out like that in practice.  maybe in 5-10 years, after you've improved, stabilized, refined, sure.  but not in year 1, or 2, or 3...

    if that's something you're interested in, start with 1, hire a great PM, and see what happens.

    here in Pittsburgh you can buy 50K houses in decent neighborhoods... and they have years or decades of deferred maintenance and need lots of work.


     What about fixing those issues up front? I see a lot here that are around that $40-$60 (even less) number that would take $5-$15k to get modern and current. I would do quite a bit of the work myself as I'm pretty handy. I built two rooms onto our current home etc. And with my current W2 gig, I have all the time I need. In theory my idea is to address any deferred maintenance up front and continue mission. 

    You're saying that practical applicability only shows (has proven) that will only be profitable after a decade? Thank you for the response.  


    Hey mate,

    I'd advise against $50,000 houses unless you are full time on the ground.

    Turnkey houses for $50,000 tend to be in rougher parts.

    C or D class.

    High crime, lot's of volatility, boarded up homes, no upside from an appreciation standpoint, cars with no wheels lol and PM collects rents with a bullet proof vest and shot gun.

    Works well for some and the hustle is real. But you gotta be on the ground.

    Great on paper and some years you might get 15% returns and next year -15% returns.

    Plus, there is no true value in such areas as homes sell for $1,000 and others to unsuspecting out of state buyers for $60,000 where the provider makes a $20,000+ margin.

    Then it goes vacant, vandalized and back to a $1,000 house

    Looks for areas with a more consistent sales value where homeowners also live and not just investor owned.

    B class in my eyes is:

    1) Close to infrastructure like schools, hospitals, shopping mall, larger employer, etc...
    2) Mix of homeowners and investor owned (leaning toward more homeowners).
    3) Well kept yards and no boarded up homes. Very few vacant.
    4) Tenants employed and pay rent online.
    5) Consistent and stable sales prices.

    Just to name a few.

    Also, sub $100,000 properties need volume to work.

    10+ properties in your portfolio as the likelihood of 1 or 2 being vacant at any given moment is high.

    Been plugging away at this game since 2012 and lost my A$$ in the ghetto of Rochester buying sub $50,000 and also bought A class condo's in Chicago North of $500,000 which was a breeze but return was 3%.

    1,000 flips later I guess I could call myself a veteran 馃檲

    Wishing you well


     Great advice there. Thank you. 

    1Reply
  • Alfath AhmedBusiness Member
    Real Estate Agent 路 Columbus, OH 路 Member since 2022 路 1k+ posts 路 1k+ votes
    2y
    Quote from @Vernon Huffman:

    Not a hypothetical. Goal is to replace W2 income, initially. 

    Hey Vernon, I think you should look into the Columbus market. There has been a ton of growth here over the last 3-5 years. The market is booming in both the business and real estate sectors. New companies like Intel, Amazon, and Google are also investing here.



    I own all of my investment properties here and work with a lot of out-of-state investors in both the east and west coast that love investing here for the turnkey and BRRRR opportunities that we have here. I made some resources for my out-of-state investors like a neighborhood graded map and contractor rolodex that I can share with you!



    [email protected]614-802-5698
    ReafCo | Ahmed Group 539 Reviews
    WebsiteView Page
    0Reply
  • Timothy Hero
    Lender 路 United States 路 Member since 2020 路 1k+ posts 路 499 votes
    2y

    I'd put $200k towards a down payment + closing costs. I'd keep $100k in reserves.

    $200k should give you purchasing power of around $800-900k, once factoring in closing costs and escrow.

    If you get good deals, maybe you get forced appreciation equity.

    1Reply
  • Jake AndronicoBusiness Member
    Realtor 路 Reno, NV 路 Member since 2019 路 1k+ posts 路 938 votes
    2y
    Quote from @Vernon Huffman:

    Not a hypothetical. Goal is to replace W2 income, initially. 

    I'd be aggressive on offers in cash and potentially hold a small mortgage on a high quality asset in the $450-$500K range. Would pay it off as quickly as I could. 

    Then repeat 3-4 times and slowly pay them off. 4 paid off rentals netting $2,500 per month isn't a bad place to be. 

    Of course, anyone you ask will have different strategies :) You're in a great spot regardless of what you decide! 

    415-233-1796
    1Reply
  • Mike K.
    Member since 2024 路 85 posts 路 106 votes
    2y
    Quote from @Jason Allen:

    I'd buy a multi-family property that cash flows in an appreciating market with a growing economic base, like Columbus, Ohio.


     Where are you finding properties with positive cash flow in Columbus?  I've been looking in this market area and havng a hard time finding a property with a positive cash flow.

    1Reply
  • Carlos A.
    Investor 路 South Florida 路 Member since 2020 路 36 posts 路 30 votes
    2y

    Private money lender would be the route I would take.

    0Reply
  • James Wise
    Real Estate Broker 路 Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH 路 Member since 2013 路 31k+ posts 路 20k+ votes
    2y
    Quote from @Vernon Huffman:

    Not a hypothetical. Goal is to replace W2 income, initially. 


     Can't replace it with passive investing. Only way is to build an active business. So it's more so about you and your skillset.

    2Reply
  • Remington LymanBusiness Member
    Real Estate Agent 路 Columbus, OH 路 Member since 2017 路 6k+ posts 路 7k+ votes
    2y
    Quote from @Mike K.:
    Quote from @Jason Allen:

    I'd buy a multi-family property that cash flows in an appreciating market with a growing economic base, like Columbus, Ohio.


     Where are you finding properties with positive cash flow in Columbus?  I've been looking in this market area and havng a hard time finding a property with a positive cash flow.


     Linden, Whitehall, Hilltop

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
    1Reply
  • Tanner Lewis
    Lender 路 Austin, TX 路 Member since 2021 路 448 posts 路 441 votes
    2y
    Quote from @Nicholas L.:

    @Vernon Huffman

    -joining the landlord association isn't silly at all - kudos to you for doing that.  meeting people and going to meetings is actual work, and shows me that you are not in analysis paralysis.  most people want to sit in the dark and look on Zillow and call that 'investing.' it's not.

    -creative financing is its own thing.  you can start looking for creative financing deals - i highly recommend seller finance, where the property you're purchasing has no mortgages on it - now, or wait.  they're hard to find, but the more work you put in, the more people you meet, and the more you know what you're doing, the more likely you are to find one. it took me 3 years to find my first.

    -there's no issue with financing anymore, or a bank saying 'no,' as there is no limit to how many DSCR loans you can get. they weren't a mainstream product 20 years ago, and now they are. so there is no limit to how many mortgages you can have. i have a mix of conventional and DSCR on my portfolio.


    I suggest avoiding seller financing unless you plan to keep a lot of liquidity on tap. It is a great strategy to throw into the mix when you are working with a lot of reserves, but if you assume a loan at a 3% rate and rates are in the 6-8%s now, then it is a no-brainer for banks to enforce the "due-on-sale" clause and call the loan due on a transfer of title so they can use those funds to make mortgages at the current market rates. These clauses are written into most mortgage documents and require that you pay the full principal amount of the loan at the current lender's discretion. 
    7Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber 路 Pittsburgh 路 Member since 2018 路 6k+ posts 路 5k+ votes
    2y

    @Tanner Lewis

    that's sub to, not seller finance... my post said "where the property you're purchasing has no mortgages on it"

    1Reply
  • Mike K.
    Member since 2024 路 85 posts 路 106 votes
    2y
    Quote from @Remington Lyman:
    Quote from @Mike K.:
    Quote from @Jason Allen:

    I'd buy a multi-family property that cash flows in an appreciating market with a growing economic base, like Columbus, Ohio.


     Where are you finding properties with positive cash flow in Columbus?  I've been looking in this market area and havng a hard time finding a property with a positive cash flow.


     Linden, Whitehall, Hilltop


     All the best neighborhoods. Remington have you looked at rental properties up in Marion?

    1Reply
  • Remington LymanBusiness Member
    Real Estate Agent 路 Columbus, OH 路 Member since 2017 路 6k+ posts 路 7k+ votes
    2y
    Quote from @Mike K.:
    Quote from @Remington Lyman:
    Quote from @Mike K.:
    Quote from @Jason Allen:

    I'd buy a multi-family property that cash flows in an appreciating market with a growing economic base, like Columbus, Ohio.


     Where are you finding properties with positive cash flow in Columbus?  I've been looking in this market area and havng a hard time finding a property with a positive cash flow.


     Linden, Whitehall, Hilltop


     All the best neighborhoods. Remington have you looked at rental properties up in Marion?


     yeah those would be good

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
    0Reply
  • Nate Powley
    Member since 2023 路 10 posts 路 0 votes
    2y

    Find a local multi-family property that is offering seller-financing, use an agent for this as its complicated and you don't want to get screwed

    With seller financing you don't have to qualify with income and can likely get a better interest rate

    Make your balloon is above 5 years, make sure you are cashflowing in the deal, and try and sell in a couple years for a huge profit

    You won't be able to replace your w-2, but you'll get started down the path of replacing your w-2!

    0Reply
  • Nate Marshall
    Real Estate Consultant 路 Evergreen, CO 路 Member since 2018 路 1k+ posts 路 738 votes
    2y

    Lend it. Short Term for EMD to wholesalers. Then as you gain experience lend for Gap.

    Break into a 4 week cycle. Divide by 4. Lend each as a weekly tranche. Add the interest earned to a pool and after 2 cycles pull your start up principal back and lend "house money". 

    Lend at 100%. Gators are trying to do 200. Undercut their "shills" "influencers" etc. 

    0Reply
  • Alfath AhmedBusiness Member
    Real Estate Agent 路 Columbus, OH 路 Member since 2022 路 1k+ posts 路 1k+ votes
    2y
    Quote from @Vernon Huffman:

    Not a hypothetical. Goal is to replace W2 income, initially. 


    Hey Vernon, I invest heavily in the Columbus market and work with out-of-state investors from both the east and west coast who love investing here. I specialize in both residential and multi-family real estate in the Columbus market. Below is a list of metrics that my out-of-state investors have looked into when choosing to invest here in the Columbus market.

    Population Growth: Target cities with a minimum 1.5% YoY growth over the past 20 years and populations exceeding 100,000. (Use tools like loopnet, Costar demographics, and crime maps. Check with local governments for their economic plans.)

    Job Growth: Prioritize areas with a minimum of 2% employment growth YoY for the past two decades. (Investigate the presence of Fortune 100 companies and industry diversity, using resources like metropolitan council reports and broker websites (e.g., CBRE, Colliers).)

    Affordability: Ensure household income has grown at least 1% YoY for the past 20 years. Be wary if rents exceed 1/3 of average incomes.

    Absorption/Vacancy: Consult National Association of Realtors for market time and inventory insights. Evaluate historical and current vacancy rates, aiming for decreasing trends.

    Demographics: For younger populations, focus on proximity to parks and schools. For older demographics, consider the availability of medical centers, entertainment, and restaurants.

    Buildings/Permits: Assess the city's growth compared to previous years.Determine if the city can accommodate future supply.

    Government Regulations: Examine the city's efforts and the type of businesses they are targeting. Be cautious of cities that aren't proactive in job attraction; too much growth can lead to strict building regulations, affecting housing value.

    Other Factors

    - Favor cities with a crime index that has consistently decreased over a decade.

    - For appreciation, I look for a minimum of 2.5% YoY growth in median house values over the past 20 years but I don't use this explicitly in calculations.



    [email protected]614-802-5698
    ReafCo | Ahmed Group 539 Reviews
    WebsiteView Page
    1Reply
  • Jason Allen
    Attorney 路 Columbus, OH 路 Member since 2023 路 193 posts 路 145 votes
    2y
    Quote from @Mike K.:
    Quote from @Jason Allen:

    I'd buy a multi-family property that cash flows in an appreciating market with a growing economic base, like Columbus, Ohio.


     Where are you finding properties with positive cash flow in Columbus?  I've been looking in this market area and havng a hard time finding a property with a positive cash flow.


     These deals are easy to find in C-class areas and off market. I am currently working on a deal that I expect to cash flow in an A-class area. However, this will require me to at least 20% down.

    1Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber 路 Pittsburgh 路 Member since 2018 路 6k+ posts 路 5k+ votes
    2y

    @Jason Allen

    I have to ask... how will you cash flow on an A-class area deal?

    0Reply
  • Ray Hage
    Investor 路 Fort Lauderdale, FL 路 Member since 2020 路 1k+ posts 路 755 votes
    2y

    I have around that much liquid as well but also have some rentals. If you can get at least one property under your belt (maybe a house hack?) and I would use the rest as a private money lender. I have been doing that for about 6 months and the returns have been excellent. Of course, you need to have a promissory note and mortgage lien against the subject property. If you want to chat about it, let's connect!

    0Reply
  • Jason Allen
    Attorney 路 Columbus, OH 路 Member since 2023 路 193 posts 路 145 votes
    2y
    Quote from @Nicholas L.:

    @Jason Allen

    I have to ask... how will you cash flow on an A-class area deal?


    I own a duplex 3 blocks away. Motivated seller. 20% down. I met the tenants and asked what they are willing to pay. DSCR loan at 6.75%. Current rents are $1,400 per side. Market rents are at least $2,000 per side. DSCR is at 1:1 even with below market rents. PITI is $3,200 a month.

    0Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber 路 Pittsburgh 路 Member since 2018 路 6k+ posts 路 5k+ votes
    2y

    @Jason Allen

    that's just PITI though... what about everything else?

    I would grant that self managing can be a huge advantage... but OOS investors can't self manage. so your example doesn't cash flow. $4K rent minus $400 for management = $3600. Repairs, vacancy, capex any shared utilities, groundskeeping, PITI, etc. = $0 cash flow.

    and again.  I'm not saying it's not a great deal.  It's probably a great deal! It's just not cash flowing unless you self manage.

    0Reply
  • Mike K.
    Member since 2024 路 85 posts 路 106 votes
    2y
    Quote from @Nicholas L.:

    @Jason Allen

    that's just PITI though... what about everything else?

    I would grant that self managing can be a huge advantage... but OOS investors can't self manage. so your example doesn't cash flow. $4K rent minus $400 for management = $3600. Repairs, vacancy, capex any shared utilities, groundskeeping, PITI, etc. = $0 cash flow.

    and again.  I'm not saying it's not a great deal.  It's probably a great deal! It's just not cash flowing unless you self manage.


     From what I'm seeing getting a near neutral cash flow in an A-class area is great right now in the Columbus area.  Only positive cash flow deals I can find are in low income neighborhoods or smaller markets outside the Columbus Metro Area, like Marion.

    1Reply
  • Dan Park
    Member since 2024 路 3 posts 路 2 votes
    2y
    Quote from @Vernon Huffman:
    Quote from @Michael Dumler:

    @Vernon Huffman, the answer to these scenarios is that it always depends on many other factors/variables. What's your age? Are you risk averse? Do you hold other assets? Do you have experience with real estate investing? What does your DTI look like? Are you considered an accredited investor? Etc. If you're predominantly focused on cash flow and have a high-risk tolerance, considering cash flow strategies such as rent-by-the-room, short-term rentals, or medium-term rentals is likely the avenue. If you're new to real estate and are risk averse, strategies like house hacking and long-term turnkey rentals in B/C-class markets are worth exploring. Based on how you answer the questions above will dictate the responses from other BP members.


     Thank you for the reply. I am 42 years old. Willing to take a little risk, yes. We currently own our home and land. No experien ce in RI yet. Though we've been in the analysis paralysis phase for a year now. I make $100k a year and only have one vehicle payment for total debt. 

    We we're thinking long term buy and hold SFH's. Or the 4 unit multi's etc.


     Multi units are usually a lot harder to find. Think if you want cash flow or appreciation. Its hard to get both. Also think of the tax strategies you want to take. 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free