how would YOU invest $100k?

Question

Hi Everyone,

After years of saving, I finally hit the $100k mark (invested in an index fund). Eventually, i would like to be a real estate investor; whether it's renting out a single-family dwelling, duplex, etc..

I currently own a SFH with my wife. We purchased for $350k and now, homes in my neighborhood are valued $550k.

My question is how would you invest your first property in this situation. Would it be better for me just to keep my money in the index fund? Or, should i take $40k to $80k out for a down payment on a rental property? If it's in NJ i would self manage. Should i invest out-of-state? Would you guys suggest taking out a HELOC. If i purchase a rental property for $80k down (will have $20k left.. just rounding here), how will i save up enough to purchase the second rental property? i feel like it would take forever just to save up..

I really don't know what to do. Any insight would be extremely helpful.

Thanks,

Adam.

Commercial Appraiser NJ

Shawn Mcenteer · Answer

Hi @Adam Eckhoff 100k is what my wife and i started with in NJ.  We also had single family home which we ended up selling and purchasing a duplex.  We became house hackers and tuned the 100k into well over a $1million in a few quick years.   House hacking remains the unfair advantage to safely acquire properties at low cost to enter.

Kerry Baird · Answer

I am personally opposed to buying crappy homes in bad locations.  I really love a gentle fixer in a great location, such as we often find with a probate home.  3/2 single family home in an area with mature landscaping.  Outdated appearance, but good bones.  They often need new flooring and paint, but often can be rented without replacing the (outdated) kitchen.  I have found some gangbusters deals on probates.

Preston Dean · Answer

Hi @Adam Eckhoff

Personally I would put 5% down on a 4plex and house hack that for a year. then use the remaining $$ you have to buy strictly a SFR preferable with a back house.

After your year is up then move out of the 4plex and do it again.

not sure if that's logically or not

OR

buy a wholesale with an ARV of $200K or more and flip it.

Wale Lawal · Answer

@Adam Eckhoff

Congratulations on reaching the $100k milestone in your index fund! Transitioning into real estate investing can be a lucrative venture, but it's essential to weigh your options and consider your financial goals and risk tolerance carefully. Here are some considerations to help you decide how to proceed:Assess Your Financial Objectives: Ascertain your long-term financial goals and the role that real estate plays in your overall investment plan. Take into account elements like diversity, tax advantages, cash flow, and potential for appreciation.Determine Your Risk Tolerance: Investing in real estate entails some risks, such as shifting market conditions, vacant properties, and unforeseen costs. Determine how comfortable you are with these risks and make sure you have enough money saved up for any unanticipated difficulties.Examine Market Conditions: Do some research on the local real estate market as well as those of other possible investment destinations. To find investment possibilities, consider elements including property pricing, demand for rentals, vacancy rates, and economic trends.Think About Financing choices: Investigate your choices for financing a possible real estate purchase, such as FHA loans, conventional mortgages, home equity lines of credit, or other innovative financing techniques. To determine which choice is best for your scenario, compare terms, interest rates, and down payment requirements.Assessing Out-of-State Investing: Investigating out-of-state markets might give access to more reasonably priced properties, larger cash flow possibilities, and better diversity, even though local investing may offer familiarity and control. But investing outside of your state has its own set of difficulties as well, such managing remotely and not being familiar with the specifics of the local market.Make a Plan for Property Management: If you decide to invest in rental properties, decide if you'll handle them yourself or by working with a management company. Especially when investing out-of-state, take into account the time, work, and obligations needed in maintaining the property.Create a Long-Term Investment Plan: Develop a long-term investment plan that outlines your goals, strategies, and timelines for acquiring additional properties. Consider how you'll reinvest rental income, save for future down payments, and scale your real estate portfolio over time.Ultimately, the decision to invest in real estate or continue with your index fund investment depends on your individual circumstances, goals, and risk tolerance. Take the time to carefully evaluate your options, seek advice from financial professionals or experienced investors, and make an informed decision that aligns with your financial objectives.

Michael Carbonare · Answer

I would short bitcoin.

Michael Margarella · Answer

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. I'd be happy to connect.

David Avery · Answer

1- Get a very good Realtor.

Go to the top 3 agencies talk to the Broker and ask for the best agent.

2- Get a good Mentor. .

search on here  (Bigger Pocket).

Someone to guide you with all your questions and concerns." Hint Hint"

Should be 40 years experience in Real Estate and construction.

No one under age 50.

Congratulations on saving,  it can really work out well, Real Estate is very stable.

My first deal I was 18.

By 22, Had a house and Duplex and $200 positively cash flow.

Kerry Baird · Answer

@Shawn Mcenteer, your last sentence is spot on.

how would YOU invest $100k?

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