Maximizing $125K Investment: Commercial Apartments, Business or Single-family homes?

[Liam Talukdar]

Hello experts,

I hope this message finds everyone well. I recently sold my rental property and now have $125,000 available for investment. I am considering a 1031 exchange to purchase a commercial residential apartment, although finding a suitable property has proven challenging. I am not particularly interested in the BRRRR strategy. If I do find a property, I prefer one that requires minimal to no work. My experience with the buy-and-hold strategy in real estate has been successful, as my tenant's rent covers all expenses. However, I'm looking into other opportunities to increase cash flow.

As a 26-year-old investor, I am exploring options to maximize my returns while minimizing capital gains taxes on my $125K. Should I invest these funds in a business without incurring capital gains taxes? Alternatively, should I consider purchasing several single-family homes? My goal is to generate a monthly net income of $5,000 to $6,000 from such investments, with the broader aim of retiring early.

I would love to hear your thoughts on what you would do if you were in my circumstances. I apologize in advance if any of my questions seem naive.

Thank you to all BiggerPockets members for your insights and guidance.