What can I do with $140K cash?
Austin, TX · Member since 2023 · 10 posts · 16 votes
What can I do with $140K cash?
Most Popular Reply
Randall AlanPro Member
Investor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votesQuote from @Account Closed:
Hi,
I want to get into real estate but don't know how and where. I have a remote job living in Austin and $120K cash and $20K on my employer 401k. If you were me, what would you do? My goal is to work for myself and stop my 8-4 job at some point. I am willing to relocate to anywhere in the US. I think my best option is to relocate to a cheap market, buy land, build a cheap house, and sell and once I gain more experience I can come back to Austin. Another option is to buy foreclosures but then I am scared that I mess up since I don't have any experience. Another option is to flip a house. But like I said I am very confused about which route to go. What would you do? I am single and can save around $4000 each month.
@Account Closed
Hi John,
I probably wouldn't recommend foreclosures as a starting point. While you have enough money to probably buy into and repair one foreclosure, your money would go farther by financing properties and putting as little as possible down. The short version of that is if you can buy 4 houses financed, it will make more money than 1 free and clear house; especially when taking into consideration all the benefits that come with each house - your tenant paying down your mortgage, 3.3% depreciation on 4 houses, market appreciation on 4 houses, plus the rental income on 4 units.
Foreclosures also come with A LOT of inherent risk - you don't know the condition of what you are buying until after you have bought it. We have bought 4 foreclosures - 3 went great - the other one literally wreaked of cat urine so strong we had to wear respirators to walk into the house. We ultimately sold that one to a handyman and only made about 1/2 the profit we could have made on it - but we were worried about being able to sell it on the open market with how bad it smelled. So point being - you never know what you are buying there.
I also probably wouldn't touch the money in your 401k. That has a different purpose in life and you should leave it alone to be there for you down the road (especially since you have other money and income available).
Just know that the whole "stop working my job" thing is a long term goal. We have gotten to that goal post - but we were at 20 units when we decided to do it where we were replacing about $200k worth of W2 jobs. We are now at 37 units and our full time job is managing those properties. It's not quite a passive as the RE world makes it out to be (we self manage our own properties)... but it is a very nice lifestyle. No alarms to wake up to and as many vacation days as we want in a year!
So presuming you are on the "add one rental a year plan" after maybe buying 4 with the money you have, I would think it would take a number of years to achieve that retirement goal - but your mileage could vary depending on how much income you need to live on.
Flipping houses is good for big chunks of cash... but it comes with lots of questions - Who is going to do the work? You while you are working? Do you have the skill set to do that? If not, managing contractors and not getting exploited in the process is a whole different set of skills as well. It's really hard to pay retail prices on renovations and come out ahead on a flip. We went the "Do what we can do ourselves" route, and then worked with more handy-man type people for the things we didn't know how to do. But we never had a shiny truck show up with people in monogrammed shirts. It's was all about maximizing every dollar spent and minimizing every expense we could to have as many dollars left over for profit for us.
All the best!
Randy
49 Replies
- 2yRandall AlanPro MemberInvestor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votes
Quote from @Account Closed:
Hi,
I want to get into real estate but don't know how and where. I have a remote job living in Austin and $120K cash and $20K on my employer 401k. If you were me, what would you do? My goal is to work for myself and stop my 8-4 job at some point. I am willing to relocate to anywhere in the US. I think my best option is to relocate to a cheap market, buy land, build a cheap house, and sell and once I gain more experience I can come back to Austin. Another option is to buy foreclosures but then I am scared that I mess up since I don't have any experience. Another option is to flip a house. But like I said I am very confused about which route to go. What would you do? I am single and can save around $4000 each month.@Account Closed
Hi John,
I probably wouldn't recommend foreclosures as a starting point. While you have enough money to probably buy into and repair one foreclosure, your money would go farther by financing properties and putting as little as possible down. The short version of that is if you can buy 4 houses financed, it will make more money than 1 free and clear house; especially when taking into consideration all the benefits that come with each house - your tenant paying down your mortgage, 3.3% depreciation on 4 houses, market appreciation on 4 houses, plus the rental income on 4 units.
Foreclosures also come with A LOT of inherent risk - you don't know the condition of what you are buying until after you have bought it. We have bought 4 foreclosures - 3 went great - the other one literally wreaked of cat urine so strong we had to wear respirators to walk into the house. We ultimately sold that one to a handyman and only made about 1/2 the profit we could have made on it - but we were worried about being able to sell it on the open market with how bad it smelled. So point being - you never know what you are buying there.
I also probably wouldn't touch the money in your 401k. That has a different purpose in life and you should leave it alone to be there for you down the road (especially since you have other money and income available).
Just know that the whole "stop working my job" thing is a long term goal. We have gotten to that goal post - but we were at 20 units when we decided to do it where we were replacing about $200k worth of W2 jobs. We are now at 37 units and our full time job is managing those properties. It's not quite a passive as the RE world makes it out to be (we self manage our own properties)... but it is a very nice lifestyle. No alarms to wake up to and as many vacation days as we want in a year!
So presuming you are on the "add one rental a year plan" after maybe buying 4 with the money you have, I would think it would take a number of years to achieve that retirement goal - but your mileage could vary depending on how much income you need to live on.
Flipping houses is good for big chunks of cash... but it comes with lots of questions - Who is going to do the work? You while you are working? Do you have the skill set to do that? If not, managing contractors and not getting exploited in the process is a whole different set of skills as well. It's really hard to pay retail prices on renovations and come out ahead on a flip. We went the "Do what we can do ourselves" route, and then worked with more handy-man type people for the things we didn't know how to do. But we never had a shiny truck show up with people in monogrammed shirts. It's was all about maximizing every dollar spent and minimizing every expense we could to have as many dollars left over for profit for us.
All the best!
Randy
- Austin, TX · Member since 2023 · 10 posts · 16 votes2y
Quote from @Randall Alan:
Quote from @Account Closed:
Hi,
I want to get into real estate but don't know how and where. I have a remote job living in Austin and $120K cash and $20K on my employer 401k. If you were me, what would you do? My goal is to work for myself and stop my 8-4 job at some point. I am willing to relocate to anywhere in the US. I think my best option is to relocate to a cheap market, buy land, build a cheap house, and sell and once I gain more experience I can come back to Austin. Another option is to buy foreclosures but then I am scared that I mess up since I don't have any experience. Another option is to flip a house. But like I said I am very confused about which route to go. What would you do? I am single and can save around $4000 each month.@Account Closed
Hi John,
I probably wouldn't recommend foreclosures as a starting point. While you have enough money to probably buy into and repair one foreclosure, your money would go farther by financing properties and putting as little as possible down. The short version of that is if you can buy 4 houses financed, it will make more money than 1 free and clear house; especially when taking into consideration all the benefits that come with each house - your tenant paying down your mortgage, 3.3% depreciation on 4 houses, market appreciation on 4 houses, plus the rental income on 4 units.
Foreclosures also come with A LOT of inherent risk - you don't know the condition of what you are buying until after you have bought it. We have bought 4 foreclosures - 3 went great - the other one literally wreaked of cat urine so strong we had to wear respirators to walk into the house. We ultimately sold that one to a handyman and only made about 1/2 the profit we could have made on it - but we were worried about being able to sell it on the open market with how bad it smelled. So point being - you never know what you are buying there.
I also probably wouldn't touch the money in your 401k. That has a different purpose in life and you should leave it alone to be there for you down the road (especially since you have other money and income available).
Just know that the whole "stop working my job" thing is a long term goal. We have gotten to that goal post - but we were at 20 units when we decided to do it where we were replacing about $200k worth of W2 jobs. We are now at 37 units and our full time job is managing those properties. It's not quite a passive as the RE world makes it out to be (we self manage our own properties)... but it is a very nice lifestyle. No alarms to wake up to and as many vacation days as we want in a year!
So presuming you are on the "add one rental a year plan" after maybe buying 4 with the money you have, I would think it would take a number of years to achieve that retirement goal - but your mileage could vary depending on how much income you need to live on.
Flipping houses is good for big chunks of cash... but it comes with lots of questions - Who is going to do the work? You while you are working? Do you have the skill set to do that? If not, managing contractors and not getting exploited in the process is a whole different set of skills as well. It's really hard to pay retail prices on renovations and come out ahead on a flip. We went the "Do what we can do ourselves" route, and then worked with more handy-man type people for the things we didn't know how to do. But we never had a shiny truck show up with people in monogrammed shirts. It's was all about maximizing every dollar spent and minimizing every expense we could to have as many dollars left over for profit for us.
All the best!
Randy
Thank you so much! How do I buy four properties with my money? Can I buy all of them at the same time, or do I need to buy them one by one? I make $90K with a credit score of 802, and have no debt, but I thought that my debt-to-income ratio had to stay below 0.5, not? Can you please explain the process? Also, I thought that since the current interest rates are around 7%, it makes more sense to put in as much cash as possible, but your idea of buying four properties is probably better if I can make that work. - 2yRandall AlanPro MemberInvestor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votes
@Account Closed
Your DTI definitely factors into things, but presuming you have rental income from your houses, that gets to be applied as a credit to offset that debt. Sometimes they require a certain time frame to be shown on that. But DSCR loans can be a little more forgiving on that. It is up to each lender to some degree. Portfolio lenders - ones that don't sell their loans to Fannie Mae have more leeway.
Another thought is to build a 4plex - so it is one purchase with 4 doors.
You only have to put 20% down… so if you are talking smaller cheap homes you can get away with $25-30k down, depending on where you are looking at.
7% interest is crappy no matter how much you put down. But when you run the income numbers including the other write offs 4 will outperform 1 every time.
A 3% gain on 1 - $100k house is $3,000/ year. On 4 it is $12,000/year. 3.3% depreciation is similar numbers - usually almost eliminating all your taxable income from financed properties after repairs and maintenance is factored in.
Truth be told, very little cash flows well at 7%… so timing also factors into your plans… but rates are expected to start dropping later this year and into next year.
Randy
- Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes2y
Initially I would lean on a house hack. This would get your feet wet. Won't be a money maker but will get you in the door. Keep saving your cash. I would then spend a year+ months learning and networking. Maybe look for a BRRR after that but nothing wrong with taking it slow out the gate. You can also just do 20-25% down on a rental but I think a house hack would be the most efficient. Find what niche in real estate you like and pursue that.
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes2y
Quote from @Account Closed:
Hi,
I want to get into real estate but don't know how and where. I have a remote job living in Austin and $120K cash and $20K on my employer 401k. If you were me, what would you do? My goal is to work for myself and stop my 8-4 job at some point. I am willing to relocate to anywhere in the US. I think my best option is to relocate to a cheap market, buy land, build a cheap house, and sell and once I gain more experience I can come back to Austin. Another option is to buy foreclosures but then I am scared that I mess up since I don't have any experience. Another option is to flip a house. But like I said I am very confused about which route to go. What would you do? I am single and can save around $4000 each month.Buy a rental, SF or duplex cash with 10% ( OOS of course) or better net income, Refi cash out buy another, rinse and repeat . After about 10 that should net you about 5-6k per month.
Good luck
- Lender · Austin, TX · Member since 2021 · 447 posts · 441 votes2y
Hey John - I'm also in Austin! If you are starting out, I think relocating to a market with higher cash flow and lower taxes makes more sense. You can move to one of these markets and do a 3.5% down FHA loan, live in the property for a year, and then get another 5% down conventional. With this, you will have 8 units with as little down as possible. Then, I would go ahead and start to use hard money and DSCR to BRRRR properties. This is my strategy, but another may be better based on your goals and risk tolerance.
- Real Estate Consultant · Miami · Member since 2024 · 53 posts · 18 votes2y
Quote from @Account Closed:
Hi,
I want to get into real estate but don't know how and where. I have a remote job living in Austin and $120K cash and $20K on my employer 401k. If you were me, what would you do? My goal is to work for myself and stop my 8-4 job at some point. I am willing to relocate to anywhere in the US. I think my best option is to relocate to a cheap market, buy land, build a cheap house, and sell and once I gain more experience I can come back to Austin. Another option is to buy foreclosures but then I am scared that I mess up since I don't have any experience. Another option is to flip a house. But like I said I am very confused about which route to go. What would you do? I am single and can save around $4000 each month.I agree with Randall.
I would say you should focus on diversifying. You can save a lot of money a month which is great. I would put some of that in non synthetic ETFs and have it in the stock market. That enables you 10% nominal anual returns while it's still very liquid (fast and easy accesible cash).
If you want to invest into real estate, why don't you look for seller finance or rent to own deals? Those will require only a small amount of money down and won't appear on your credit. You'll have monthly payments but the idea is that you put tenants in these properties so that you cash flow. That way you can invest in multiple properties without having to bind up all your cash. Plus you can cashflow. Just make sure it's a good deal and you can actually make money after all monthly payments.
- Lender · Nationwide · Member since 2023 · 362 posts · 237 votes2y
120k is plenty of capital in the right market. In midwest markets where I shop, my average purchase price including rehab is lower than that. I have 9 doors across Memphis and Detroit. Happy to connect and knowledge share if you are interested.
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes2y
I don't know if I would move just for real estate. A higher cash flow market would certainly be ideal, but I wouldn't go for a "cheap market" (which sounds like a high crime, blight-filled, declining city).
It may be worth relocating to another, less expensive city in Texas like Dallas or Houston (although prices there aren't "cheap" by any means). Either way, I think house hacking is the best way for basically anyone getting into real estate. The loan terms are just so much better and you wouldn't need to use all or even a large amount of the cash you currently have. That way you would still have a big rainy day fund or enough for a second investment.
Best case is to find a fourplex or at least a duplex. Get and FHA loan (or homeowner loan from a local bank, I've done that and it only was 5% down vs 3.5% down with FHA) and live in one unit and rent out the others. Then after a year or so, do it all over again.
- Investor · Miami, FL · Member since 2020 · 80 posts · 66 votes2y
I would buy a 2-4 unit in the Austin market with 5-10 % down. Save 6 months for reserves and use the remaining money to do a BRRR deal either in Austin or in a market that may cashflow better.
- Austin, TX · Member since 2023 · 10 posts · 16 votes2y
Quote from @Randall Alan:
@Account Closed
Your DTI definitely factors into things, but presuming you have rental income from your houses, that gets to be applied as a credit to offset that debt. Sometimes they require a certain time frame to be shown on that. But DSCR loans can be a little more forgiving on that. It is up to each lender to some degree. Portfolio lenders - ones that don't sell their loans to Fannie Mae have more leeway.
Another thought is to build a 4plex - so it is one purchase with 4 doors.
You only have to put 20% down… so if you are talking smaller cheap homes you can get away with $25-30k down, depending on where you are looking at.
7% interest is crappy no matter how much you put down. But when you run the income numbers including the other write offs 4 will outperform 1 every time.
A 3% gain on 1 - $100k house is $3,000/ year. On 4 it is $12,000/year. 3.3% depreciation is similar numbers - usually almost eliminating all your taxable income from financed properties after repairs and maintenance is factored in.
Truth be told, very little cash flows well at 7%… so timing also factors into your plans… but rates are expected to start dropping later this year and into next year.
Randy
@Randall Alan
1- I looked at the definition of DSCR loans. With today's interest rate, it's almost impossible to find a property that can qualify for it. Am I wrong? Can you please show me an example of a property that can get a DSCR loan?
2- Building 4plex? I would love to but I don't have enough money to build. All I can afford is to buy land and then I have to hire a builder to be able to get a construction loan and as you know builders charge 10-20 percent of the cost.
3- Can you please tell me where to find the cheap homes that you mentioned? 20% down in Austin means around $100k.
Thank you - Austin, TX · Member since 2023 · 10 posts · 16 votes2y
Quote from @Bob S.:
Quote from @Account Closed:
Hi,
I want to get into real estate but don't know how and where. I have a remote job living in Austin and $120K cash and $20K on my employer 401k. If you were me, what would you do? My goal is to work for myself and stop my 8-4 job at some point. I am willing to relocate to anywhere in the US. I think my best option is to relocate to a cheap market, buy land, build a cheap house, and sell and once I gain more experience I can come back to Austin. Another option is to buy foreclosures but then I am scared that I mess up since I don't have any experience. Another option is to flip a house. But like I said I am very confused about which route to go. What would you do? I am single and can save around $4000 each month.Buy a rental, SF or duplex cash with 10% ( OOS of course) or better net income, Refi cash out buy another, rinse and repeat . After about 10 that should net you about 5-6k per month.
Good luck
Bob, I am worried about buying my first property out of state. But I have a remote job and can definitely move. But, can you please share examples of good markets to consider?
- Austin, TX · Member since 2023 · 10 posts · 16 votes2y
Quote from @Tanner Lewis:
Hey John - I'm also in Austin! If you are starting out, I think relocating to a market with higher cash flow and lower taxes makes more sense. You can move to one of these markets and do a 3.5% down FHA loan, live in the property for a year, and then get another 5% down conventional. With this, you will have 8 units with as little down as possible. Then, I would go ahead and start to use hard money and DSCR to BRRRR properties. This is my strategy, but another may be better based on your goals and risk tolerance.
Hi Tanner,
Thanks for your advice. What are the examples of markets that can cash flow well? - Austin, TX · Member since 2023 · 10 posts · 16 votes2y
Quote from @Livia Adams:
Quote from @Account Closed:
Hi,
I want to get into real estate but don't know how and where. I have a remote job living in Austin and $120K cash and $20K on my employer 401k. If you were me, what would you do? My goal is to work for myself and stop my 8-4 job at some point. I am willing to relocate to anywhere in the US. I think my best option is to relocate to a cheap market, buy land, build a cheap house, and sell and once I gain more experience I can come back to Austin. Another option is to buy foreclosures but then I am scared that I mess up since I don't have any experience. Another option is to flip a house. But like I said I am very confused about which route to go. What would you do? I am single and can save around $4000 each month.I agree with Randall.
I would say you should focus on diversifying. You can save a lot of money a month which is great. I would put some of that in non synthetic ETFs and have it in the stock market. That enables you 10% nominal anual returns while it's still very liquid (fast and easy accesible cash).
If you want to invest into real estate, why don't you look for seller finance or rent to own deals? Those will require only a small amount of money down and won't appear on your credit. You'll have monthly payments but the idea is that you put tenants in these properties so that you cash flow. That way you can invest in multiple properties without having to bind up all your cash. Plus you can cashflow. Just make sure it's a good deal and you can actually make money after all monthly payments.
Hi Livia,
I hate the stock market. I would rather keep my money in a high-yield saving account and get 5 percent annually than be stressed by the stock market fluctuation.
About your comment on seller finance, where can I find these deals? Is there an option for these on Redfin or Zillow? - Austin, TX · Member since 2023 · 10 posts · 16 votes2y
Quote from @Shawn Bhatti:
I would buy a 2-4 unit in the Austin market with 5-10 % down. Save 6 months for reserves and use the remaining money to do a BRRR deal either in Austin or in a market that may cashflow better.
Hi Shawn,
I can't find a single property in Austin that can cash flow. I am very frustrated. Even if I put all of my $120k down, and assume that I can collect $800 per room (in worst case scenario), I am still in negative cash flow. Either my calculations are wrong, or the numbers on Redfin are wrong ( I am very suspicious of the home insurance that they show on the website), or I am in the wrong market. - Investor · Miami, FL · Member since 2020 · 80 posts · 66 votes2y
Quote from @Account Closed:
Quote from @Shawn Bhatti:
I would buy a 2-4 unit in the Austin market with 5-10 % down. Save 6 months for reserves and use the remaining money to do a BRRR deal either in Austin or in a market that may cashflow better.
Hi Shawn,
I can't find a single property in Austin that can cash flow. I am very frustrated. Even if I put all of my $120k down, and assume that I can collect $800 per room (in worst case scenario), I am still in negative cash flow. Either my calculations are wrong, or the numbers on Redfin are wrong ( I am very suspicious of the home insurance that they show on the website), or I am in the wrong market.Don't worry about cash flow in a property that you have to occupy. You'll have to pay rent regardless, so you need to consider that you would already have that expense, along with the fact that you'll get the benefits of principal paydown and asset appreciation (especially by leveraging).
Acquire the asset and perhaps focus on something you can add value to, then you'll have a 100-200K equity chunk to play with in a few years when the market accelerates again. This is how real wealth is built over time.
Cashflow is the long term goal but it just isn't realistic in high growth markets like Austin.
- 2yWale LawalBusiness MemberReal Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
@Account Closed
You can choose an investment strategy like house hacking, buying, rehab, rent, refinance, repeat (BRRRRR), or flipping houses. Leverage $120K cash for down payments and explore financing options. By starting small, educating yourself, and leveraging your capital wisely, you can build a solid foundation for your real estate investing journey and work towards financial independence.
Good luck!
NETWORTH BUILDERS5236 Reviews - 2yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
@Account Closed the more you immerse yourself, the more you will learn and get ahead.
So, buy a 2-4 unit somewhere and rent the other units out.
You can even rent out extra bedrooms in your unit to maximize cashflow.
After living there 12 months, you can buy a nother, rent out your unit and move into the new purchase to repeat the process.
Also, living in the property/neighborhood will stop you from buying Class D trainwrecks - which rarely work out anyways.
You'll find that most larger Midwest cities, currently have a better "bang for the buck" than anywhere else in the country. Many posting here will challenge investing in Midwest properties based up on appreciation, but the Midwest is appreciating fine!
We're partial to the Detroit market, of course. DM us if you'd like to chat.
Logical Property Management4.9458 Reviews - 2yT. Alan CeshkerPro MemberAttorney · 3409 Executive Center Drive Ste 110 Austin, Texas 78731 · Member since 2020 · 99 posts · 92 votesI would buy as many seller finance deals via non qualified assumptions as possible. I usually am out of pocket about 10 to 15k by the time I get a property NQ assumption and then sell via seller finance. LTR is also possible with this method.
I generally stay in the surrounding counties to get lower value properties. Right now, Austin is too high (re FMV) and still over priced a bit -- and a slower market.
Reach out if you want to learn how to do wraps and we can send much material for you to review.
Good luck with all! - Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes2y
Quote from @Account Closed:
Quote from @Bob S.:
Quote from @Account Closed:
Hi,
I want to get into real estate but don't know how and where. I have a remote job living in Austin and $120K cash and $20K on my employer 401k. If you were me, what would you do? My goal is to work for myself and stop my 8-4 job at some point. I am willing to relocate to anywhere in the US. I think my best option is to relocate to a cheap market, buy land, build a cheap house, and sell and once I gain more experience I can come back to Austin. Another option is to buy foreclosures but then I am scared that I mess up since I don't have any experience. Another option is to flip a house. But like I said I am very confused about which route to go. What would you do? I am single and can save around $4000 each month.Buy a rental, SF or duplex cash with 10% ( OOS of course) or better net income, Refi cash out buy another, rinse and repeat . After about 10 that should net you about 5-6k per month.
Good luck
Bob, I am worried about buying my first property out of state. But I have a remote job and can definitely move. But, can you please share examples of good markets to consider?
I know dozens from OOS and out of the country that have been and still are buying rentals including me. I currently have 3 renos going in Cleveland, and have two more closings this week, best part I'm in FL, Check out the mid-west, great returns
All the best
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes2y
Quote from @Account Closed:
Since you can live anywhere, I would find a strong market that you would enjoy, then buy a big house or a multi-family that allows you to rent spaces out and gain experience. After a year, do it again. And again. In five years you could have find rental properties.
Read "Set For Life" by Scott Trench or "The House Hacking Strategy" by Craig Curelop.
The DIY Landlord Book4.7248 Reviews - 2yPatrick DruryBusiness MemberReal Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
@Account Closed
Look at doing a househack in your local market. If that isn't viable then maybe move to a cheaper market and do a househack. If you have a busy day job I wouldn't dive into a full rehab. Utilize an owner occupant loan and put 3-5% down on a rental to get your first one. That will help you get your foot in the door of real estate. - 2yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
@Account Closed
-you should house hack
-you should not try to build something
-you should not move to a random market solely because of home prices
-i would not tell you where to move to since I don't know you. what is important to you - city, suburbs, weather, sports?
-the goal of a house hack is not to cash flow - it's to repurpose your housing payment
hope helps
- Member since 2020 · 351 posts · 329 votes2yAs others have said, house hacking is the right answer for your first deal. If you house hack with 5% down, even though you might cash flow severely negative the appreciation is likely to make up for it.
Quote from @Nicholas L.:
@Account Closed
-you should house hack
-you should not try to build something
-you should not move to a random market solely because of home prices
-i would not tell you where to move to since I don't know you. what is important to you - city, suburbs, weather, sports?
-the goal of a house hack is not to cash flow - it's to repurpose your housing payment
hope helps
When I pencil in the numbers, I see 20% returns over the first 7 years, despite the -2500/mo in cash flow.
Assumes 4% appreciation, 2.5% rent growth, 2% tax and insurance growth, 5% down, 20k in closing costs/initial repairs, 15k/year expense, 850k house with 5k in rental income, 1000/mo in insurance, taxes and pmi, 7% interest. 6% appreciation would see 30% returns.
Build a calculator and run the numbers your self--house hacking gives superior returns to most other buy and hold strategies despite the fact that you have negative cash flow. - Lender · Austin, TX · Member since 2021 · 447 posts · 441 votes2yThe midwest is good, but I am mainly a fan of Ohio markets like Cleveland. I also like North Carolina, Tennessee and Georgia since they are more hybrid markets that have both appreciation and cash flow.
Quote from @Account Closed:
Quote from @Tanner Lewis:
Hey John - I'm also in Austin! If you are starting out, I think relocating to a market with higher cash flow and lower taxes makes more sense. You can move to one of these markets and do a 3.5% down FHA loan, live in the property for a year, and then get another 5% down conventional. With this, you will have 8 units with as little down as possible. Then, I would go ahead and start to use hard money and DSCR to BRRRR properties. This is my strategy, but another may be better based on your goals and risk tolerance.
Hi Tanner,
Thanks for your advice. What are the examples of markets that can cash flow well?
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