How to invest $250k cash

[Jonathan Khachatryan]

I recently started in real estate investing and I have about $250k cash. My goal is to generate $5k/month cash flow. Is this possible? I bought 2 SFHs so far, but should I be looking into buying an apartment complex instead?

What sorts of things should I be aware of buying a SFH vs apartment complex?

[Frank Chin]

I invested through the years. I stayed with SFH, up to 3-plexes, but I looked into apartment buildings for while.

To start with, 5 families and up you'll need a commercial mortgage. Up to a 3-plex, I can rely on tenants to do minor chores, like garbage, shoveling and even lawn maintenance, with a slight rent concession. Starting with 6 to 8 families, I find you'll have to have a tenant with 50% or so off in rent to handle aspects of property management. It's 20 and beyond where I find you can have a on site full time manager.

You can also hire  property management firm as well. The problem is even 20 are considered small for some firms, and you cannot count on them to give you the time and attention on your property. 

The amount you have to work with $250K is a good amount, and it depends on where in the country  you want to invest. If you're looking for cash flow, one apartment building in a good cash flowing area, with on site management would do it for you, even $5K/month. By self managing, I find I can handle a handful of 3-plexes, but fortunately in the NYC area, appreciation went crazy, and I did OK with it, even cash flow was low, but OK. 

[Rafael Norat]

Jonathan Khachatryan

Congrats on getting started! You have a good amount of capital to get started as well.

There are plenty of pros and cons between single and multis. Multis may be easier to judge globally from a numbers perspective as the added value can be shown in your cap rates and such, whereas singles can have the advantage of residential buyers if you need to sell down the line. But there is always success in either as long as you have a good business model and can implement well. I would suggest finding people who has successfully done both and picking their brain a bit. Don't be in rush to spend your funds. Let someone who has been there before guide you a bit. I personally started with multis, now have some singles, now have storefront business to raise capital and expand into flips and larger commercial units. I may have just taken the commercial route from the start of I had the capital to begin with. But either way, I have some good tool on my toolbox now.

Hope that helps a bit...

[David Thompson]

Hi Jonathan,

Looking at MF is a good thing as you can start thinking about scaling a business. If your primary goal is cash flow, there are a few ways to go about it. First, I would ask do you have the time, interest to devote to this asset class. If you do, start reading a ton (BP, books, etc) and see if there are local MF meetup group(s) in your area you can network w/folks doing what you'd like to do. Look for mentors or potential partners that you can learn from. Alternatively, many folks appreciate what real estate can do but still want to be more focused on your job to create the savings to allow you to invest in passive investments. They want to be educated but not looking to create a job out of managing more REI assets, if you qualify as an accredited investor you can look to participate as a limited partner in large value add apartment deals. Larger has the potential to be better (think scale and forced appreciation which are concepts not available to the small MF investor). Couple articles to get you thinking.

https://www.biggerpockets.com/blogs/9145/53820-why...

https://www.biggerpockets.com/blogs/9145/53959-vet...

[Brian Garrett]

I'd advise you don't publicly advertise how much cash you have sitting around.