How would you invest 100k Cash?

Question

I currently have 100k in cash to invest in real estate. My goal for the next 12 months is to create an additional revenue stream that provides monthly income (specifically I am thinking a 4–6-unit rental property). What would you do? Would you focus on fixing a multiple family foreclosure? Should I buy in cash?  or put 20% down and then attempt to get multiple properties?

The areas I am looking in are: Milwaukee, WI ; Atlanta, GA, Delaware and/or maybe Ohio (Columbus or Cleveland) or Detroit, MI.

I have the most connections with contractors and other investors in Milwaukee, WI.

Ideas I have are- student housing (could generate 5-10k per month) or two section 8 duplexes by buying foreclosures.

I would love to hear any recommendations and your thoughts and experience!   Please respond with details and specific thoughts on the best way to invest 100k in todays market.

Reece Iovine · Answer

Don't limit yourself. Just buy good deals :) In Columbus goodluck finding multifamily foreclosures this isn't 2009-12 anymore. Absolutely leverage your purchases. Contractors will be the hardest part besides actually finding the deal so either work with a real estate agent that has referrals. Goodluck!

Remington Lyman · Answer

You should leverage yourself and not purchase with cash. Columbus, Ohio has some great multifamily opportunities for you.

Will Fraser · Answer

I would absolutely not buy in cash.  That neglects one of the primary levers of real estate investing and, does not hedge against (seemingly imminent) currently inflation as much as buying with leverage could.

I'll second Aj's lead-off question above:  what's your why?

That will determine a lot about your strategy.  For my why, which is cashflow en route to generational wealth, the quality of the property is exceedingly important and cashflow is not unimportant.  That means that in my market section 8 is nearly always out.

For my money I'd look to use a 25% down conventional loan to buy the best quality 4-plex I could get my hands on that would follow the 1% rule or better.

Dave Poeppelmeier · Answer

Wherever you want to invest regarding Student Housing, find out the culture of the University/Student Housing. I love student housing around The University of Toledo and is solely what I own, but it is very different here than say Bowling Green State University 20 minutes away, or a huge school like Ohio State. Find out when the rental seasons are (spring here, fall in BG), what roughly each room goes for in a nice house vs a pig sty, what students are typically responsible for, etc. Also, be ready to rent to 20-year-olds who have no idea how to live in a house. Not that they are going to destroy it, they just need to be told that they need to set up the gas, electricity, etc, as well as knowing that a leaking toilet is not OK, nor is the dripping faucet, or the fun collection of bugs they are seeing around their beds. If you have $100k to invest, like everyone else has said take advantage of the low interest rates and around here, you could get yourself into 4 or more houses instead of 1. Let me know if you have any other Student Housing questions, happy to help.

Jonathan Styer · Answer

@Remington Lyman is spot on. The beauty of investing in real estate is the leverage that you can obtain. Many folks who buy cash then choose to do a cash out refinance afterwards to achieve that leverage. Good luck!

Brock Mogensen · Answer

Definitely leverage debt to buy deals.  If you don't have to pay cash for a deal, dont..IMO. You should also look at partnering with other investors in your target market to buy deals.  If you can find 2-3 other people that have $100K, then you can go after bigger deals, which offer greater economies of scale.  With a standard 75% LTV loan and 4 investors at $100K, now you can start looking at deals in the $1.5M-$1.6M range.  In Milwaukee that can get you a decent size apartment building.  I invest and live in the Milwaukee area, happy to connect you with people here.

Eudith Vacio · Answer

Hello @Christina NA - you have some great options!

I would lean in on where your team of contractors are OR you will have to add building a new team of contractors into your "time budget" and as far as the large initial investment in cash v buying multiple properties really depends on your returns and and making sure that you have additional reserves to maintain the property.

Hope that helps! Please keep us posted :)

Zeke Liston · Answer

That's great Christina! Columbus would be a great market for student housing considering it hosts the 3rd largest university in America.

Aaron W. · Answer

@Christina Woodson If you finance a property, there are certain requirements traditional lenders will look for. It needs to be in habitable condition or else they will likely not finance it. Properties that just need updating and modernization may be good candidates for this.

If it is a major rehab then you may need to go with some type construction/rehab loan that includes construction/rehab plans. Traditional lenders have these programs or you can look at hard money or private lenders for financing these projects.

What you decide to jump into is really dependent on your goals. There are advantages and disadvantages of smaller and larger multifamily units. I personally like larger for the scalability. If you are just starting, then I'd probably start smaller and then slowly work up to larger units. It will allow you to learn incrementally.

Good luck!

How would you invest 100k Cash?

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