Have 300k to 400k to invest

[Asif Islam]

Hi All,

I am somewhat knowledgeable with real estate as I listen to the bigger pockets podcast, I have read The book on rental property investing by Brandon Turner, and I have watched countless number of videos on real estate investing.

My parents are selling their primary residence and are looking to net $300k-$400k after fees and everything.

What do you all think is the best approach to set up the foundation for a real estate business for my parents and I? I am willing to be a hands on investor and be involved in anything I need to be apart of.

We currently live in the metro Atlanta area. 

I am looking to purchase a primary residence for my parents with their money, and put about 3-5% down (or should I put 20%?) and use the rest of the funds to purchase a primary residence for myself again 3-5% and I would be renting out rooms while living there. Lastly, whatever funds are left I am looking to put money down on either investment properties (25%) down or BRRRR properties.

My parents would live at their primary residence half the year and other half the year back in our home country, so I am thinking I can Airbnb their primary residence. 

I have lived in downtown Atlanta myself for 8 years and am familiar with the area. I am interested in investing in Pittsburg, Sylvia Hill, and West end areas, however I am open to anything. Single family or multi family   is what I am looking for, maybe a condo for my parents if it makes sense!

Any advice is appreciated! 

[John Ford]

There's a lot to unpack here so I'll only hit on a couple of points. Glossing over the details, I think your plan is sound: Buy a primary residence for your folks (it's their money, after all), buy something to house-hack, and then start acquiring properties. On the other hand, real estate is expensive right now and the timing isn't great. I'm not saying there's gonna be a crash or anything, just that relative to incomes and other metrics, real estate is historically expensive right now and thus, it might not be the best time to buy. But who knows, maybe hyper-inflation is right around the corner and it's our last chance to buy. I'm just playing the odds.

That said, if you execute your plan diligently and don't try to do everything at once, you are effectively dollar-cost-averaging into the market. Buy your folks' place. That will probably take a few months. Then when that transaction is complete, find your house-hack which I would expect to take a bit longer. By then it will be about a year from now. The craziness of the last lear will be in the rear-view and the dust will be settling from all the money that's been thrown around in the response and it will be a good time to evaluate the market for potential long-term investing. (Not going to speculate where the market might be then, since my crystal ball is broken).

The last thing I'll say is, if you read the book, then you might remember the part where the author says "plant as many trees as you can water". I'd change that to, "plant as many trees as you can water in a draught". Don't overextend yourself. If your parents are going out of the country for half the year, do they still have income? Can your income cover the PITI on 2, 3, 4+ houses? Or if there's a replay of 2020/21 and tenants stop paying rent and you can't get them out, are you going to need a bailout? If not, you might want to earmark a big chunk of that 400k for cash reserves. Just some things to think about. Best of luck to you.