What would you do if you had, $60k, $100k, or $150k?

Question

I’m looking for some perspectives from seasoned investors who could offer some thoughts on long-distance investing under these scenarios.

What would you if you had $60k/$100k/$150k and:

1. needed to invest hands-off (personally could not manage/could not renovate)

2. preferred short-term rentals (you would like to visit in the summer understanding summer is a popular rental time in some regions); long term is fine though

3. did not care too much about location

If your advice differs (e.g., markets, property type, etc.) for each dollar amount, please share. I’m also curious about your market sentiments.

Andrew Bang · Answer

hands-off long distance investing...that's bit tricky....For long distance investing would need to be all hands on deck in the beginning, then once its established could take a back seat, but even then, property managers need to be managed.  Short term rentals are more high maintenance.  Where ever you end up investing realize there will be a few occasions you have to jump on a plane to handle some issue.  If you are looking for something totally hands off, place your money in a syndication or a REIT.

Evan Polaski · Answer

@Gabriel C., what is your definition of hands off?  Any direct ownership is not 100% hands off, then again neither is a syndication or choosing a REIT, but still a bit different.

Direct ownership means, at minimum, you are an asset manager, managing your management company.  You will still be signing off on certain decisions, will still have book keeping to do from time to time, etc.  You will also be the one interviewing new management companies when your current one isn't working out.

Syndications and REITs: you need to vet sponsors or monitor which REIT(s) have the best outlook. And then execute the investment.

In either option above, you should 100% care about the location.  I am assuming you mean you will buy in any city, but what makes a good short term rental is often very different than what makes a good long term rental.  STR guests want convenience and easy to find, since they likely don't know the area.  STRs are effectively hotels.

Long term rentals people typically want neighborhoods and schools.

And as for market, if you own directly, you will likely be traveling there at least once a year, so my suggestion is always for a place that is a direct and inexpensive flight from you.

To answer your question, for all three probably syndication.  Maybe at $150k a STR in an area I personally like, and has strong tourist appeal.  Mountains of Gatlinberg or Asheville.  Maybe into Scottsdale or something.  Essentially, places where the lower amounts won't get you a downpayment for a second home.

Colton Hahn · Answer

For me, I value my free time at a higher rate than others. I think sometimes we forget why we invest in real estate. Yes, to make money but also to finally live life and the more passively you invest the more free time you will have.

Gabriel C. · Answer

@Lane Kawaoka thank you for this. Those amounts are only a portion of net worth (other investments in stocks), with some representing projected proceeds from a syndication and some from the sale of a MF with a partner after 8-10x capital investment. Unfortunately, I don’t believe I can 1031 if I’m planning to reposition funds out of that LLC to one with my wife and inject additional capital or else there could be more. I’m open to some syndications but when deals are made, for how long, and exiting is out of one’s control. I’m not against this characteristic of them because they are hands off but there is a cost associated with letting others be 100% in control.

Caleb Brown · Answer

I'd do STR. Put 10% down for the first one then do a 2nd one. Purchase price for each 250K<. If I had money left over I'd use hard money and flip

Gabriel C. · Answer

@Paul Moore thank you for this. I am familiar with that area and somewhat with the vacation demand, though I haven’t discussed STR vacancy rates or hard numbers with anyone.

Cole Simpson · Answer

Whats the goal, cash on cash? Appreciation? If you truly want passively put your money in syndications, if not airbnbs have awesome cash flow

Paul Moore · Answer

@Gabriel C. since you got a lot of good general and specific advice above, I’m going to give you a very specific comment to your original question.

I was just in Gatlinburg Tennessee with my family at a short term rental cabin. If you can find the right cabin specifically in Gatlinburg or pigeon Forge you can absolutely crush it. The demand was very high and even did pretty well during the big downturn. The fact that they had a massive fire that took out a few thousand cabins several years ago has caused the supply and demand imbalance to be even more acute.

It is critical that you get the right type of cabin and set it up correctly to make it as hands off as possible. I know a guy who has done this successfully several times there.

Chad McMahan · Answer

Single family homes. 3-6 bedrooms, 2-4 bathrooms, 1600-3000 sq ft, capacity 10-14

price range: $400,000 - $700,000 in one town, or $1.2M - $2M in another town. Both locations getting strong cash on cash and appreciation. The lowest cash on cash a client of mine has received in the last 2 years is 15%. Average is closer to 25%. I have 3 remodels going right now, that project over 35% cash on cash.

What would you do if you had, $60k, $100k, or $150k?

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