What would YOU do with MY $100,000??

Question

Hello Bigger Pockets Family,

I'm new to Real Estate Investing, and my husband and I are looking for the BEST way to see FAST results with investing in Real Estate. We truly want to build a business that will secure our financial future. My QUESTION is to those of you SUCCESSFUL INVESTORS out there. With the knowledge you have now, what would you do if you had $100,000 to get started in real estate investing??... If you were truly trying to see GREAT results, what would you do NOW?

Will Barnard · Answer

I would responsibly leverage that $100k into $1M, investing at least half in rehab flip projects and the remainder into buy and hold multifamily or commercial (retail strip, self storage, mobile home parks, etc). I would then take a large majority of the flip proceeds and roll into more buy and hold. Step and repeat until you own enough to provide cash flow to live off for life.

I am in this process now, however, I started out buy and hold slowly, then moved into other avenues of RE. If I started over, I would have done the above right off the bat.

Eric Taylor · Answer

Key questions you need to address for yourself prior to investing 100K

1)  How much time do you have to spend?  Less time suggests Buy and Hold vs Stock market index fund.

2)  Risk tolerance?  Can you lose the 100K and still be OK financially?

3)  Can you sleep well with 200K vs 400K vs 900K worth of mortgages?

4)  Aside from the money, do you have any other skills that would be handy in the world of REI?  Do you like dealing with tenants?

5)  Relax, do your research, and start with a small project

Account Closed · Answer

I donno if $100k is enough for you to see "great" results, I guess depends on your perspective. $100k would get you $500k of leverage with standard 80/20 loans.

To be great with that 100k would be to, along the way of utilizing/spending, the $500k you pick up some seller financed properties allowing you to use less then the standard 80/20's (20% down payment loans), or maybe some of the properties you aquire need rehab which will give you some forced equity. By utilizing some methods which allow you to maximize your investment dollar and minimize the amount of down payments. Thereby possibly getting $800k or so of total portfolio value or possibly higher instead of what standard investment loans with 20% down payments will do for you.

larger the dollar amount of portfolio, the larger possible return obviously, assuming your ok with higher risk utilizing higher amounts of leverage which goes back to your confidence level in your experience and how good of a deal you find.

Crystal Smith · Answer

@Crystal Dugar  Here are some responses to the same question asked a few weeks ago:  What do you do w/ $100K

Emily Powell · Answer

Hey Crystal - I'm betting you are familiar with the technique, perhaps just not the language.  When people use the term "leverage," they are referring to borrowing money (getting a mortgage) and spreading out your capital.  By using leverage, you can use your $100K towards 20% down-payments on $500,000 in real estate using 80% of other people's money as opposed to $100,000 if paying cash.  But as Eric said, you need to consider your comfort level/risk tolerance and think about whether you would be comfortable with $400K in mortgages.  Or perhaps some compromise of leverage and cash.

Sonia Walsh · Answer

I would definitely have both short term and long term goals, and avoid using my $100K. Use other people's cash to fund your deals.  I would live off of wholesaling properties, acquiring one property every year to hold.  The rent from that rental, instead of spending it, I would put it towards the loan.  A house that cost me say $50K, putting aside money for repairs etc...I would be able to pay off my loan in about 3.5 years.  But don't forget, my goal is to acquire one "hold" property every year.  By the second year, I would now have 2 rental properties, and the net profit from the second house is also going towards the loan from the first house. By the third year...well you get the picture.  Now I totally own the first house, because I funneled all the money from my 3 rental properties to pay off my hard money loan..in the meantime real estate values are rising.  So that house I bought 3.5 years ago for $50K, is now worth let's say $75- $80K depending on location etc...just saying

Stephen Chatto · Answer

Go out and learn how to use other peoples money :)

Because once that 100k is spent...  then what?

If you REALLY want to spend the money.   You can buy 2 houses in my market and rent them out for a pretty darn good return.

You could probably buy 4 if you want to venture into certain areas.

:)

Good Luck...

Steve Babiak · Answer

Be on the alert for scammers, you advertised yourself as a potentially lucrative target ...

Crystal Dugar · Answer

Hey thanks everyone, i'm overwhelmed with the great information you all have.

Just from reading some of the comments I learned an invaluable amount of information. I believe the "Buy and Hold" option is what I'm looking to do. I didn't even know I could leverage my money, hadn't even heard of it before. I think Will Barnard hit it on the nose!! All I need now is a crash course on "How To", thanks guys. Crystal Smith, thanks for the link I'm about to check it now!

What would YOU do with MY $100,000??

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