Investor · Atlanta, GA · Member since 2015 · 39 posts · 8 votes
Hello BP community,
I have a questions that I am looking to get an answer to : how would you invest $200k cash in real estate in order to maximize return on investment. All input is welcome.
Draper, UT · Member since 2016 · 6 posts · 5 votes
10y
I'm with Zack Karp, I would look at buying apartments in a very good area and have a property management company manage the apartments, make sure you keep cash on hand in case there are vacancies or unexpected expenses.
I have bought over $5M in property, I have had apartments and flipped single family homes, if you do decide to buy single family homes, do it under 200k a piece, in other words do not buy the big expensive property even if it is a great foreclosure deal, because if you can't sell it quickly, at a higher price it is nearly impossible to rent it out and cover your mortgage payment.
You could buy 7 or 8 100k homes and put 20k down on each and at that price point definitely look for some good deals i.e foreclosure, distressed home owner, whatever you do, take your time, regardless of what any realtor tells you, take your time and make smart decisions.
Real Estate Investor · Mobile, AL · Member since 2016 · 41 posts · 10 votes
10y
I would buy 8 $25,000 houses and have them rented out through section 8 for at least $800.00 each bringing in over $6400 a month. I would be patient and look for 3/2 or 4/2 houses that need a little work in a decent neighborhood but can be purchased and fixed up for under $25,000.00.
Investor · Saint Paul, MN · Member since 2014 · 48 posts · 39 votes
10y
This is such a serious thread. Why the hell has nobody said the first thing they would do with 200k is go get some hookers and blow? Of course the hookers would be the tenants on the upper unit and the drug dealer would be the main level tenant. Easier to run from the main level.
Cashflow is great plus an additional 15% cut from my entrepreneur tenants.
Portland, OR · Member since 2015 · 6 posts · 2 votes
10y
Need more parameters to answer? At least what other investments do you have? Do you have full time job ... how passive/active can you be with the 200k investment?
I would buy 8 $25,000 houses and have them rented out through section 8 for at least $800.00 each bringing in over $6400 a month. I would be patient and look for 3/2 or 4/2 houses that need a little work in a decent neighborhood but can be purchased and fixed up for under $25,000.00.
I wish I could get something at even twice that price out here... that would be awesome.
I can answer you question with what I DID with 200+k.
Bought a small apartment from a mom & pop RE, in a great location.
Spent another 90k out of pocket for the rehab.
Filled with qualified tenants and cut expenses almost in 1/2.
Now it cash flow +/-15% and is worth almost double what I paid.
In a another year, refinance some cash out and repeat the possess.
Good work! That sounds great!
I would say it depends on the source of the funds. If it was from sale of a business or similar, I would probably invest it in BRRR and flips on a 1:1.5 ratio in the 60-80k per house all in range. Doing a lot of the work myself. Paying myself for the work; cashflowing from the work as my job while building my portfolio from the BRRR's and flips.
If its income from job or business cashflow, I would probably continue doing that. Then buy an apartment building that is stable but under market. Improve it, get the better rents and force appreciate it. Nothing so terrible that its a vacant building, but basically a place where the market has improved over the past 10 years but the landlord is still renting at the same C class neighborhood grade. Or I would BRRR with more contractor assistance than the plan above while raking in the cash at the job/business where I built up the 200k.
I am essentially doing plan 2 currently but not with 200k.
Littleton, CO · Member since 2014 · 195 posts · 72 votes
10y
I second what @Dave Chapa mentioned about Apartment Buildings.
If you can find one that has an Owner that just wants out, you can get some really good terms, price, or both.
If you can find one that has been neglected and can assemble a good team, you should be able to get a really good ROI if you flip it in a year or two after bringing the property up to par or slightly above. Many times, the Apartment Buildings that my Father bought were not for sale but after contacting the Owner or Owners with a decent offer, they decided to sell.
Once you get some experience with 12-24 unit apartment buildings, you could move up to the 50-200 unit ones. Those require an onsite leasing office, full time maintenance, and some other things that the smaller ones do not, but the returns can be great in an area where rents are increasing. But, sometimes dealing with Employees can be quite the headache.
If you like hands on Investing, a SFH or duplex flip might be better suited for you. How well have your Townhome's performed? Have you run into any problems with HOA's not allowing more than a certain percentage of rentals? Have you had to pay a special assessment fee for something that was not planned for?
Since you already have your RE License, you could try and specialize in some Commercial Properties, which in tern could give you an in on some good opportunities.
Keep us updated on what you plan to do this year in RE.
I have a questions that I am looking to get an answer to : how would you invest $200k cash in real estate in order to maximize return on investment. All input is welcome.
Thanks,
Tony - here's the problem:
What I would do, you obviously cannot do, as is evidenced by your asking the question in the first place. So - the question is not what I would do, but what you could do, and this question is impossible to answer without know your back-ground and skill set...
Rental Property Investor · Saint Louis, MO · Member since 2016 · 162 posts · 53 votes
10y
What about buying 4 houses at, or below, $40k, and spend $10k in each fixing them and renting. Then in a year or so, you'll be able to buy another one. Then keep repeating until you are where you want to be financially?
If you by a bunch with mortgages, you will not make much until they are paid off.
I'm with Zack Karp, I would look at buying apartments in a very good area and have a property management company manage the apartments, make sure you keep cash on hand in case there are vacancies or unexpected expenses.
I have bought over $5M in property, I have had apartments and flipped single family homes, if you do decide to buy single family homes, do it under 200k a piece, in other words do not buy the big expensive property even if it is a great foreclosure deal, because if you can't sell it quickly, at a higher price it is nearly impossible to rent it out and cover your mortgage payment.
You could buy 7 or 8 100k homes and put 20k down on each and at that price point definitely look for some good deals i.e foreclosure, distressed home owner, whatever you do, take your time, regardless of what any realtor tells you, take your time and make smart decisions.
I like that you're straight to the point.
I'm in a similar boat, would you advise investing out of state for a first REI? I'm in CA and right now its seems only people with large capital can play this game.
What about buying 4 houses at, or below, $40k, and spend $10k in each fixing them and renting. Then in a year or so, you'll be able to buy another one. Then keep repeating until you are where you want to be financially?
If you by a bunch with mortgages, you will not make much until they are paid off.
Just my $0.02.
Jeremy,
What areas would you recommend with this strategy? im in CA, I don't think I can do that here..
Draper, UT · Member since 2016 · 6 posts · 5 votes
10y
Hey Michael,
There are still some bread and butter areas in Cali where you can actually pull out some affordable properties like in Bakersfield and Fresno. You are correct the Cali market is expensive, there are a lot of affordable houses still in the midwest of the US in the Michigan, Ohio, Indiana areas, Texas has some affordable markets. Whatever you do I highly recommend you have a property management company manage the properties.
Real Estate Broker · Windsor, CT · Member since 2015 · 1k+ posts · 268 votes
10y
It all depends on your real estate strategy. if you are a buy and hold then I would recommend using the money as a downpayment for multiple properties.
Chicago, IL · Member since 2015 · 6 posts · 1 vote
10y
I'D spend a few thousand on opening an LLC and paying for pros to increase my business credit and personal credit. Get a loan against what you have and invest the money from the loan and keep your 200k in your pocket. After about 6 to 12 mos of building credit. Apply for another loan ( maybe around 500k ) with the LLC. Pay back personal loan and continue investing with that. First thing first, double your money and protect it at the same time by creating another entity and using it to invest. OPM ( other people's Money) Keep your 200k for a back up plan. But I'm sure you can double it by the years end. Don't forget to get a wealth tax strategist to help with tax breaks. You'll pay a pretty dollar for a good one but they'll save you a lot on taxes. This is the summary version but it can be done.
Rental Property Investor · Albuquerque, NM · Member since 2015 · 39 posts · 48 votes
10y
We are partial to Mobile Home parks and migh suggest learning a bit more about them if this is of interest to you, then join your local manufactured home industry association in your area. You will meet the park owners and network. Learn to read the financials/numbers on what a good deal is, and is not. You can maximize your investment by purchasing a, "toad" to some and, "gold" to others with a keen eye to excellent cash-flow, if the right park is found. There are plenty out there, and even some with mom/pop owner financing. Expect that those types of deals won't always have perfectly kept books so you will have to become a detective during the due-diligence phase.
There is a good book "Investors Guide To Buying A Mobile Home Park" author - Laura Cochran
If you choose a fixNflip residential strategy there is a good book "Millionaire Real Estate Investory" by Gary Keller, (Founder of Keller Williams Realty), and Dave Jenks, Jay Papassan.
No matter, Bigger Pockets is a great resource for us all!
Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
10y
We have done well in Hanford California. The biggest issue is that even highly leverage prices has gone way up. So the house we bought for 163k in 2012 is now $225,000. Still you can find great deals the deals aren't as great even though the appreciation and cash flow is still there. I know our area hasn't fully recovered since the crash and many houses are still upside down even though this is rapidly changing.
I have a questions that I am looking to get an answer to : how would you invest $200k cash in real estate in order to maximize return on investment. All input is welcome.
Thanks,
Hi Tony,
Have you considered turnkey investment in a reasonably priced market with great returns? Generally single-family properties that are completely rehabbed, a tenant is placed and then sold to an investor with in-house full service management in place. In most instances you don't close on the property unless there is a tenant so there is immediate cash flow.
I would buy 8 $25,000 houses and have them rented out through section 8 for at least $800.00 each bringing in over $6400 a month. I would be patient and look for 3/2 or 4/2 houses that need a little work in a decent neighborhood but can be purchased and fixed up for under $25,000.00.
Wichita, KS · Member since 2013 · 39 posts · 10 votes
10y
If I had $200k I would invest in single family homes (using leverage by taking out a conventional loan and putting 20% down on 15 year notes) that have been sitting on the MLS for several months that had a desperate seller (someone maybe paying 2 mortgages)...this would take some work, patience, and a good realtor willing to submit a lot of low-ball offers...ideally I would shoot for nice C+/B- homes (at least 3/2's) that I could buy at a discount (buying with equity built in) that did not need too much work...maybe some updating...but nothing major like a foreclosure or something on the courthouse steps that required me to manage contractors on a daily basis. (That's what I did when I first started investing, but I learned) Then I would get them rented for the super high rents that are the norm right now, and sit back and wait...and keep buying...and never sell, but pull the equity out thru cash-out refinances...then rinse and repeat! Well every once in a while I would sell one...if everything fell into place...but that's another conversation;)
Real Estate Agent/Investor · Clarkston, MI · Member since 2013 · 156 posts · 34 votes
10y
I would follow @Zack Karp and @Leo Kanell advice. Do your homework, what are you willing to do? It is a great problem to have be also be careful and guard against who you tell your problem to. Everyone will have a "wonderful" idea of what to do with it.
Personally, if it were me, I have a few 16-unit MF I am looking at now. That would be my down payment for those if I had that available right now. Thats just me. Good luck!