What to do with $250k?

Question

Tamiel Kenney · Answer

Hi Scott!  Are you looking for strictly a passive investment or an active investment opportunity. I am a Multifamily (Apartment) Investor and Syndicator.  We started off buying 1-4 units at a time 22 yrs ago.  Now we only buy large complexes thru syndication, with 1700 units by the end of this month!   We are passive investors as well as active syndicators.  Because this is the investment type I prefer, this is what I will talk about.  If you just want passive income...then joining a Multifamily syndication is great.  You would be able to find syndicators on bigger pockets for sure or local REAI clubs, that you can talk to and get to know and see who has deals for you to consider.  You can ask for references and you should have a list of questions to vet out a potential bad Syndicator - yes they are out there!!

Being an active investor is more of the syndication side...where we actively find the deals thru relations with Brokers, run the numbers in detail on the potential properties, tour the properties and if we move forward on it...then start raising money from other investors to buy the property thru syndication.

We hold training events and webinars to teach people each of these 2 aspects of Apartment Investing but focus on the passive investor education.

I strongly suggest you learn about the type of investment you are considering in.  Learn to evaluate the deals (to some level) to make sure the deal being presented to you is actually going to perform like promised.  We see lots of numbers being changed to "make a deal work" because the hot markets are getting tighter, and people are overpaying for the properties!

Do you have an expectation of the kind of return you are hoping to get each year?

Do you know what your risk tolerance is for investing?

All these things you should consider learning or researching before you invest.

Please consider putting the money in 2 different deals.  With friends who have a lot more money to invest...I tell them that $250k is fine to invest in 1 deal.  BUT...if that is all you have -- Spread it out! $50-100K is the minimum investment in Apartment deals.

Whatever you choose, please educate yourself about the investment first.

Happy Investing!!!

Michael Wagner · Answer

@Scott Ewell,

As others have alluded to, more information is needed in order to provide you with a truly meaningful answer.  That being said, I am sure you will get a lot of answers that will get your wheels turning and that is a good thing.  Take my answer for example, may send your thoughts down a path you hadn't considered before...or it may be white noise.  Even so, are you set on habitational real estate?  Or would you consider real estate that folks don't live or work in?  I've found happiness in self storage!  In 5 short years, I am actually down to working 10 hours or so per week (my wife donates 5 hours to bookkeeping as well) and paying bills and crushing debt.  We spend the rest of our time chasing our two small children around! This is all possible because self storage has income/expense ratios that are far better than other RE asset classes.  At the very least, its worth a look if you haven't investigated it yet.  By no means is it for everybody but I wanted to mention it.

My only other advise (and I apologize if this is a bit of a soap box) is to spend a whole bunch of time relecting on your retirement goals.  Are you looking to fill your days because X number of years of working has you feeling that you might go stir crazy in retirement? Or are you simply looking for extra cash with no day to day work?  Are you going to be staying where you currently live? Or is it possible you will relocate when the job no longer ties you to your current locale?  Or is extensive traveling in the cards?  Do you "need" the money from this investment? Or would it just be nice to have?  These questions, along with thousands of others should be dreamt up and answered before you dive in too deep.  You won't know if your investment is successful unless you define success ahead of time.  You don't want to climb all the way up an investment ladder only to realize that its leaning against the wrong wall!

Hope some of this is found to be helpful.

All the best to you!

Mike

Jeff Wallenius · Answer

@Scott Ewell if your going to invest in a buy and hold investment property how involved do you want to be? If your looking for a retirement supplement I'm going to make a broad assumption that your not looking to manage properties on a day to day basis. I don't think there is one correct answer for your decision you do have to determine your investment goals. If buying SFR I would make sure you buy in the B and above class neighborhoods, which will provide a stable investments without the constant turnover and headaches that a C- and worse will provide. You'll pay a higher price, but as a retirement supplement you want a smooth ride I assume. With multifamily you may be able to buy into a higher class property but most likely your down payment puts you in a slightly lower class property type versus SFR. As @Tamiel Kenney stated above, you can get into a syndicate and let the proven professionals deal with the issues. This is a great option for avoiding headaches and letting knowledgable, proven operators work to your advantage. The drawback is your level of control will be minimal and ability to liquidate difficult. Obviously you mentioned buying property, but there are other options to achieve nice returns in real estate without individually owning the properties. I made a lot of assumptions in this post, so you know what that means.......

What to do with $250k?

Most Popular Reply