What would you do if you were starting out with $300k in capital?

Question

Hi guys,

New member here who's been lurking and reading on BP for a while now. I'm liquidating some assets overseas and bringing the money here to the US (NY to be exact) and would like to get involved in the world of real estate investing. At first I thought I would buy my first deal cash and look to flip it, but I'd also be interested in utilizing hard money to do multiple deals at once. Not sure what the prevailing opinion on this strategy is, but I'd love to hear your thoughts.

I have friends and business associates who invest in real estate, and as I'm sure you can imagine, everyone would like me to invest capital and let them do the dirty in return for a small percentage of the profits. I'd like to work with some of the more trusted people in my circle to develop a better understanding of the industry and narrow down exactly what my path in the real estate investing world will be, but even starting off I'd like to be more hands on.

My purpose for starting this thread would be to ask those who might be interested and willing to share how they would have started off if they had $300k available to them as a beginner investor. What is the best way to build knowledge and maximize returns with this sum of money in your opinion? I am interested in buying and flipping to start off but as I become financially stronger I'd like to rehab and hold - specifically larger multi-family units.

Everyone's responses and opinions on this topic are going to be different, and I look forward to learning from your respective invaluable experiences.

Chinmay J. · Answer

@Fareed Zahid - First of all, I wouldn't advertise openly too much that you have money and how much exactly you have. Here, on this forum is OK (because you are getting advice), but I am talking about going out and about when  interacting with people on more personal basis.

As far as what to do, it entirely depends on your goals and dreams. You can buy and hold large multi family commercial units. About $1 million range if you'd like with 20-25% down, or join with other investors and get even a bigger property, or you could start multiple fix and flip projects. You could get into note investing and become a banker (of sorts). It all depends on what you want to do. Each requires a separate skill set that you need to acquire.

Personally, I would have done a lot of reading, learning about real estate without spending lot of money. Most of the things you need to know are available right here on these forums. I would have just spent good 5-6 months absorbing knowledge. Then I would start a few fix and flip projects to grow $300K. Once I reach about a $1 MM range, I would invest most of the money in big multifamily projects.  Good to start locally, and then expand in other parts of the country is my motto. But that's me. Not you. You need to decide what works for you, and what doesn't.

Good luck.

Fareed Zahid · Answer

Thanks Taylor. I currently own a home with my family and my personal expenses are taken care of via a retail business I own. I'd like to transition my money and focus from my business into real estate, but I want to make sure that I am educated and capable enough to generate cash flow in this industry before selling my business. I will likely start small with my first few investments, and as mentioned in my first post, work with friends (and hopefully mentors) on my first few deals as I learn the ropes.

Luciana Hasse · Answer

@Nate Hanger About the assign value I think its so true! if someone really wants to learn they will def pay the $50 or $300 to a person that has the knowledge.. I would. Thanks for the tip! We will keep in touch on PM.

David Faulkner · Answer

Is your retail business primarily online/home office, or brick and mortar? If brick and mortar, have you considered owning the real estate you operate out of? You can segregate the entities by for example running your retail business as S-corp and hold the Real Estate in a LLC ... money leaves your right pocket (S-corp) as rental expense, and flows into your left pocket (LLC) as rental income. This is fairly common with medical professionals (EG: dentists) who want to seperate their assets, shelter their income from taxes, and own the medical facilities they operate out of. What better tenant are you going to find than you? As a side note, you should watch the movie "The Founder" ... it is about Ray Kroc and explains how McDonald's is in the REI business, not the burger business ... similar type concept ...

Nate Hananger · Answer

As a matter of fact I do. I'll PM you with her info.

But let's say she doesn't fit what you're looking for for whatever reason...you aren't limited to those who are just advertising mentorship.

Spot someone you'd like to work with who's local? Offer them a check for say... $300. Then map out what you'll do and how you'll bring them deals in exchange for them investing their time and knowledge in you.

The scouts I train have to give me at least $50 bucks and sign a basic time-commitment of at least 6 months to show they aren't going to disappear after our first webcast training session or they aren't working for the competitors trying to fish for info.

Some will say take the free route. Personally, I say people are more likely to assign value to something they pay for. Free knowledge is great AS LONG AS you piece the full puzzle together and utilize it all.

Luciana Hasse · Answer

@Nate Hanger Do you know any good mentor around LA that focus on Flipping?

Nate Hananger · Answer

Fareed - I'm on a similar boat. Only enough capital to do one deal at a time AND living in a very expensive, top tier area.

I would make sure you find a mentor who is at least a decade ahead of you in experience with the financial success to show for it AND is also adapting to the shifting marketing strategies with mobile devices dominating everyone's attention more than TV, radio, or mail.

Just beware as you search for said mentor that you don't get sucked in my any get rich quick gurus flashing their Lamborghini to seduce you in some video. BP offers great feedback on finding mentors and reviews on pretty much every program out there.

Jeff Wallenius · Answer

@Fareed Zahid there are some opportunities to partner with proven, high volume, real estate investors in markets across the nation. I would partner with those types of individuals as a capital partner to begin growing your capital. This of course takes quite a bit of research and due diligence to determine who the best partners are. We invest with several across the nation and stick to a few markets as the team on the ground in those areas are fantastic. I'm happy to provide more details on a PM.

Stanley Parsley · Answer

if I were you I would lone it to me- HA!

no just kidding

be careful with your money, look at differing strategies to move that money

maybe look at loaning the money through a reputable agency for a 10-12% return on the capital

if you have some background in business then maybe a complex of some sort

best yet would be what is your dream- what do you really want to do- this could give you the opportunity to start something that you are passionate about- that may not be real estate you know what I mean?

I know a lot of people that do things but it doesn't make them happy but they stay in that rut-

enjoy

Shawn Ackerman · Answer

@Fareed Zahid I could buy about 20-23 properties in my market with cap rates at about 16-20%.    As a New Yorker, $300K won't go very far here as you know.  Best of luck to you.

What would you do if you were starting out with $300k in capital?

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