How to invest my $700K CASH Anywhere. Goals: Residence & Income.

Question

I am coming across a decent chunk of Cash $700,000. I want to get into RE full time I currently have 3 Low-end rental properties i bought a few years back in Delaware.

Goals:

1. Make a good and safe residual income (by safe i mean recession proof, and always being able to pay of my Monthly Payment)

2. Move to an aspiring area have been thinking Florida or California.

3. Get into Realestate full time.

4. Great School Districts.

Questions:

1. How would you invest this?

2. Would an FHA Loan be advisable since i have never bought a house?

3. Besides FL & CA. What are some other markets you would suggest.

4. What is a correct LTV to aim for, something about even a 20% LTV scares the Day lights out of me as all i have is this 700k. Being that if something goes wrong due to vacancy and i cant make my payments, i could loose everything.

5. Your general advice please!

Account Closed · Answer

@Paras Turakhia You are going about it all wrong.

Decide which kind of investor you want to be (SFR, Commercial, Land, Tax Liens, HML, Multi-Family, Notes, Fix & Flip, Buy & Hold, “Subject To”, apartments, duplexes, assisted living, REOs, Foreclosures, Short Sales), etc.. Decide how much money you have access to, & the zip codes, city or state you want to focus on. That will determine the next step. Outline where you want to be in five years. Put it all in writing. Start working your plan.

If you have further interest send me a Colleague notice and I can email you some info.

Mike Dymski · Answer

Hey Paras.  I'd recommend putting the cash aside for now and spending a couple of months immersing yourself in real estate podcasts and books.  That will provide a foundation for the various real estate investing strategies and market dynamics.

Also, be wary of the sharks trolling on public forums that will help separate you from your cash.

Brent Coombs · Answer

@Paras Turakhia, anywhere? Does that mean you're flexible as to where you LIVE too?

Mixing your (wanted) residence with your other investment goals could be problematic.

Investing in California is (mostly) NOT for cash flow. You know that, right?

You also realize that "Great School Districts" equals low or negative cash flow too, right?

Florida, though not AS hard to find cash flow, is still not easy for Out-Of-State Investors.

$700k CAN go far! But, don't spend willy-nilly. If you see a "deal", please ask BP about it.

Welcome to BP. You've come to the right site to learn, learn, learn. All the best...

David Thompson · Answer

Paras,

First thing is to do some research into areas and trends that have good upside and downside protection historically.  Rental housing, affordability concepts and storage are key themes right now.  I currently would explore putting some money to work in some passive real estate syndications (invest w/experts) that target niches w/legs, know where the strong markets/submarkets are, have a solid track record, use conservative underwriting with deals that make sense to you.  Niche areas I like include being a limited partner in large value add multifamily apartments, self-storage value add and conversions, and mobile home parks.  Some blog articles to review to get started. Bottomline, take your time, do some research, ask questions, be realistic and if it sounds too good, probably is.

https://www.biggerpockets.com/blogs/9145/53820-why...

https://www.biggerpockets.com/blogs/9145/54155-sel...

Brent Coombs · Answer

"Great upcoming markets"? That's the $700k question! (What if they stall/slide instead?)

People NEED to live somewhere. Just find the spots that they're ALREADY happy to rent at more than a mortgage and expenses would cost them, but for whatever reason/s, they can't/won't.

And as has been consistently suggested to you: take the necessary TIME to research, first.

My recommendation is: once you settle on your specific niche market, use the $700k as DEPOSITS to buy cash flowing property that costs say $2M in total, but which (because your research was done thoroughly) should ALREADY be worth another $680k+. Cheers...

Mitchell Jaworski · Answer

@Paras Turakhia - I would not focus on real estate alone.  Now don't get me wrong I own three rentals and love it, but I also have investments in small businesses and private lending that generate passive income.

For the real estate you do buy, make sure you buy right.  In the end, SFH, multi-family, etc. doesn't matter if you do not buy right.   Make sure you run the numbers and see that a property does indeed cash flow after costs (mtg. maintenance, reserves, taxes, etc)

I have a formula I use in an excel sheet.  You can PM if you want it.

As for buying cash or using financing, well its just a matter of how much risk you are willing to accept as it obviously has an impact on your returns and especially your leverage.

In the end, there are so so many investment vehicles out there that offer a good return you should be able to live off the passive income of that 700K.

Thomas S. · Answer

Why not just invest in a income generating fund and avoid all the hassle's of real estate. Take the next 10 years reinvesting the returns and reap the rewards. You take less risk, do no work and end up comfortably wealthy in retirement.

Rodrigo Medeiros · Answer

Hi, Paras,

You are in a great position since starting with money makes a lot of things easier. On the flip side, you have to be more careful, as you may not value the cash you as much if it came without years of work, and there there are probably as many ways of losing money as there are of making money in Real Estate.

Invest time in learning first. I would definitely take small investment steps before going for larger deals.

You show a concern about losing the money with a crisis, so diversification is key. If you leverage yourself hugely and get a large apartment complex you could get incredibly rich, but you could also end up bankrupt with a very large debt if you don't know what you are doing.

I would have a five-year plan and would actively manage every investment during this period. I would aim at at least doubling the money and gain practical experience. Hands-on experience will help you identify how to get investments where you have to put less time in to make money.

Aside from learning with BP, I would also listen to the podcast "Money for the Rest of Us" to understand more about the economy in general and passive investment.

Hope it helps!

Rodrigo.

Brian Garrett · Answer

@Paras Turakhia West Palm Beach and South Florida in general are extremely competitive.

Paras Turakhia · Answer

@Brent Coombs Thanks for you reply! I am flexible as to where ill live. And after doing some further research im understanding why your saying don't mix my residence with my investment. Any idea on some great upcoming markets for Multi-family and apartments?

How to invest my $700K CASH Anywhere. Goals: Residence & Income.

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