How would you invest $100,000 in today's climate?

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How would you invest $100,000 in today's climate?

John Smithe
Member since 2018 · 14 posts · 3 votes

Hi everyone.  In an attempt to try to stop my analysis paralysis, curious as to what established investors would do in the following scenario:

$100,000 liquid

No Debt at all

Remote IT Job making 100k/yr.  Location is a non issue.  Can move anywhere or stay put.

No family or anything holding back from making drastic moves.

What market/strategy would you use the 100k for buy/hold purposes in today's climate?

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Ryan Mullin
Real Estate Broker · Indianapolis, IN · Member since 2009 · 575 posts · 496 votes
7y

Midwest city like Indianapolis, KC or Cleveland.  Up and coming neighborhood near something really desirable.   5 down payments at 20k each on 100k houses.  Power the notes down, pull equity and buy more.   Keep it simple :) 

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y

    depends on what your looking for.. and want to acheive.

    most folks on this particular site are geared toward owning rentals.. which is a fairly easy concept to understand and pull off.

    However there are many other avenues to make money in RE if you dont particularly care to be a landlord.

    And Frankly some small business you could buy will renturn far more than any rentals would given the same capital

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  • Kristofor Rahmas
    Rental Property Investor · Member since 2018 · 40 posts · 17 votes
    7y

    Curious to hear what people have to say as im attempting to start my portfolio as well and I know its all about getting good deals and not about the market however, im not going to lie...i don't want to make bad decisions before a probable downturn.

    0Reply
  • Ryan Mullin
    Real Estate Broker · Indianapolis, IN · Member since 2009 · 575 posts · 496 votes
    7y

    Midwest city like Indianapolis, KC or Cleveland.  Up and coming neighborhood near something really desirable.   5 down payments at 20k each on 100k houses.  Power the notes down, pull equity and buy more.   Keep it simple :) 

    5Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    7y

    @John Smithe my first question is what other assets and investments do you have. As much as I am a proponent of real estate, I also believe in having a diversified portfolio and not having all of your eggs in one basket. The first thing to do is establish a clear objective. If it's cash flow, quantify it. How much cash flow do you want monthly? What kind of CoC return do you want? Once you do that, then identify the markets that will best get you to those objectives. If your goal is cash flow, you'll find the Midwest and Southeast are generally the best. Personally, I like Indianapolis and Kansas City. The key is to get past the analysis paralysis and choose a market. I've seen would be investors compiling data and analyzing spreadsheets for a year or more and still never do anything. There's no such thing as a perfect market but there are several very good ones. Pick a good one and move forward. Feel free to reach out if you want some help.

    3Reply
  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    7y

    Given the market is probably near the top, I would do so carefully. I wouldn't be in a rush to find a deal. Make sure it's a really good one. I wouldn't avoid using debt necessarily if you want to go that route as rates are still pretty low though.

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  • Nicholas Lohr
    Investor · San Francisco, CA · Member since 2015 · 302 posts · 206 votes
    7y

    @Jay Hinrichs  what kind of small businesses do you have in mind?  This has occurred to me also lately. 

    1Reply
  • Whitney HuttenPro Member
    Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
    7y

    @John Smithe I would invest in the types of homes and areas much like @Ryan Mullin mentioned and be sure you have multiple exits (rent, refi,   However!!!  I wouldn't buy retail.  I would buy low, rehab, rent, refi, repeat.  This makes your capital go further and protects you in a market decline or the need to flip a property.  
    OR buy a MF unit (second option), partner up with others for a larger deal (third option).

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  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    7y

    @John Smithe. I would use the BP search function to find other threads that ask this exact same question

    1Reply
  • John Smithe
    OP
    Member since 2018 · 14 posts · 3 votes
    7y

    @Caleb Heimsoth, wow, that idea never occurred to me.  Thanks for the quick thinking.  Brilliant.  Would love to research past answers from 2010 to see what people were doing way back when in a much better climate with deals all over the place.

    1Reply
  • Erik W.
    Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes
    7y

    How would I invest $100,000 in today's climate?  Well, I'd start by making sure I wasn't being rude towards seasoned investors who gave me good advice, especially considering many of them are making 3x to 10x more than $100K yearly and know what they're talking about.

    We discussed this same topic about 2 weeks ago.  @Caleb Heimsoth's advice was spot on.  Couldn't find anything recent?  Refine your search criteria...a tip from one IT Pro to another.

    5Reply
  • Scott KronePro Member
    Investor · Northbrook, IL · Member since 2017 · 352 posts · 295 votes
    7y

    @John Smithe  I applaud your discernment.  One close person to me spent over 30 years studying and never pulled the trigger on an investment out of fear of failing.  It wasn't the failure that was the issue, it was the perception that people would see the failure.

    So, to answer your question, I would suggest defining your goals.  Based upon those specific goals, develop a criteria to meet them.  Research that market, and then know you have the confidence to proceed based upon your due diligence.

    My criteria may be completely different that yours.  This past year, we have made major shifts in our strategy based upon the market conditions we are observing.  I believe we are at the peak of the market so, we are looking for under served market conditions.  Ours is a longer term strategy that is 3-5 year plan.  That being said, we have based the plan on lots of research, observations, and experience.

    Once, we have made that decision, we are going hard after it!  

    1Reply
  • John Smithe
    OP
    Member since 2018 · 14 posts · 3 votes
    7y

    @Scott Krone, thanks for the great information. Im in a bit of a whirlwind as my initial plan was thwarted. I was looking into investing in a quad that I could house hack. Then in the FHA year I'm in the area , I would build a team and pick up some SFRs where I would then vacate the MFR and continue working with the team to continue building a portfolio from afar.

    However, I talked to a lender and learned that FHA won't approve a loan if you don't already live within 90 miles of the property. Even if I could prove that established residence in the unit is no problem. So that plan is a bust.

    Its hard for me to decide if I want a stable cashflowing market like St. Louis or Kansas City or a cashflow/growth hybrid like Tampa or Orlando. I'm leaning towards stability since I, too, believe we are near the top of the cycle. Either way, looks like ill have to either rent and establish a residence first or buy a fixer upper and live there for a few months while working with contractors to get it ready while looking for a MFR in the area.

    Lots to think about.  I really want to be in the area the first few deals so I can get hands on experience.  Doing it all from afar seems daunting.  Thanks for your input.

    0Reply
  • Scott KronePro Member
    Investor · Northbrook, IL · Member since 2017 · 352 posts · 295 votes
    7y

    @John Smithe - seems you have a well thought out plan and strategy. Why is your plan dependent on FHA financing. Look for other means of financing. Once it is stabilized you an can restructure the debt.

    With respect to Midwest or Florida, I think it would be wise to assess the risk level of both and then adjust the rate of return based upon the risk/reward.  My relatives live in Orlando, and find it hard to buy appropriately based upon the high speculative nature of that market.

    0Reply
  • John Smithe
    OP
    Member since 2018 · 14 posts · 3 votes
    7y

    Good point. I guess its not absolutely dependent. I just thought it would be a good way for me to get a sizable loan on 4 units for a small amount down giving a good COC return to start out strong.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Erik W.:

    How would I invest $100,000 in today's climate?  Well, I'd start by making sure I wasn't being rude towards seasoned investors who gave me good advice, especially considering many of them are making 3x to 10x more than $100K yearly and know what they're talking about.

    We discussed this same topic about 2 weeks ago.  @Caleb Heimsoth's advice was spot on.  Couldn't find anything recent?  Refine your search criteria...a tip from one IT Pro to another.

    I cant never find anything on the search function how do you do that.. you IT pro's.. i cant even find other members when i try.  the list comes up with hundreds of match's and I don't have the patients to scroll through them all..  just wonder how you guys make doing a serach sound so simple when i cant even do a basic one..

    But if the only option is to invest in real estate.. right now great performing notes could be a good option.. Also i know of some nice REG A offerings that are real estate collateral based that allow 50k minimum and you DONT need to be accredited and they have a 30 day call period.. I would personally start there.. make income while you shop.. and re fine your wants/needs.

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  • John Smithe
    OP
    Member since 2018 · 14 posts · 3 votes
    7y

    Yeah @Jay Hinrichs, I agree.  Tried different keywords with nothing recent or relative to what i need.  Erik is clearly looking for a reaction and not going to go down that road.  

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y

    this is not my company and the mods don't like advertising.. so if you want to hit me off line I can send you their contact info you will want to talk to the director of investor relations..  its pretty cool though 30 day call is very nice..  

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  • Tim S.
    Investor · California, CA · Member since 2016 · 367 posts · 375 votes
    7y

    Agree that the search capabilities of BP are pretty crap, can't find much of anything even when I know for sure it exists, like I just read it yesterday and want to find it again.   So if there are any tips to get search to provide anything useful I'm all ears.

    OP didn't mention what your time horizon is, how long do you want your money tied up?  If you are accredited, you should look at syndications.  They are passive, returns can be better, no tax write off's though.  It really does depend on your situation and your goals. 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Tim S.:

    Agree that the search capabilities of BP are pretty crap, can't find much of anything even when I know for sure it exists, like I just read it yesterday and want to find it again.   So if there are any tips to get search to provide anything useful I'm all ears.

    OP didn't mention what your time horizon is, how long do you want your money tied up?  If you are accredited, you should look at syndications.  They are passive, returns can be better, no tax write off's though.  It really does depend on your situation and your goals. 

    see I am not the only one you guys are all way smarter than me.. and if you cant do it I certainly cant..  

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  • Grant Rothenburger
    Investor · Taylor Mill, KY · Member since 2016 · 2k+ posts · 964 votes
    7y

    @John Smithe

    I would do similar to @Jay Hinrichs' suggestion with a modification. I'd passively invest $50k in a deal that was the asset class I thought I wanted to buy myself. See how the active investors or GP structures and executes the business plan, and implement what I learn into my own business, which is where that other $50k would come in.

    0Reply
  • Alexey Greben
    Palm Coast, FL · Member since 2017 · 1 post · 1 vote
    7y
    Originally posted by @John Smithe:

    Yeah @Jay Hinrichs, I agree.  Tried different keywords with nothing recent or relative to what i need.  Erik is clearly looking for a reaction and not going to go down that road

    Try using google for your research of this site. Tons of old goodies to be found.

    Google site:biggerpockets.com your keyword

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Alexey Greben:
    Originally posted by @John Smithe:

    Yeah @Jay Hinrichs, I agree.  Tried different keywords with nothing recent or relative to what i need.  Erik is clearly looking for a reaction and not going to go down that road

    Try using google for your research of this site. Tons of old goodies to be found.

    Google site:biggerpockets.com your keyword

    thank you.. for me personally I not really interested in old subjects since I lived through that stuff.. mainly just finding people and that I cant do..  but anyway.. still love the site..  

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  • Mark Sullivan
    Viera, FL · Member since 2014 · 61 posts · 84 votes
    7y

    @Jay Hinrichs What were the small businesses you were thinking of with greater returns?  

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Mark Sullivan:

    @Jay Hinrichs What were the small businesses you were thinking of with greater returns?  

    any number of small franchises.. subway comes to mind I have a friend that started with one  and you cant make a living on one but now he has 3.. and they get paid off much quicker than real estate then at that point they will net 100k plus each a year.. so about a 30% return to start.. and something of real value.. but its a business you need to run it.

    I have a friend that has 7 take and bakes and those gin money as well.. I know he gets to fish more during the steelhead season than I do..  

    One thing I would look at as I am going through this now.. but is Senior day care.. going through it with my mother. 

    The other thing I would look at is any small business that is in the trades.. we are not teaching youngsters how to build anything any more which has led to all sorts of billy bob GC types.. owning a nice plumbing or electrical business. a nice roofing company etc..  I was going to take a swing at a roofing company last year.. it made 700k a year net and I could buy it for 1.5 mil..  that type of thing.  also small coffee stands in parking lots  I can keep naming them but most all of them will make more money with 100k than what you would make with rentals.. if money is what your after.   Rentals is just a very long term forced savings if you cant or don't scale it.. your never going to make much more thant 10k a year on 100k invested. which to me is money that just gets lost in the shuffle.

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  • Mark Sullivan
    Viera, FL · Member since 2014 · 61 posts · 84 votes
    7y

    @Jay Hinrichs Thanks!  I was curious.  Money is my short-term goal, passive income a longer-term goal.  

    0Reply
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