What would you do/have you done for max return on 200k cash?

Question

How can we make the most on our money? Buy properties outright with the cash? Put down minimum downpayments on multiple properties and hold? Buy several low end flips and sell? Buy one high end flip and sell? Dayton primary location Cincinnati/Columbus secondary locations

What have you done? What would you do to maximize your return on 200k cash?

Joshua D. · Answer

Capital is only as good as the one who controls it.

Focus on education until you can answer this question for yourself.

Jose Belman · Answer

@Matthew Gwin Get a Real Estate Mentor. Not its no a joke, I am serious. Just like a GPS when you go to Kansas or any state you dont know where to go you use the GPS.  Good luck.

Darrin Carey · Answer

@Matthew Gwin There is NOT a right answer to the question without knowing more. The correct answer is "It depends".

• What are your short and long term goals?
• How much time do you have to spend on it? 
• What is your personal knowledge and skill level? 
• How much risk and volatility are you willing to accept? 
• How much real estate experience do you have?
• Do you love tenants? Or does thought make you nervous?
• Do you need current cashflow?
• How long do you want to invest the money for?
• Does debt keep you awake at night?

Leverage has it's place, but it's a double edged sword, it cuts both ways, it amplifies both gains and losses.

For me, right now to meet my current goals, the right answer is doing a combination of flips and lending, and picking up some rentals along the way. Later, I'll be doing less flips than I am now.

Come to the Dayton 6/13/16 meetup, we can get you talking with some of us that have already worked out our personal answers for this question. We had a very similar discussion with someone last time. Feel free to call if you want to chat in the meantime.

Robbie Reutzel · Answer

Hi @Matthew Gwin,

Without example numbers, risk tolerance and the state of the market you are looking to invest in it's pretty difficult to say.

I.e. What is the ROI on the flips?  Timeframe?  Etc.

Need more specifics to even begin to answer.

Cesar Mendoza · Answer

Great Response

Chris Soignier · Answer

Spend $200K on lottery tickets and hope to win mega-millions.   Oh yeah, there's that pesky risk factor which means you may end up with $0.    OK, that's an extreme example, but I used it to highlight that risk and return are highly correlated.

First, I believe that investing in yourself is always a wise investment, especially if you're lost about what strategy to employ in your target market.

When you buy, use leverage wisely to max out your returns.     Several low end flips would be more work than a single high end flip, but also less risk.    I really like seller financing and value play apartments (big ones, not the little ones popular on BP), but like any other strategy, you have to know what you're doing.

Erick Harbert · Answer

@Matthew Gwin first, go check out your boy John Cochran / systems Saturday :-)

1. Market yourself.

-Realistically you would be best of getting deals direct from seller if you aren't already. If you would like help with this please let me know. We do it for many investors and get great response.

-If you don't want the hassle of acquisitions getting in tight with a few key wholesalers, bird dogs, and realtors will go a long way.

2. Leverage.

-I am a strong believer in leveraging your $. This will help maximize your return, especially when the rates are staying low. If rates go up dramatically then cash will become a better return.

-example: buy one house cash 100k - Rents 1200. Buy same house with Temp to Perm hard-money to refi. 20k down, PITI 800, cash flow 400, do it 4 more times to use the 100k, now own 5 houses with 400 a month cash flow or 2000 month cash flow or 800 more than cash outright. This continues on.

-Stability comes in to play a little. If you can't keep the units rented or have a fluctuating market this could be detrimental since you have to keep making the monthly payments with or with out tenants. You need to make sure to keep reserves!

3. Flip vs Buy and hold.

This one is on you. We do both. Flips have a higher ROI and quicker deployment of funds generally, but they are also one of the largest time SUCKS in our business. Getting a good rental or multifamily units cuts down on the time wasting a lot for us. Once again will really depend on what you want to do and how. Often times investor find a happy medium. Buy and flip two a year (6 month turns) while BRRRR.

Jay J. · Answer

I guess that really depends on your specific situation and goals, but..

1. Buy a duplex for $100k that you can BRRRR.    ...a year later, you move out of this one, and buy another duplex. Then you have 2. The next year, you do it again and have three. The cycle continues forever..2. Use the other $100k as funding for flip. Depending on the price range you're looking at, you may or may not need much hard money..

just my 2 cents.

What would you do/have you done for max return on 200k cash?

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