What would you do with 100k+?

Question

My husband and I have inherited a home that we’ll be selling this spring after light renovations. We stand to walk away with 150-200k and want to get into real estate investing as our path to financial freedom.

We both come from the construction world so flipping has been something we’re interested in but also would like to have rentals.

My question is, what would you do fresh to this world if you in our position knowing what you know now?

John Mathew · Answer

• Hi Janell here are the things that I would do with 100k+Buy a rental property: Invest in a rental property and collect monthly rental income. This option can provide a steady stream of passive income, but it also comes with responsibilities such as property management and maintenance.
• Participate in a real estate investment trust (REIT): Invest in a REIT, which is a company that owns and manages a portfolio of properties. This option can provide exposure to the real estate market without the responsibilities of direct property ownership.
• Participate in a real estate crowdfunding platform: Invest in real estate projects through a crowdfunding platform, which pools funds from multiple investors to finance a property.
• Fix and flip: Purchase a property, renovate it, and sell it for a profit. This option requires a significant amount of research and due diligence, as well as a good understanding of the real estate market and renovation costs.
• House hacking: Purchase a multi-unit property and live in one unit while renting out the others. This option can help offset living expenses and provide exposure to the real estate market.

Eliott Elias · Answer

Buy as much real estate as humanly possible,  i'd be broke in a week.

Drew Sygit · Answer

@Janell Mccoy many investors fail to understand that flipping is just another job. You don't flip, you don't get paid.

Rentals create positive cashflow and long-term wealth.

Have known flippers that kept every X property as a rental, so they built their own portfolio.

Steven Foster Wilson · Answer

I would do the BRRRR and do as many properties as possible. You can buy a decent amount with that here in Ohio. The price-to-rent ratio makes for great investments. Not to mention our appreciation has been 8% higher than the US national average, because of the high demand for affordable housing.

Caleb Brown · Answer

I'd say BRRR or flip. 150-200K is plenty to get the all rolling

Craig Clinton · Answer

Hi Janell

I would find the market that you want to invest in and then study it until you know it like the back of your hand.  Start going to REI meetups because you'll learn little nuggets about investing that you wouldn't learn elsewhere and you'll meet all sorts of people that you'll need in your investing journey like lenders, realtors, contractors, insurance people, etc.  You'll also meet people that have deals, which is the hardest & most important thing in REI.

Once you find a deal and the numbers make sense, jump in.  I personally, would not use all of your 150-200k on one deal because now that your going to meetups and networking, you never know if a screaming deal comes your way.  You want to have some liquidity if it does.  I would use a hard money lender (HML).  They'll typically pay 85-90% of the purchase price.  You can use a portion of your 150-200k to cover the 10-15% difference.  Also, with the rehab, hard money lenders don't reimburse you until a particular portion of the total job is done.  For instance, if you have 10k in your budget for kitchen cabinet installation, the HML won't pay you the 10k until they physically come see that the cabinets are installed.  You can use a portion of your 150-200k to cover that too.

You have the construction knowledge so that is a huge plus.  Keep networking and keep educating yourself.  Hope this helps.  Good luck!

John O'Leary · Answer

Hi Janell,

Investing in real estate through a combination of flipping and building a portfolio can offer several benefits especially if you have 100K+ or more to invest assuming you build the assembly line correctly.Flipping can generate quick returns and is ideal for investors who are looking to make a fast profit. Flipping can also provide valuable experience and knowledge in the real estate market, which can be applied to future investments.

Building a real estate portfolio provides a steady stream of passive income and the potential for appreciation over time. A well-diversified portfolio can also provide a safety net during economic downturns, as real estate is less volatile compared to other investments such as stocks.

By combining flipping and portfolio building, you can take advantage of the quick returns offered by flipping while also building a stable and long-term source of wealth through their portfolio. This strategy can also offer diversification benefits, as flipping can provide a short-term source of income while the portfolio can provide long-term stability. Additionally, if you are using Private/Hard money as leverage, building your assembly line similar to what I outlined above allows you to bypass the BRRR strategy which is difficult in certain markets due to increased competition, high rates, and low inventory. It also will give you a lower interest rate on your DSCR financing due to keeping a lower LTV. Additionally, holding offers several tax benefits such as deductions for mortgage interest and depreciation. This can help to reduce the overall cost of ownership and increase returns.

What would you do with 100k+?

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