How to invest 2M in Multifamily

Question

Hello,

I recently left the corporate world after 20 years and decided to take a sabbatical. Ideally, I would like to not return to that world and instead, take my savings (2M) and invest it in RE as my primary source of income to maintain my lifestyle and build wealth. What recommendations do you have on how to maximize that money to get best returns? One big property or multiple ones?? other ideas??? thanks

Mark Munson · Answer

@Pedro Huichapa I would start with the mindset that you need to leverage your capital and not buy properties all cash. I would stay under 60% loan to value for the best rates. Commercial lenders will want to see you have experience operating a MF property, so if you don't, I would recommend sourcing a good property management company. If you don't currently own any investment properties, I'd be cautious jumping right into the deep end and buying a large MF property. You are in a very competitive market in PHX too, so make sure you are buying right or look out of state to make your money stretch further. Feel free to reach out if you want more feedback and guidance.

Art Shalomov · Answer

@Pedro Huichapa Wow, with 2 million dollars in cash, you've got some exciting options ahead of you. It's all about your long-term strategy and what you're looking to achieve. Given my 15 years of experience living and investing in the Phoenix market, I can tell you that single-family properties are a fantastic choice. The multifamily options here aren't as appealing or affordable, so single-family homes make a lot of sense. They're easier to buy, sell, and rent, plus they tend to attract great tenants. I'd love to have a chat with you and share more of my insights and experiences.

Allie Pfannenstiel · Answer

@Pedro HuichapaHi Pedro!Congrats on your sabbatical. Some of my questions to you are:How much income are you looking to replace as your primary source of income?Whats your aversion to financial risk?How much involvement do you want in these properties?Do you want to take on renovations or does it need to be turn key?Some of these questions will help determine the number of properties that you get, the asset class you invest in, whether you join another investor's syndicate or keep full control and responsibility in your investment. Id love to help guide you after getting to know more in depth some of these crucial questions.We do both residential and commercial real estate at my brokerage so you can take your time and explore the best of both worlds.

Amir Khan · Answer

@Pedro Huichapa I agree with what's been said above. I would really learn different types of assets that will give the kind of risk you are willing to take while providing the returns you'll be happy with. BiggerPockets is probably one of the best online resource where you'll be able to access valuable information for free. Plus, there are very experienced and helpful people on these forums - Good Luck!

Melanie Johnston · Answer

Hi @Pedro Huichapa I see @Art Shalomov posted above me. He's a great resource, as both a lender and an investor. He's helped many of my BiggerPockets buyers put together a complete portfolio of properties, so I find him to be extremely creative and trustworthy.I noticed that you were asking about MF. As far as the Valley goes, I agree with Art about the state of our MF stock. Thought it might be helpful to share a link to the current MF listings on the MLS, just to give a sense of what's available:https://www.flexmls.com/share/...I'm happy to help in any way I can in recommending local resources to you. Feel free to reach out!Melanie

Mark Munson · Answer

I would let the deal dictate the approach. Ideally, you would hold it, but some deals may be better suited towards flipping. You have a lot of capital to start with, so I'd diversify into various asset types and approaches. I just got back from a real estate event in Scottsdale, where I assume you are from. If you need any local connections to larger operators in your area, let me know.

Mason Weiss · Answer

@Pedro Huichapa all depends on the deal. You could find one big deal or several smaller properties and diversify. Depends on your risk tolerance and experience. I would start by focusing on building your team. Find an agent, lender, and property manager that you can trust to help you accomplish this goal. Only a team can truly help you maximize your return through their experience and expertise.

Sheri Fluellen · Answer

Hey Pedro! I'm a Psychologist and Certified HIgh Performance Coach. I noticed as I was reading responses that people were giving you a lot of advice but there are some critical questions that need to be asked first, and I appreciate @Allie Pfannenstiel's post, as it actually directly asks some that i was already thinking about. Start with your long term vision first. Then work backwards from there. This will help guide your decisions around how REI will play a role in your life and how it can serve you. If you want to talk through things a bit more detailed, I'm happy to help. I do this sort of thing a lot.

Jimmy Lieu · Answer

Hi Pedro, tons of opportunity with 2mil! I would personally take a look at a cheaper real estate market that has tons of cash flow and appreciation potential - I really love Columbus Ohio and as someone who works with a lot of out of state investors - there's so many catalysts for why you should invest here. Specifically, there's job growth (Intel, Honda, Amazon, Nationwide, etc) and the population is growing (unlike Cleveland or Cincy). I really see Columbus Ohio as an extremely safe bet for the next 10-20 years. Plus, there's still so many positive cash flowing and 1% deals here in Columbus Ohio. Just a few weeks ago, I helped a client close on a deal getting them 20% cash on cash return. As a local investor and agent here in Columbus, let me know if you have any questions or want to connect!

Pedro Huichapa · Answer

Thank you for the advice. Very much appreciated!