If you have 100k of cash in the bank, how would YOU utilize it??

Question

If you have 100k of cash in the bank, how would YOU utilize it to yeild most cash flow/return.

i'm considering all startgies, but essentially it depends on the deal and market. however, i''m focused on cash flow.

All advice is much appreciated. helping me make my decision. mostly thinking about 5-6 until apts building somewhere for 12% cap rate or possibly higher.

Joseph Bui · Answer

With a 100k, I would considering doing BRRRRs in Midwest markets. I’ve been doing BRRRRs in Memphis and Detroit since late 2020 and now have 9 doors across those markets. 100k with the right deals can allow you to scale to about 8 or so doors that all cash flow (after taxes, insurance, property management, mortgage) about 400-500/month each. I would also put aside 15-20% for maintenance/capex/vacancy but that still leaves solid cash flow each door. I work with a team on the ground that can help end to end by sourcing deals, project managing rehab and providing property management. Happy to connect and share more.

Travis Biziorek · Answer

The folks telling you a high-yield savings account is your best bet simply aren't real estate investors.

They are people that purchased rent-ready homes from the MLS when interest rates were basically zero and thought that's how things are done.

Maryam, I know you've looked at Detroit a bit and we've had a couple messages about that market. I'd highly recommend giving it another look if you aren't able to invest in your back yard.

My typical deal in Detroit is $75k-$95k on a SFH including the rehab. Then you're looking at an appraisal anywhere from $85k-$120k. It's a great market to BRRRR but you need the right folks on your team that understand the market and can get things done.

Regardless of where you invest, HOW you invest is going to be much more important. If you want cash flow in today's environment you're going to need to do some value add.

Theresa Harris · Answer

Honestly in my market with interest rates, rent and house prices-I'd put it in a high yield savings account.

Becca F. · Answer

High yield savings account, real estate debt fund or divide up the $100,000 between HYSA and index funds/stocks (with a higher percentage going towards HYSA if you want be more cautious).

I'm guessing you live in Florida? I'm not sure what part of FL you're in and what properties cost there but could you buy something locally and rent it out or do MTR or STR (to traveling nurses or corporate professionals and/or people vacationing)? I considered buying in the Panhandle area (Fort Walton Beach, West Panama City Beach, Navarre Beach) and talked to an agent about 18 months ago. To me I would have approached FL like I do with California, more of a long term appreciation play.

After my experience in the last year, I'm not a huge fan of OOS investing - I invest in S.F. Bay Area and Indianapolis. I would rather be able to physically see my properties and check on them frequently and have more control over them.

Nick Maugeri · Answer

Ohio is a good market for this, but it has to be managed heavily. It sounds like you may be after 2% style properties. You'll need to be prepared for heavy vacancy, tenant turnover, R&M, and CapEx. That said, if you can endure then it's likely going to be profitable down the road. Do you need to recapture the $100K in a certain time or can it be left in the deal?

Chad U. · Answer

Buy Bitcoin

Chris Seveney · Answer

I agree with the other poster. Put it in a high yield savings. a 12 cap apartment is class D and while it may on paper pan out at 12%, will it. If you want 8-10% put it in a debt fund

Theresa Harris · Answer

I'm in Canada, so it will differ.  I know some bank accounts (savings or GICs) were giving 5.5% when I looked a few months ago.

Allan C. · Answer

@Maryam Mostafa 12 cap is high risk, high effort or some combination of the two. It’s best for you to first determine what kind of investor you want to be. High risk/effort and higher yield or low risk/effort and lower yield?

I’ll use an analogy - if you want to make a lot of money why don’t you just become a doctor or a lawyer? You don’t have to be particularly smart to do either, but you need to put in a lot of work and take on a lot of debt. That’s no different than buying a 12 cap property to make a lot of money.

Figure out your investment style first and then you can ask more specific questions on different ways to achieve that goal.

V.G Jason · Answer

I would either buy debt if that $100k is all you got. If that $100k investment threshold is something you've come across before, and see it in your future then I would look at starter-ish price homes in a growing areas and buy one slightly distressed one and add some work to it, plus keep rest for reserves. And rent as LTR.

If you have 100k of cash in the bank, how would YOU utilize it??

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