Reinvestment Help Needed

[Seth Poston]

I have to reinvest about 1.3 MM from a recent company sale. My question is, should I look to do as many single family and small multi families for the best return (BRRRR) or should I look at doing a deal on an apartment building? I am newer to REI but familiar with the financing behind the small and large deals. I would appreciate any opinions you would share.

[Joel Owens]

Seth it can depend on your situation.

If you sold one business for 1.3 million and have no other assets or income then the yield you might need might have to increase to sustain yourself.

If this is one business among many or you have other income then putting into higher quality assets that are more passive can make sense. There is cash flow today, accelerated cash flow over time, and then hopefully equity growth on the back end.

If you want super high returns that doesn't go with no headache and being passive owning directly. It's a supply and demand thing. With houses some might buy in depressed areas and deal with lot's of crap to try and get a high teen yield. Conversely someone worth 5 million making 500k a year might want to own a NNN property or retail strip center that throws off 7% cash on cash and double digits after principal paydown on the mortgage. The annual rental increases helps push the yield up and keep up with inflation dollars.

If you have tons of time on your hands and want to be active then you can spend full time trying to diversify a portfolio with different tranches of risk versus return (portfolio averaging).

The kind of clients I have for commercial retail properties the passive part is more important to them over yield although yield certainly plays a factor.

For apartments to own directly it is tough to get passive unless about 80 to 100 units and price could be 6 or 7 million. Retail you can get passive in the 1 million plus range. There are crowdfunding sites as well where you can put a little money here and there into different investments.

Be careful as just because some people become members on here does not mean they have credible investments. Some are just desperate for cash and will do almost anything to try and get it.