High earner-ex realtor trying to decide what type & where to make my first investment

[Anthony Minervini]

Hello All!

I’m an ex realtor who also has some experience working for a private equity group for a short time before I got a really good gig in a completely unrelated industry that will allow me to have options when investing. I want to know everyone’s opinions on what they would do in my shoes. I’m pretty busy with my job as it’s a 24/7 industry, I don’t have time to handle aggressively hunting for off market deals however I could still do it with mailers, as I’m in no rush to purchase right away. I don’t know if I should invest in the Jersey market and put maybe 20-50% down on something, make less cash flow and make more appreciation, or every two years or so maybe buy something fully cash (my own $) in the Midwest let’s say 5-10 units and make more cash flow with no debt as with the income I make I can just save and buy more, don’t necessarily need to leverage in some markets. Although I love my job , I am motivated in 10-15 years or so to retire with real estate. What are your guys opinions ?

[Corby Goade]

If you are a high wage earner, you are wasting your time chasing cash flow in the midwest. All of that work in order to find a property with a little cash flow and modest appreciation is not a good use of your time. 

Trying to dig up your own deals is at least a full time job- the ROI on it doesn't really start to materialize until a year or so in to full time plus efforts.

If you are making good money, you should be focusing on two things: tax mitigation and long term wealth building. You can do that by buying B or better properties in growing, desirable areas. 

No, they probably won't cash flow in a traditional sense right away, but you'll put much more money in your pocket using tax mitigation strategies that you'd ever get from cash flow on SFH in the midwest.

As those properties grow in value and become more and more desirable, you'll be building up a very nice nest egg that will pay off in spades 10 years from now, and you'll be making money all along the way. That's where generational wealth happens. 

Best of luck!