Help me spend $600,000. Looking to buy multiple units and I need a good strategy

[Travis Elliott]

Hi guys.

A little about myself. Some years back I sold a business. I got a lump sum of cash down and then I carried the contract for the remaining portion. More on that soon. 

I retired young and moved to Asia. I now have a beautiful wife and daughter here in Asia. Currently I have eleven rental properties. I am debt free so I figured that I would continue to live on the rentals and the loan payments. I bring in more than I spend each month so this woulnt be an issue.

The company that bought my business is now selling it. They will continue to pay me principal and interest for the next 50 months and then pay the remaining principal off at that time. Since the business is selling  we would collateralize the remaining loan with a commercial building that they own and have paid off. That would all work out fine but......I got that "real estate bug" again. 

The second option, the option that would help me to invest, is that they pay me everything that owe all at once. Currently that is 700,000. I consulted my cpa and he states that I will owe 100,000 in taxes leaving me with 600,000. This is the option that I will probably take.

So I would like to hear some investing suggestions..

We will probably move back to the states so I will need to buy a house for me and my family. I thought about putting 400,000 down on a 600,000 house. This would allow me to have smaller payments on my primary residence. I am looking at northern Idaho. Most of the houses are highly priced. I also want to be out in the country on some land so this increases home pries as well. With the remaining 200,00 I could use it to buy four houses in the three hundred price range. I may have to add some but it would be enough for down payment on the properties.

As far as what type of investing I want to do.... I would say Short term rentals (air bnb), Mid term rentals (renting to nurses), Fix and flip, mini storage, commercial buildings. I am open to other ideas as well.

Hopefully I explained my self well enough.

So any suggestions on the best way to invest the funds?

Any questions please ask..

[Mike Klarman]

Travis, what a story.  Congrats on the business accomplishments, I wish I had 700k coming down the pike!  Never been to Asia, but I've always been curious about the culture. Oldest culture in the Historical Records I believe.

So, If I am you and I had 200k to invest, what would I do?

Well, I wouldn't want to sink 100% of the capital into four purchases.  200k is more, alot more than most have to start with.  You are in the cat bird seat my friend.

So, I'd come back to the states and immediately look into your credit score and what it is, and how you can get it to 720+ if it is not.  That's first.

Secondly, I'd sit down and think about a 5 year plan for this investment.  Talk about your goals in each year 1- 5.  The types of projects, the project costs, timelines.

Personally, I think the end result for us all is to have an ever growing and expanding REI company that remains a player in the game for decades to come. The last sentence of my 5 year plan would read something like that.

One of the most important arms of the company to get going, IMHO, is the flipping arm. That's the arm that will actually bring money in, the BRRRR arm and the Holding arm either cost money or offer capital back to you that you invested, but the flipping arm brings in money.

I always advise clients to build this arm first.  There's plenty of Markets from Western PA all the way to the western border of Indiana that offer great entry points, affordable rehab costs, antiquated houses, emerging neighborhoods.  Pick up houses for 100k, put 60k in and sell them for 225k - 240k.  Walk with half the spread.  So if your spread is 60k, walk with 30k.  Have an arm that does this 10x per year.  Get some money coming in. These deals require 30k - 45k in liquidity through their lifecycles between down payment, closing costs, insurance costs, holding costs and then fronting the contractor his start money (that you get back when the rehab is done).  You can easily do two of these at at time with that liquidity. It's a question of creating a funnel that shoots opportunity at you.  That's what I do for my clients.  I create the funnel of opportunity.  Serious investors, even beginners they want to get in just need a sound opportunity that they can afford.

Once the flipping arm is operating nicely, now deploy capital into holds and and maybe start turning flips into BRRRR projects. Move into other more desirable markets now too: Cali, Florida, Carolinas, and now you have the stability, the structure, the experience, and the capital to never stop building your air BNB empire.