250k & able to move/work from anywhere: wwyd for next REI?

Question

Hopefully this is a fun “what would you do” RE question for the unique times we all live in:

If your goal was to get to $4000/month in income asap or by 2023 and you have/make...

• 50k in cash.
• 200k in stock you’re comfortable liquidating for a smart RE investment.
• 160K in HELOC available from a house-hacked BRRRR you completed.
• A forever remote full-time W-2
• You’re comfortable moving anywhere in the U.S with standard lifestyle amenities for a millennial (no podunk middle-of-nowhere class D places - this one’s tricky :-).
• 150k in yearly income (W-2 + annual rental income)

...what would you do? Asking for a friend ;-)

I’ve been researching, and am considering an investment in a class A, B 4-plex in the 600k-1m range that provides a .8% to 1% rent to purchase price ratio at 25% down, declaring 1 of the units as a primary residence, then executing cost segregation since the stock I liquidate would yield a 160k capital gain that I could offset (shoutout to Advanced Tax Strategies by Amanda Han for that thought).

I could go the acquiring SFHs, but that seems like it’d be more overhead and not leverage my current positions. Happy to provide more context/details.

Thanks BP. Where would you go and do? Looking forward to your opinions 🙇🙇

Andy Whitcomb · Answer

@Drew Sing

You’re already in Bremerton, which is traditionally a good cash flowing market for us here in WA. I’d house hack a small multi right where you are. There’s tons of them around, you just need to talk to the right people.

Start networking with agents, investors, and wholesalers in the neighborhood. One tip that I use is network with older and successful investors who may have some properties in the portfolio that don’t work for them anymore.

I have a good Bremerton based agent if you need a referral.

Jai Reddy · Answer

Congratulations on your situation. As Account Closed said, if you have already decided to use RE as one of your income sources, focus on finding a good deal, the other liquid investments you want to put money into are easier than finding an (illiquid) RE deal that gives you good returns.

Nick James · Answer

Personally, I'd consider states with little or no income taxes. Washington and Nevada are on my short list. I'm thinking Vancouver Washington or Las Vegas Nevada.

However, you are already based on Washington lol.

Curious to see what others think.

Tyler Jahnke · Answer

My guy @Drew Sing - you got a lot of options, but this is what I would personally do (but, I'm not saying this is what YOU should do):

1. Calculate what your 3-6 month living expenses are and classify that as your Emergency Fund

2. Convert Emergency Fund cash into USD Coin, keep it with a platform like Celsius or BlockFI and get a 8%-12% return on it to sit there without any fluctuation in the value of USD Coin. *Do your thorough research and understand what you're getting into...these platforms are not FDIC insured so it may not be for you*

3. In this order: use your HELOC + any extra cash after calculating Emergency fund + sell the needed stock to house hack a 2-4 unit with 25% down and live in one unit so it's a primary. You could also do this with a SFR if you're still comfortable renting out rooms.

NOTES: Property would be on the worst block in the best/hip neighborhood of an A/B neighborhood. If you could find a property and afford it by ONLY using your HELOC I'd try to go that route so you don't have to touch your stock holdings or cash. Any extra cash you have I'd put in the market or invest in an income property with a partner.

*Not saying this is what anyone should do, this is just what I would do and what my initial thoughts were without much thorough analysis or thought hahah take it with a grain of salt*

-Tyler J.

Janine Huang · Answer

@Andy Whitcomb I’d love the name of the agent in the Bremerton/kitsap area

Drew Sing · Answer

Thanks all for your comments. Agree it requires extra perseverance to find a good deal today @Jai Reddy Account Closed, thus ensuring one is focused on a specific RE strategy is even more crucial as I'm still in the research stages. Putting in sweat equity to BRRRR a SFH into a MFH with limited cash is what I've done, so makes logical sense to rinse and repeat, but what's changed is my financial position and it's a whole different RE landscape, so hopefully others can relate that there may be alternative RE options that make more sense based on one's situation and the market (eg. syndication, partnerships, self storage, or just waiting, etc).

Tyler Jahnke · Answer

Account Closed - oh yeah, definitely does not come without risk. Everyone should do their due diligence in any investment! And it should not be seen as a typical savings account with an established bank.

Tyler Jahnke · Answer

Account Closed - I'm not recommending anything...just putting my thoughts out there on what I would do if I was in his situation/what I am doing personally.

To further explain my crypto play: the value of 1 USD coin always stays the same...it always equals $1 USD because it's backed by that currency. So if you convert $100 USD into USD coin you'll have $100 worth of USD coin. It should not decrease in value.

But, the value of his account will rise as BlockFI and Celsius pay 8-12% annually on any USD Coin you have with them.

*Always do your own due dilligence, I'm 100% NOT a crypo expert. I'm trying something new and have been researching ways to capture a higher return on my cash that's just sitting around (I was getting 0.5% from Ally before and now I think I've found a better solution)*

Drew Sing · Answer

Thank you @Tyler Jahnke and @Nick James for your comments. The USD coin is quite interesting, will look into it. As for income taxes Nick, I could buy a property out of state, stay there for 1-2 months during the process, and still have my W-2 located Washington (no income taxes) where my primary residence is. The fully-remote W-2 adds another dimension to REI flexibility. Or I could do the math and do a househack in a state with income taxes if the #s worked. I've been looking at Durham and the Research Triangle for both lower priced homes and a high quality of living, but they don't seem to have much of an inventory of 3-4 unit MFHs. Curious if anyone thinks there other growing areas that an "out-of-state" 3-4 unit house hack could work. Open to creative ideas

250k & able to move/work from anywhere: wwyd for next REI?

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