Advice on investment type

[Olga Daisel]

Folks,

I am a mother of 2 small kids, 3 and 5. My 5 year old started Elementary in our neighborhood. The school is very good, but middle is not so much.

I have some cash to invest, but can't decide what route to take. I singles out 3 routes, and due to funds limitations I can take only 1.

1. Get a house in a great neighborhood during the summer 2025 and sell my primary in spring 2026. My primary is not ready and needs more work before I pull the trigger. For those who are familiar with austin, I want a house in westlake hills, my primary is in northwest hills.

2. Buy a lot and build a house for sale in 2026. Potential income 600k-800k.

3. Buy a lot, build a rental propert, to be rented out 2026 for approximate annual income 150k.

I understand I can borrow for 1 and (2 or 3), but that would put me under risk i don't want to take.

[Randall Alan]

Quote from @Olga Daisel:

Folks,

I am a mother of 2 small kids, 3 and 5. My 5 year old started Elementary in our neighborhood. The school is very good, but middle is not so much.

I have some cash to invest, but can't decide what route to take. I singles out 3 routes, and due to funds limitations I can take only 1.

1. Get a house in a great neighborhood during the summer 2025 and sell my primary in spring 2026. My primary is not ready and needs more work before I pull the trigger. For those who are familiar with austin, I want a house in westlake hills, my primary is in northwest hills.

2. Buy a lot and build a house for sale in 2026. Potential income 600k-800k.

3. Buy a lot, build a rental propert, to be rented out 2026 for approximate annual income 150k.

I understand I can borrow for 1 and (2 or 3), but that would put me under risk i don't want to take.

 @Olga Daisel

I think we are lacking some key details of your plan. The numbers you mention in your post are confusing - like $150k annual income from a rental property.  The typical income from a free and clear rental would probably be $800-1500/month - and on a financed rental probably $300/month on a good day in today’s market.  Even at $1500/month that is $18,000/year… so I’m having trouble understanding $150,000/year unless you are building 10 free and clear rentals?

Likewise the $600-800k income by building a house.  Maybe that is gross profit when you sell it, but what about the cost to build it?  Flipping a brand new home likely wouldn’t bring much profit - especially after having to close twice when you first buy it, and later sell it.

Maybe you have millions to spend and I’m just missing the big picture… but when I think of “income” I’m usually thinking “net income” after you factor in expenses, like purchase price or building costs?  

As for holding a home and building another one - be sure to include carrying costs of the first home while building the second.  Also know that building a home seldom goes as expected - I have relatives that just built a nicer house… they thought it would take 9 months… it literally took 18-24 months between delays in permitting and the builder just not being able to get it done in a timely manner - often due to sub-contractor issues.  Custom building a home is a slow and painful process.  So if you started today you would probably be looking at 2026 before it was completed if I had to hazard a guess.

Can you clarify how much you plan to invest in real estate?  Lots of us are happy to offer suggestions but I think we need to understand your situation better.

All the best!

Randy