Need Advice on Newbie Investment Strategies

[Melani Sweet]

I'm new here and eager to connect with others!  I am currently putting together a business plan/proposal together for several reasons, and I have so many questions. I need to know that my ideas are sound in theory and solicit advice.  First, my parents are considering income properties later this year. Second, I would like to jump in and contribute by identifying properties, rehabbing, and managing the properties... and then build the family portfolio from there (for a percentage maybe? Not sure how to structure a partnership like this with family.) 

All advice welcome!!

1. I am a stay at home mom in Colorado and currently going back to school and do not have very much cash. I am interested in learning REI for the below reasons.

2. My parents in California will be receiving between $3 to $4M in easement options on their family cattle ranch and need to invest in income properties in a 1031 Exchange.   

a. Need to determine how to best and correctly identify and purchase a number of rental properties in a short amount of time - work with a Realtor and/or wholesaler?

b. How to determine the best area for them to invest in. If they choose their area in California, that could be only a few properties. I would like to steer my Dad towards the booming market of Vancouver, WA and surrounding area where we would like to move. Risk is not knowing the market as well, but I have been doing my research. 

3.  $750k of this money is earmarked for purchasing a residence for me. or trust planning purposes, my folks need to even things out between my brother and I. My brother was "gifted" some land to build his house, and now will also receive an easement payment. I live in Colorado, but want to possibly relocate to Vancouver, WA and Portland, OR area. 

a. I want to find a really good deal on a "forever home" and have enough left over for a rental property. This would start my husband and I out on our investment journey as well. Ideally, we want to buy a rural property that might have another rental suite on the property.  

b. Should I try to jump into the real estate game here and now in Colorado? Should we try and find a partner to try our hand at flipping for shorter term gains now?

Ready.... GO!

[Bill S.]

@Melani Sweet wow what a post. Where to begin?

I suggest against you managing $3M of property for your folks since it doesn't seem like you have any property management experience. You could easily get in way over your head. If they go the route of investing in RE your best assistance is the help them find a competent manager. You can shadow them for a few years and then take over if you still want. While it's not really too hard it can also eat your lunch if you don't know what you don't know.

Based on what you have said, experience says, let your parents do their thing with the their money and you do your thing with your money. If in a few years they like what you have done and want you to take over managing their properties then so be it. 

With the kind of money your folks are getting, if they want to go the RE route, they should look at a nice safe tripple net lease commercial property. My family went that route and it has turned out good for them. 

IMO purchasing properties through a wholesaler is a terrible idea. To successfully do that you need lots of experience to qualify deals. Wholesalers often have deals that need work which would be extremely difficult to execute from a distance. You are in no position to do this while being a stay at home mom and attending school. Find an agent that can be trusted in the commercial space and let them steer your parents to a quality deal. 

Finding a great deal on a "forever home" is a long shot. It can be done but most "forever homes" sell for near retail. Based on my experience it's very challenging to find good deals with 1031 money unless you have the property on the buy end found before you close the sale end. 45 days to locate the replacement property is a very very hard in this market. Let alone finding a good deal. For mine I settled for just getting the deal done.

I wish you well.