What would you do with $100K to invest?

Question

Hello, I am new investing on real estate in the US and I would like to know what would you do if you have $100K savings for invest in real state?

Do you do it through a LLC or as a personal owner? How you could make the most with this $100K?  Will you use the 100% of these funds to buy R.E or use it as down payment for multiple properties?

Any suggestion will be welcome..!

Thanks in advance..!

Tim G. · Answer

First I would ignore any PM I got from anyone seeking a partner or offering a deal in the immediate future.

Then I would get educated on current market conditions and strategies that work for my business model and goals, and likely wait things out a little as inflation hasn't yet showed signs of being tamed and the frothiness of this current market is certainly fading fast. Waiting for the dust to settle to me seems wise. But I am a conservative investor and don't like trying to force things.

Laura Shinkle · Answer

What I would do and what you want to do may be two totally different things. For example, I would buy a STR in an established vacation rental area. But maybe that's not the type of investment you're looking for.

I'd recommend starting with some internal reflection.

What is your goal with purchasing real estate? Is your focus cash flow or simply diversification from the stock market? Are you wanting completely passive income or are you willing to do a little work to get more cash flow? Are you local or is this an out of state purchase? There's so many ways to invest in real estate that you really need to figure out what you're wanting out of it before you dive into learning about a certain investment or strategy.

Greg Scott · Answer

That is a hard question without lots of context.  For example, is this $100K your entire savings or is this a $100K you are willing to try out real estate investing?   How much time do you have?  What is your credit like?  What is your job situation?   Depending on how you answered just those questions, I might recommend very different things.

Knowing that we don't know much about you, I would say that single family rentals are probably the easiest place to start.  Get some education so you know how to distinguish a good deal from a bad one.  Learn about how to manage the properties and then take action to get going.

I would never recommend you sink 100% of your cash into a deal.  You need money for reserves, unexpected problems, occasional vacancies, and the like.  With that in mind, I'd try to find a deal where you are putting down less than $40K on your first property.  Run it for a few months.  Get to see how it operates.  Then go buy another property.

Laura Shinkle · Answer

Congrats on the two STR in Peru, that sounds like you've got some systems and knowledge in place already. Just curious as to why you would switch up a strategy that's working for you? Also, long term rentals won't generate as much cash flow. They'll give your portfolio diversity and perhaps more stability with the long term tenant, but STR will get you more cash flow (as a general rule).

From what I'm seeing in Charlotte, home prices have outpaced the rental prices so it's tough to get a property to cash flow unless you're putting more than 25% down. Some investors are fine with that for the stability of the lease and likely rent growth over time. Some are not.

I have a mid term rental and a long term rental. Mid term is downtown Charlotte, being rented out to traveling professionals, minimum 30 day lease, usually 90 days or so. It's generating a good amount of cash flow for me, but it is more work than a standard long term tenant. (turnover)

Paul Moore · Answer

Hi @Gerardo Castillo! I'll throw a different line of thinking into the mix...

If you really want to be active as a real estate investor I would throw it into single-family homes or short-term rentals. This assumes you are giving a huge percentage of your time and you are working towards doing real estate full time, in my humble opinion. I realize this opinion is not shared by most on BP. But I found over a few decades + in real estate that active real estate is really hard to do as a side gig. I am thinking of the principles of Gary Keller and Jay Papasan's wonderful book, The One Thing.

If you plan to do a real estate as a side gig and always do that I would take an entirely different route. I would recommend passively investing in someone else's deal. There are syndication deals and funds that could be a good fit for you. You might also find a local house flipper or another type of active real estate investor to partner with. My thinking is the same as above: passive investing IMHO is the best path for someone who doesn't plan to be a full time real estate investor. Good luck and happy investing!

Gerardo Castillo · Answer

Hello Laura, thanks for your comment..! I already have two STR in Paracas, a natural reserve in Peru (South America) and I manage them from the US. I have developed a team to make the check in, cleaning and maintenance of the properties every time I rent them. I have plan to invest on STR in the US in the future but first I would like to generate cash flow through long term rentals.

The markets I am looking at this time are NC and Alabama, this market I find it very attractive because the lower price and low taxes.

Where do you have your STR? Are they giving you good profit?

Eliott Elias · Answer

Absolutely, I have deals in Killeen

Gerardo Castillo · Answer

Hello Eliott, thanks for your comments. It really sounds good, the challenge is to find good and reliable constructors. Are you doing it? That is something that I would like to do and have in mind for the future.

Gerardo Castillo · Answer

Hello Ruchit, i am looking for passive investment.

Ruchit Patel · Answer

Are you trying to do passive investment or active hassle or BRRRR?

What would you do with $100K to invest?

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