All Forum Posts by: Andrea Diaz

Quote from @Andrea Diaz:

I have been learning about REI for the past year and just when I feel like I´m ready to get my first deal going, everyone keeps talking about how we are still in a seller's market and that we have seen better days. My background is not related to RE at all and I have no experience in the industry. My business partner and I do however have around $100k to start investing. Given the pool of experts that might be reading this, if you were us, what would you do?

Thank you for the time.

@Andrea Diaz    $100,000 depending on where exactly and the value of the investment property can be used as reserves to fund a few flips in most markets. That's if you are a flipper or plan to pivot into other areas after a few deals.

@Andrea Diaz I'm a PL here in Tampa, FL so right down the street. I noticed in your response to Blake that you want to be a passive investor. Ask any Buy and Hold investor if it's truly passive and they will tell you no. Now you could go to one side where it is completely passive, you have a management team in place, and the property is already renovated and rented at max rates, but then your return would be closer to 6 - 7.% annual, not near the type of return Blake mentioned. You could invest in syndication, but then your capital is locked up for several years (2 - 5 yrs is typical) and that type of exposure to the market leaves a lot of uncertainty IMO. With $100K you would be hard-pressed to purchase a dilapidated property and cover the renovation costs. It's definitely not enough to purchase a performing asset here in FL 100% all cash. So more than likely you will need leverage if you're going to purchase a 1-4 unit SFR. Lining up a lender would be advised as one of your top priorities, IMHO. You will need to know how much they expect you to put down, as well as what type of DSCR ratios they will consider (Debt Service Coverage Ratio). Some are higher, others are lower. This will give you some parameters in determining what properties you should make offers on.

Of course a not so often spoke route is that you become the bank.  You become the lender.  This is something that we teach in our Turn-Key Private Lending solution for capital investors.  It's not for everyone, and it is specific for those looking to diversify their portfolio into cash-flowing assets (Notes) secured to real estate.  You in essence become the bank.  In either regard, there are plenty of professional and sophisticated investors here on BP that can help you navigate the journey ahead.  Best of wishes and much success.

Start with learning the basics about REI. Podcasts and books are a great place to start. Then you can start attending local real estate events to build your network of agents and lenders. That is the best route if you are looking to be active in your investments. If you are looking to build a passive portfolio - investing in syndications as an LP can be a good route.

@Andrea Diaz

I’d buy (financed) 3 really good rentals in Metro Detroit

(my rental portfolio is here)

Purchase: $80k-$130k

Rent: $1200-$1500

ROI: Double Digit

Cash flow: couple hundred/month

Appreciation: Double digit (for past 10 years, will gladly send data)

Location: C, B- (suburbs and certain markets)

We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare and Auto industries.

The bad reputation comes from OOS investors wanting $20k D market properties.

Investors can retire (FIRE) in a few years with these.

We love them.

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 Congrats on your journey so far, 100k is a lot of money!

I think first off, IMO you need to decide two things for yourself.

1.) Why do you want to invest in real estate? 

2.) Do you want to be an active investor or passive investor?

Active: Finding the deals, underwriting them, putting everything together, executing the biz plan and managing the asset(s) afterwards. Passive: investing with another group and relying on them to all of this and be good stewards of your money.

I'd love to hear your specific goal for this 100k to better give my opinion. Nevertheless, I wish you the best in this new adventure!

Hey Blake! 

I´d probably want to start as a passive investor, work a buy-and-hold portfolio strategy for long-term investments. I am an aspiring multifamily investor. 

My why is clear, I am a single mom who wants to provide financial security and quality time to my son. Also, I have lived in 3 different countries and I have invested in 2 single family homes, successfully, in two of them. 

So obviously there is no "one single right way", but what would YOU do?

Thanks for the time!

You mentioned that you want to be passive and buy multifamily properties.  In my experience as an active investor owning single and multi family and as a passive investor in syndications, I can tell you that buying the properties is not at all passive!  You can hire a property manager, but your job will be managing that person.  You will be an asset manager - I tried to do that "passively" and it was not possible.  Perhaps others have different experiences, but buying properties and being an asset manager is a full time job - at least if you want to do it well.

 If you are interested in being a true passive investor, then I would look into real estate syndications as some have mentioned.  You have some work to do to find and qualify sponsors, then find and analyze deals - but once you send the wire you are done with the active part.  After that, you just collect reports and distributions.  That is truly passive investing.

I think the first thing to do is define passive and active from your perspective and then choose which you want to do.  At that point, you can start working to deploy the capital.

Good luck!

Hi ,

Great to hear about your success so far!

If you do want it to be more passive, I would not get into wholesaling or flipping. Even being a landlord is not really passive.

I'm a full time real estate note investor where I'm able to receive monthly cashflow without the headaches of property management or repairs. Even with that, it takes active work to find the deals, do the due diligence and keep an eye on them.

If I were you,I would either participate in a syndication of some kind or privately lend that money out on RE deals. That way your money is still working for you in real estate but you don't take on lots of active work.

Find the right market

You might want to follow the "Deep Dive" series we're doing on our BiggerPockets blog about Metro Detroit cities, City of Detroit Neighborhoods and comparing Metro Detroit to other hotspots investors usually consider:

https://www.biggerpockets.com/...

Quote from @Andrea Diaz:

Quote from @Blake Pieroni:

@Andrea Diaz Congrats on your journey so far, 100k is a lot of money!

I think first off, IMO you need to decide two things for yourself.

1.) Why do you want to invest in real estate? 

2.) Do you want to be an active investor or passive investor?

Active: Finding the deals, underwriting them, putting everything together, executing the biz plan and managing the asset(s) afterwards. Passive: investing with another group and relying on them to all of this and be good stewards of your money.

I'd love to hear your specific goal for this 100k to better give my opinion. Nevertheless, I wish you the best in this new adventure!

Hey Blake! 

I´d probably want to start as a passive investor, work a buy-and-hold portfolio strategy for long-term investments. I am an aspiring multifamily investor. 

My why is clear, I am a single mom who wants to provide financial security and quality time to my son. Also, I have lived in 3 different countries and I have invested in 2 single family homes, successfully, in two of them. 

So obviously there is no "one single right way", but what would YOU do?

Thanks for the time!

Andrea, thank you for the reply.

Since you want to be a passive investor (as do I)
If it were me with the 100k, I would get a list of 4-7 sponsors and meet with them, in hopes of vetting them thoroughly.
Since I am young and want my money to grow a lot, I would place the 100k in the best growth position with my preferred sponsor. Likely doubling the 100k in 4-5 years and 4x over 10. Then I would repeat with the now 400k for another 10. Now its 1.6M with no additional capital investment.

I'm 26, so again this is what I would do, but thank you for asking!

Hello @Andrea Diaz,

Multi-family properties are a great investment for cash flow, but you just have to make sure you run your numbers properly and buy right on your first deal. The FL market is inflated right now, so I would recommend looking for a multi-family deal with a value add component to mitigate some of risk. That way if the market does correct (I am of the opinion that the FL market is in too high demand to crash, but there will be a correction soon), you have some room to weather the storm with either cosmetic improvements or rental increases.

I am active in the Central FL market, feel free to reach out if you need help with analyzing any properties in the area and I can give you my insight. 

wait...patience :)

you will only find a few

opportunities in your life

by Charlie Munger