All Forum Posts by: Kevin S.

I would agree with what @Mike Klarman said. Western PA is a great area. I would say the best strategy would be to pick up single family homes in the $80-$120k range, put $30-$50k in, rent and re-finance. You can pretty quickly turn this into $10million in more of real estate. Between the steady cash flow and appreciation you would be set.

Thank you Elise. From what I hear isn't it better not to use money to rehab, instead buy properties that doesn't need reno/rehab and keep the money for down payment of another house instead? I stay away from contractors and rehab as I have zero knowledge in that department. But your idea definitely sounds tempting. You are a realtor in western Pa?

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Quote from @Adam Davis:

Put it in a managed portfolio and get a SBLoC without liquidating. I have a financial planner in Oregon/US VI who can write these loans for up to 2% under prime (last we spoke about it, like 2 years ago), and the portfolio cashflows something like 10% per year.

Thanks. Can you share contact info if you want to DM me?

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Quote from @Mike Klarman:

So, a million bucks.

This is Real Estate forum so I'm guessing you are looking for RE options.

If this million was for pure investment then I'd:

Look in the smaller markets from Western PA through Ohio, Indiana, Iowa, etc. In those markets you can get multi's for 100k or less and put like 50k into them. So a project would cost 150k without financing. I do 6 of those for 900k. That will provide me with 15 - 20 doors that are mortgage free. If you average 1,000/door that will be 15k - 20k per month coming in and you still enjoy the appreciation of the buildings. If you get around 25% appreciation over prject costs then your 900k is now worth 1.125 million and you are making 200k/yr in cashflow. So in 5 years you are flush again with the Million. Probably some where in year 4 you'll reach your breakeven. Now you have 1.2 - 1.5 million in free equity to refi as well if you ever need to but you shouldn't cause the cashflow should be more than enough to stay liquid and just keep going.

Thanks for your advice and I voted for it. You make a good case except for a few things. I am new to REI and hence would be very nervous to invest out of state. I prefer to have my first and maybe second property within state before I have the courage for out-of-state venture. If you can refute that please make your case again and I am all ears. Maybe other investors here on BP who made a straight dive out of state with their very first property (without family in that state to help, being the state you grew up, just sheer luck or other reasons that will skew the opinion/experience) can chip in. Also, how do I know where within those states you mentioned? I do see OH mentioned a lot in this forum tho.

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Quote from @Carlos Ptriawan:

Quote from @Kevin S.:

LOL. That wasn't the advice I was looking for.

If he can give you 11% annualized return why not ;-) I myself could return you 11.05% no problemoooo LOL

And how so? Btw, I don't think I am getting anything back from Jordan :)

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Quote from @David M.:

@Kevin S. there are so many funds of all different ranges. Yes, the higher funds tends to lose price value, especially just recently in the past few years. But, the total return for many are up. the bdc's actually have done very well even in price. There are even more to choose from in the 7%-8% range. That's the typical "high yield" range -- granted "high yield" can also means 3%-4%. Its all variable.

One strategy is the "barbell" strategy where, for example, you use a small portion of funds to do 12%, and leave the rest of your funds at 4%-6% (which now you can do with the "blue chip" stocks) so you capture the high income, but also have dividend growth stocks that both appreciate in value and dividend.

I looked into dividend aristocrats stocks with 10-12% dividends but most are now valued at almost half. Which is why this whole topic started. With 20% down 80% leveraged, the returns hoover around 20% even in the absence of cash flow in the current market (where I am at). Am I wrong?

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LOL. That wasn't the advice I was looking for.

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Quote from @Eddy Ogbekhilu:

Quote from @Kevin S.:

Quote from @Eddy Ogbekhilu:

Hi Kevin just a quick note to connect and to say thanks for your thought provoking questions insights and analysis you bring to the forum.

Will be 59 soon and looking to give up active work and the 1M questions was indeed where my emotions has/have been wondering. Am comfortable with income from 1M 4d nxt 30yrs at fairly moderate return of 7% ...Once again thanks and am following ur post keenly.

Thanks for following this thread. Lot of people have contributed to this subject so far with varied and interesting opinions. Each with valid points. I am just soaking it in and hopefully will make it work for me, only to contribute later to help someone else in the future as a way to give back. Going to your response of 7% return, is that from REI cash flow?

The 7% is potential expected/guaranteed return of off 1M invested either by way of dividends and the likes.I am not sure if I answered your question correctly!

You did. I was expecting 7% return from cashing flowing properties. Which funds are you looking at. Many of these high dividends funds especially closer to double digits (9-12%) dividends funds tend to loose value over time(downward trending). The upward trending funds/ETFs gives 3.5-4% at best. Maybe someone can correct me.

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Thanks Khalid. I have been looking at South Florida market and the price seem to be totally out of line with cash flow. I am talking about mainly duplexes and quadplex where the mortgage payment(without PM fees) are higher than rent. How is it even justified? To break even a down payment of 20% or even 35% is required. I understand the appreciation is much better than other market but the question is for how long as I believe it has run it's vertical trajectory course mostly by now.

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Quote from @David M.:

@Kevin S. oh okay. Missed that. But $80k generated by $2.1mil is a ~4% yield…. That’s back to the staple 4% rule.. and doubling of the base amount in some 13yrs is ~5.5% yield, assuming no withdrawals

…. I’m not even sure what we are discussing anymore LOL

You just made me laugh with your last sentence. LOL

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All Forum Posts by: Kevin S.

Kevin S. has started 24 posts and replied 394 times.

Post: What to do with $1,000,000.00?

Post: What to do with $1,000,000.00?

Post: What to do with $1,000,000.00?

Post: What to do with $1,000,000.00?

Post: What to do with $1,000,000.00?

Post: What to do with $1,000,000.00?

Post: What to do with $1,000,000.00?

Post: What to do with $1,000,000.00?

Post: What to do with $1,000,000.00?

Post: What to do with $1,000,000.00?