All Forum Posts by: Michael Malmrose

@Michael Malmrose I think it truly depends on how much work you want to do. 1. Fix and flip - you will be involved often and have to make sure everyone is doing their job. Can be stressful if you are still working or the market turns on residential in that area. You are dependent on the sales of other similar houses in the area. The cool thing is you could get a highly discounted house because you could buy it for cash. Maybe your the type that likes to see the fruit of your own labor which we have done before but it ALWAYS takes longer than you thought and you are not making any passive income while you sleep at that point.

2. Joint venture with someone you trust, you be the money supplier and they handle the job and you guys split the profit when the project is done which might work if your still working and you have an iron clad agreement drawn up first.

3. Use it as a downpayment for a small multifamily. We have done this and are doing a long term hold on a triplex. Not bad, we get about $1200 a mo in income. It’s pretty easy once we it got all fixed up and got higher end renters in. Less drama is good! Run it like a business and you will be much happier.

4. Scale much faster, use your money to invest in a large multifamily, leave the work to someone else and make amazing returns while you sleep. You get cashflow throughout the hold which is typically 3-5 yrs then get your money plus a large chunk of the equity upon the sale too! If the people that found the deal did the right homework they found it in an up and coming matket, added value and forced appreciation right away so it is worth a lot more in year one because commercial multifamily sales values are aligned with the income not the other buildings that sold by them. To give you an idea of what people make using this passive Investing method is typically anywhere from doubling their money to even maybe 2.5 times or more. There is a reason why wealthy people invest in large apartment complexes.

5. Take some of the funds, get educated (I recommend RE Mentor) and you can learn how to find good deals in hot markets with large family yourself and you can syndicate and scale up even faster but you will have to work for this one and if you have another job it could be challenging.

I hope this gives you some ideas. Think of your ultimate goals and move forward in that direction. Take care and God bless.

@Michael Malmrose Welcome to BP! 

The great thing about Real Estate Investing (REI) is that there are literally 100 ways (or more) to get started.

Using your seed capital as a starting point, I would start with asking "do I want to be an active or passive investing AND what is the goal here or what does success look like? 

ACTIVE vs PASSIVE | Some people join BP and straight assume: I should be an active investor, and that assumption can be interesting because many people haven't had the purview to the challenges of getting started in REI. There are a few reasons many never get started in REI (we see those investors all the time at REIA MeetUps [in fact, they are regulars]). 

Having said that, if you have spent ample time to appreciate what ACTIVE REI entails such as patience, ridiculous persistence, and sometimes failure and rejection. You are now well equipped, at least, mentally, to jump in.

FACT: Most of us WANT to either earn money OR get our current capital to SWEAT MORE that is why REI is initially considered. Consequently, it is not an absolute must to start with active investing. I know of an investor in California and all he does is passively invest with our investors AND he does incredibly well.

To answer your questions (using the preamble above as fundamentals): 

Do I dare buy my first experience out of state? Like Alabama? Yes, you could buy out-of-state, but you have to ensure you do your Due Diligence on your boots-on-the-ground folks. Remember, if you can do Alabama, then you can do the remote part in your state too! 

Maybe try a fix and flip first? Honestly, I wouldn't advise a flip for a first deal because there are too many variables and susceptibilities to errors. That said, have there been Investors, who have successfully done their first deal as a flip? Absolutely! Conversely, can we find Investors who tried to flip their first deal and lost it all? You bet! Expectedly, many lick their wounds in the corner and/or swear not to do Real Estate again! 

Recommendations: 

PASSIVE INVESTING: Remember, that Real Estate Investors doesn't have to be all-or-nothing I have to do it all by myself active investing. You can research other ways to leverage people who have some experience doing real estate and partner with them.  

HOUSE HACKING: I think someone had already mentioned this; however, this bit requires sacrifice: are you ok with moving from your current house and now living in a multifamily house with other tenants? If you are willing to do that then it could be an interesting start for you. 

MORE RESEARCH: Wait a tiny bit on pulling out that equity and reflect a little more and ASK WHY do I want to this now in my life. Perhaps, you have done this already. Study other ways to get started and give yourself a firm timeline to get started but after you have researched your options a bit more. 

Hope this helps.