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Adrien S.
Pro Member
  • Property Manager
  • Griffith, IN
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What would you do with $60K?

Adrien S.
Pro Member
  • Property Manager
  • Griffith, IN
Posted Aug 24 2015, 16:38

I'm in a unique position as far as REI: lots of head knowledge from reading and some real experience with 1 SFR. My long term goals are to grow a business with enough passive income to live on comfortably. Currently, I don't have enough extra cash to do anything else. My SFR is at 90% LTV and is still recovering from the crash. My short term goal is to accumulate cash as quickly as possible.

My parents sold some family property and are ok letting the money sit in the bank at 0.1% interest. I asked to "borrow" $60K because I know I can get them more and help myself at the same time.  We've discussed 6% interest only loan. 

I've thought up 4 options and I'll list them from less risk to most risk (and/or experience) 

1) Invest money in an REI company. They give 12% paid monthly. My 6% is $3600.

2) Purchase a condo. I can find 2/1 condos or town homes for $60K that need minimal work. I can get $1200/m or more (my condo is a 2/1.75 and 1250 sq ft and I get $1300/m now). Estimated NOI is $3000 using the 50% rule. This is consevative since expenses are limited to inside the unit. A NOI of $4500 is more realistic. This area rents quickly; in the past 48 months at my other condo, I've had 3 tenants and haven't missed a month. This is the low end side of an A area.

3) Purchase a MFH. In this price range, I'm looking at C areas (one with promise as 2 large 500 employee companies are relocating there in the next 3 yrs.). Again using the 50% rule, I'm looking at NOI between $7000-15,000. Factors include if I use a property manager and 4 or 5 unit buildings.

4) I have an acquaintance who just shared with me his current investment strategy. He buys $10,000 bank owned houses (mostly in Gary) and does minimal work if any. He turns around and sells them with owner financing ($5K down and 10% over 10yrs). Assuming they pay over the 10yrs, his profit per house is $40K. He only does 3 per year per Frank-Dodd. 

Thoughts on those 4 options and/or other options I'm missing.  I'm thought of flipping (I'm good at it and enjoy it but I make too much at my career to take the time off to do it) 

Thanks 

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