If you had a 100k to invest what would you do with it?

27 Replies

I live in Salt Lake City, Utah and as most know the market here is among the most inflated across the country. I was lucky enough to get ahead of the curve and purchased a townhouse in august of 2020. I currently have about 100k in equity to date from when I purchased. The plan was originally to rent the basement as studio apartment just to help out with savings, while the basement is yet to be completed I started to rent one of the upstairs rooms until it is. Meanwhile as the housing market is holding steady and median house price hasn't changed much in the last 6 months. I can't help but worry that I need to make a move and secure equity in my house before its too late.

That brings me to the next question, where do I go from here? I make about 80k a year and have little to no debt (not including the house) no car payments and a decent amount in savings. I don't know what is the best move in finding my next investment. House flipping isn't really a thing here in Utah, because everyone is willing to spend millions on houses that are trashed and from the 80's because the market is still so competitive even with things slowing down. I thought about doing a cash out refinance and looking for a rental property to fully rent out the entire space. I even thought about a commercial property, maybe even a plot of land for storage just to generate some limited attention properties because I work 12 hour days 5 days a week. I have a lot of ideas and I know whatever direction I go, there is enough info online that I can figure out how to actually carry out on project. I'm just still a little lost and what way would be the best for my position to get maximum leverage on my equity income.

I would appreciate the input!

Have you thought about doing a second house hack?  That way you can put less money down with a better interest rate and keep the townhouse as a rental?  SLC has a lot going for it (I have family out in South Jordan).

@Jayden B.

Hi Jayden, If it were me I would keep the home and continue to house hack. I would then do a HELOC on the home to purchase a short term rental that will generate more income than a LTR or house hack. Obviously you would need to find a STR that would also pay back the amount of the HELOC and still cash flow. There are a lot of markets here that may be options (may) such as Salt Lake City, Hurricane (capture travelers to the national parks), Garden City (aka Bear Lake) or more expensive markets like Moab or Washington County (St.George). Or a market near hospitals to capture traveling nurses.

Or another purchase alternative is another Single Family Home or even Townhouse near a college and you can do a rent by room, depending on local tenants laws.

I am personally investing in Garden City for a STR.

Those are just my ideas…

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@Jayden B. That's a great question, a definitely a good problem to have imo! 100k equity!

Is this townhouse your primary residence? If so you could take out a HELOC.

Additionally as you mentioned, depending on what your current interest rate is, you could do a cash out refinance.

Lots of the clients my team and I work with are buying long term investment properties and either using the BRRRR method or buying turnkey and just renting it out. This allows you to greatly leverage your initial investment over time! If you're not familiar with BRRRR method I'd highly suggest looking into in!

Housing prices are projected to continue to rise over the next 5 years in UT and although there are less sellers due to the holidays, there are still just as many buyers and houses going UC as the summer months.

Originally posted by @Rick Albert :

Have you thought about doing a second house hack?  That way you can put less money down with a better interest rate and keep the townhouse as a rental?  SLC has a lot going for it (I have family out in South Jordan).

So what implications does that cause with it not being my primary residence? I don' think the bank will let me do an FHA or conventional loan if its not my primary?

Originally posted by @Niomi Snedden :

@Jayden Boysun

Hi Jayden, If it were me I would keep the home and continue to house hack. I would then do a HELOC on the home to purchase a short term rental that will generate more income than a LTR or house hack. Obviously you would need to find a STR that would also pay back the amount of the HELOC and still cash flow. There are a lot of markets here that may be options (may) such as Salt Lake City, Hurricane (capture travelers to the national parks), Garden City (aka Bear Lake) or more expensive markets like Moab or Washington County (St.George). Or a market near hospitals to capture traveling nurses.

Or another purchase alternative is another Single Family Home or even Townhouse near a college and you can do a rent by room, depending on local tenants laws.

I am personally investing in Garden City for a STR.

Those are just my ideas…

My biggest concern is getting approved for another loan on a STR or LTR with just the HELOC for the down payment? Financially I don't think my debt to income ratio would be low enough to support both being my residence and not a rental property. What loan would I be able to use to purchase another rental without it being my primary and not having to put 20% down?

@Jayden B. If you're comfortable with more debt, lock a low rate, cash-out ReFi, and park the cash in your bank. DON'T buy another property. Read, research, network, and find the niche you want to buy into. Clearly you're not ready to purchase another property. 

If you're not comfortable with more debt. Follow the Papa Dave Ramsey approach and pay off your current property as fast as possible. Increase your income with a better job, side hustle, or both and keep expenses low. The house hack is already allowing you to do that. Never stop improving your financial I.Q. If you're patient you'll find/buy/create a good deal and be smart enough to be dangerous. That's the difference between buying and investing. I could have bought three different houses this year; I choose not to because the prices were too high. The numbers didn't make any sense as a rental or profitable flip but for someone else it didn't matter. 

Originally posted by @Andrew Scheuffele :

@Jayden Boysun That's a great question, a definitely a good problem to have imo! 100k equity!

Is this townhouse your primary residence? If so you could take out a HELOC.

Additionally as you mentioned, depending on what your current interest rate is, you could do a cash out refinance.

Lots of the clients my team and I work with are buying long term investment properties and either using the BRRRR method or buying turnkey and just renting it out. This allows you to greatly leverage your initial investment over time! If you're not familiar with BRRRR method I'd highly suggest looking into in!

Housing prices are projected to continue to rise over the next 5 years in UT and although there are less sellers due to the holidays, there are still just as many buyers and houses going UC as the summer months.

It is my primary residence, and I would like to take out a HELOC. However does that ultimately mean buying a rental property as my secondary residence and having to put down 20%? I don't know what ways there are to get around that ultimate demise of having to use all of that heloc money.

Originally posted by @Jayden B. :
Originally posted by @Rick Albert:

Have you thought about doing a second house hack?  That way you can put less money down with a better interest rate and keep the townhouse as a rental?  SLC has a lot going for it (I have family out in South Jordan).

So what implications does that cause with it not being my primary residence? I don' think the bank will let me do an FHA or conventional loan if its not my primary?

When you got the loan on your current property, the intention was that you lived there for a year.  After you move out, there is nothing the lender can do.  That loan is locked in place.  Just don't refinance unless it makes absolute sense.

Because it would be another house hack/primary residence, you get the same benefits as before. The lender will take the 75% of the rent of your townhouse towards your DTI.

You are allowed one active FHA loan per borrower. For example my first property was conventional 10% down. My second house hack was the FHA 203(k). I have since refinanced out of that loan so if I wanted to go FHA again I could.

Hope this helps.

@Jayden B. Yeah I completely understand! I want to preface by saying that I am not, I licensed mortgage lender or financial advisor

I do believe however that if you purchase an investment property you'll likely have to put 15-20% down. There are portfolio lenders who look more at the quality of investment you're looking to buy and may potentially allow for a lower down payment.

Another good option if you're current life situation permits, is to do a live-in flip, or make your new property your primary residence. For example if you buy a 4plex, living in one of the units would allow you to potentially get a much lower down payment.

@Andrew Scheuffele There are many rules regarding these sort of strategies obviously and you should consult a licensed lender. I'm happy to recommend the lender our team uses if you'd like!

Keep the first house as a rental and buy another house as your primary residence. Do this when you are ready. Don't feel obliged to splurge the equity you've built up. It will keep building up. I'm very bullish on appreciation in this valley. There are thousands of people coming here, and hardly any homes are being built. All of us homeowners in SLC have $100k plus in equity in our houses thanks to the recent market gains. The other edge of that sword is now it costs us $100k more to buy our next house. I advise 1) Keep saving cash 2) Finish your basement remodel and rent out your basement as well as your extra room 3) TALK TO A LENDER!!!!! 

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Originally posted by @Rick Albert :
Originally posted by @Jayden Boysun:
Originally posted by @Rick Albert:

Have you thought about doing a second house hack?  That way you can put less money down with a better interest rate and keep the townhouse as a rental?  SLC has a lot going for it (I have family out in South Jordan).

So what implications does that cause with it not being my primary residence? I don' think the bank will let me do an FHA or conventional loan if its not my primary?

When you got the loan on your current property, the intention was that you lived there for a year.  After you move out, there is nothing the lender can do.  That loan is locked in place.  Just don't refinance unless it makes absolute sense.

Because it would be another house hack/primary residence, you get the same benefits as before. The lender will take the 75% of the rent of your townhouse towards your DTI.

You are allowed one active FHA loan per borrower. For example my first property was conventional 10% down. My second house hack was the FHA 203(k). I have since refinanced out of that loan so if I wanted to go FHA again I could.

Hope this helps.

This does help a lot, I appreciate it a lot. When you say the lender will take into account 75% of the rent towards dti. Do you mean future rent for the second property or current rent for the first?

@Jayden B.

Current rent for the first. For example if you collect $2000 a month, the lender will use $1500 towards your DTI. They generally will count projected income on the second purchase (while in escrow) if it is a legal 2-4 unit.

Originally posted by @Rick Albert :

@Jayden Boysun

Current rent for the first. For example if you collect $2000 a month, the lender will use $1500 towards your DTI. They generally will count projected income on the second purchase (while in escrow) if it is a legal 2-4 unit.

 Is there a minimum amount of months you have to collect that “rent” for them to accept it? 

@Jayden B.

That is probably a lender question. Typically they would want a year but you are coming from a house hack so they may not count the income this time.

@Jayden B.

I would get what I already own producing as much PCF as possible and go do it again. So the question is what would it cost to finish the basement and the max rent you can charge. Do the numbers work, if they do theres your answer.

@Jayden B.

In order of priority:

I would change my privacy settings so that I don't list how much money I have with my full name on a searchable website. Google your name, this thread is like the third result. 

I'd use the search bar to see the answers that have been given the other 80 times this and variations of this question have been asked on the forum. 

Once I had an idea of the various choices I had before me, then I'd eliminate the ones that don't fit my knowledge, skills, and abilities. 

From those remaining options I'd research each individually and make a decision about next steps from there. 

Personally, just because I’m really interested in them and always have been, I’d use it as a down payment on a self storage. Or a 8-plex.

That’s just me.