What is the best way to invest 250k?
Canton, OH · Member since 2015 · 69 posts · 10 votes
What is the best way to invest 250k?
Most Popular Reply
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3yQuote from @Paul Farley:
I am looking at investing into real estate. If you had financing for $250k, what would you invest into for your first purchase?
Be careful. When you ask people to help you spend money, a lot of people are happy to help you spend your moeny.
If you are eligible for a house hack, I would start with that. If your life situation doesn't enable you to purchase a live-in rental, then I would consider a single-family up to a fourplex with a conventional loan. Your market should be affordable for something.
It sounds like you're in the early stages, so let me give you some basic advice to start educating yourself. If you've already done this, then ignore me.
1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turner or The Unofficial Guide to Real Estate Investing by Spencer Strauss.
2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by Scott Trench , or The Total Money Makeover by Dave Ramsey.
3. As you read these books, watch the BiggerPockets podcasts. This will clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.
4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. BiggerPockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up. Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice. It doesn't take long to learn how to spot a good deal.
5. Study the market. You can learn to do this on your own or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR that works with investors and knows how to best help you.
6. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education.
You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.
The DIY Landlord Book4.7243 Reviews
31 Replies
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
Quote from @Paul Farley:
I am looking at investing into real estate. If you had financing for $250k, what would you invest into for your first purchase?
Be careful. When you ask people to help you spend money, a lot of people are happy to help you spend your moeny.
If you are eligible for a house hack, I would start with that. If your life situation doesn't enable you to purchase a live-in rental, then I would consider a single-family up to a fourplex with a conventional loan. Your market should be affordable for something.
It sounds like you're in the early stages, so let me give you some basic advice to start educating yourself. If you've already done this, then ignore me.
1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turner or The Unofficial Guide to Real Estate Investing by Spencer Strauss.
2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by Scott Trench , or The Total Money Makeover by Dave Ramsey.
3. As you read these books, watch the BiggerPockets podcasts. This will clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.
4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. BiggerPockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up. Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice. It doesn't take long to learn how to spot a good deal.
5. Study the market. You can learn to do this on your own or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR that works with investors and knows how to best help you.6. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education.
You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.
The DIY Landlord Book4.7243 Reviews - Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes3y
I would house hack for sure. Are you saying you're pre approved for $250k or you have $250k in cash?
- Real Estate Agent · Northern Virginia · Member since 2021 · 3 posts · 1 vote3y
If I had $250k, I would invest in a syndicate.
- 3yTy AshBusiness MemberReal Estate Agent · Milwaukee, WI · Member since 2018 · 201 posts · 132 votes
Hi @Paul Farley!
Huge fan of the house hack but I'd recommend that you keep/start learning! This can be done through Podcasts, Books, and Mentors you find by networking.
I'd pick up a copy of Set for Life by Scott Trench as it has a good framework for financial independence, especially for a newer investor. Real Estate is just a part of your total financial picture so don't become too focused on just real estate. You'll want to learn more ways to increase your income now and in the future, keep your expenses low, and take the difference to invest into assets, real estate/business.
As already mentioned above, a house hack will probably be one of the best strategies for you to get started and take action while giving you a great return because of the low % down needed to get started. Once you get to this point, make sure to run your numbers for both while living in the house hack (lowering your living expense to less than what it would be to rent in your area) and post move out where you need to be at least break even after accounting for your monthly payment + maintenance, capex, vacancy, property management.
Here's a great resource right here on BP:
https://www.biggerpockets.com/real-estate-investing/house-hacking-strategy
Best of luck getting started! Here for you with any questions you have along the way!
- Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes3y
As Tony Robbins would say, “The quality of your questions determines the quality of your life." I recommend doing some research with books and podcasts to narrow down your options and come back with more specific questions. Otherwise, the answer on the forums to this question is always going to be "invest with me" phrased in a way as to not violate the forum solicitation rules.
- Canton, OH · Member since 2015 · 69 posts · 10 votes3yGreat thoughts! Thank you.
Quote from @Nathan Gesner:
Quote from @Paul Farley:
I am looking at investing into real estate. If you had financing for $250k, what would you invest into for your first purchase?
Be careful. When you ask people to help you spend money, a lot of people are happy to help you spend your moeny.
If you are eligible for a house hack, I would start with that. If your life situation doesn't enable you to purchase a live-in rental, then I would consider a single-family up to a fourplex with a conventional loan. Your market should be affordable for something.
It sounds like you're in the early stages, so let me give you some basic advice to start educating yourself. If you've already done this, then ignore me.
1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turner or The Unofficial Guide to Real Estate Investing by Spencer Strauss.
2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by Scott Trench , or The Total Money Makeover by Dave Ramsey.
3. As you read these books, watch the BiggerPockets podcasts. This will clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.
4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. BiggerPockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up. Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice. It doesn't take long to learn how to spot a good deal.
5. Study the market. You can learn to do this on your own or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR that works with investors and knows how to best help you.6. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education.
You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.
And, thank you everyone else. The house hacking recommendation will not work my for current life situation. Unless there is something I am missing.
I am pre approved for the 250k. Not cash. - 3ySebastian MarroquinPro MemberReal Estate Agent · Pasadena, CA · Member since 2015 · 477 posts · 263 votes
Buy something that brings in more than what your payment will be.
Sounds simple right :)
Look at cash flowing states : Like everyone on here has suggested. Look at
1. growing states (jobs and population)
2. Growing rents
3. Available units for less than $250k
4. Learn : what team members you will need and why? (out of state investing : book ) BRRRR
5. Learn how to manage the unit or how to interview the person that will manage it for you?
6. Learn how to house hack or BRRRR (so that you can recycle that financing).
7. Learn about primary residence vs investment homes ? (fi you say right now that you are approved for $250k is that with a 5% down payment or a 25% DP ) that will quickly tell us that you would be buying an investment home…. but if you live in an affordable state, this approval may be for a primary home.
Looks like you have some books to buy, or podcast to listen to! (YouTube is great too)
Talk to a Realtor or Lender in your area that can guide you through all of these!
Let me know if you would like a referral to a Realtor?
Hi Paul, One of the easiest ways of scaling in real estate today is to invest in turnkey properties out of state. If you have a busy 9-5 routine but have the money to get started and don't have enough time, turnkey companies provide some of the best resources to scale your portfolio. I have used that strategy so feel free to reach out if you want to discuss.
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes3y
Spread your money as thin as possible and buy as much real estate as you can.
- 3yJustin BrickmanBusiness MemberRealtor · San Antonio, TX · Member since 2021 · 502 posts · 274 votes
Short term rental!
Justin Brickman Realty4.9137 Reviews - 3yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
We think the Midwest is a GREAT place for OOS investors to consider!
YES, we may be a little biased, but check out our blog here on BP comparing Detroit to other cities and Deep Dives on Metro Detroit cities & neighborhoods: https://www.biggerpockets.com/... (links also available @ our website)
Your biggest question shouldn't be WHERE to invest, but HOW you will invest!
Many OOS investors set themselves up for failure because they don't truly take the time to understand:
1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.
2) The Class of the PROPERTY they are buying - which is relative to the overall area.
3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.
4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.
5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.
6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.
7) That OOS property Class rankings are often different than the Class ranking of the local market they live.
8) Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.
9) Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.
10) Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.
11) Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.Also, SERIOUSLY consider - do you really have the time to be a DIY landlord or should you hire a PMC?
Good luck with whatever you decide😊
Logical Property Management4.9469 Reviews - Real Estate Agent · Pittsburgh, PA · Member since 2015 · 1k+ posts · 846 votes3yIf you don’t own a house in your own market and 250k then buy your first property as a house hack. If you do have a house and 250k can get you a house where you are then buy where you live.
Quote from @Paul Farley:
I am looking at investing into real estate. If you had financing for $250k, what would you invest into for your first purchase?
I prefer small multifamily because it is rarely 100% vacant and you typically don’t have to worry about covering the mortgage as long as you run your numbers first and don’t buy a dumb deal.
Any way you slice it though, just buy a good deal somewhere and get going.
If this isn’t your first deal then I think you have an idea of what to or what not to buy depending on how it’s going. - Rental Property Investor · Orange County, CA · Member since 2016 · 740 posts · 529 votes3y
I would open up a whole Life insurance policy- (Only work with people that understand real estate and over funding the account- and no I don't sell it) then use that money you put in there to get financed for investment properties and only put down 20% SF, or 25% small MF. Then I would diversify between SF and small MF-- housing is NOT a luxury, its a necessity and a housing shortage is here and people need safe housing.
- Real Estate Agent · Columbus | Toledo · Member since 2019 · 608 posts · 768 votes3y
Quote from @Paul Farley:
I am looking at investing into real estate. If you had financing for $250k, what would you invest into for your first purchase?
You can begin by househacking or purchasing affordable cashflowing rentals right there in Cleveland.
- Investor · TX · Member since 2022 · 4 posts · 2 votes3y
Single family rental houses imho.
- Canton, OH · Member since 2015 · 69 posts · 10 votes3yYou may have lost me. Do you mean open a policy and then take out against my policy for the funding of purchase versus going with a conventional loan? How would this even work?
Quote from @Melissa Nash:
I would open up a whole Life insurance policy- (Only work with people that understand real estate and over funding the account- and no I don't sell it) then use that money you put in there to get financed for investment properties and only put down 20% SF, or 25% small MF. Then I would diversify between SF and small MF-- housing is NOT a luxury, its a necessity and a housing shortage is here and people need safe housing.
- Rental Property Investor · Orange County, CA · Member since 2016 · 740 posts · 529 votes3y
Quote from @Paul Farley:
You may have lost me. Do you mean open a policy and then take out against my policy for the funding of purchase versus going with a conventional loan? How would this even work?Quote from @Melissa Nash:
I would open up a whole Life insurance policy- (Only work with people that understand real estate and over funding the account- and no I don't sell it) then use that money you put in there to get financed for investment properties and only put down 20% SF, or 25% small MF. Then I would diversify between SF and small MF-- housing is NOT a luxury, its a necessity and a housing shortage is here and people need safe housing.
You can open a Whole life insurance policy and overfund it. Think of it as a savings account that earns 4-6% interest. When you want to use that $ to buy real estate you borrow against your policy (usually 2-3%) then you use that $ as a down payment for your next purchase, So you are actually sorta buying down the interest rates bc your money in the policy is earning more than the fee to borrow it. You need to work with a lender that will allow the downpayment to come from a life insurance policy. Aaron Chapman does, Look him up- he's not on here, but the best.
- Insurance Agent · Moundsville, WV · Member since 2014 · 17 posts · 12 votes3y
Quote from @Melissa Nash:
Quote from @Paul Farley:
You may have lost me. Do you mean open a policy and then take out against my policy for the funding of purchase versus going with a conventional loan? How would this even work?Quote from @Melissa Nash:
I would open up a whole Life insurance policy- (Only work with people that understand real estate and over funding the account- and no I don't sell it) then use that money you put in there to get financed for investment properties and only put down 20% SF, or 25% small MF. Then I would diversify between SF and small MF-- housing is NOT a luxury, its a necessity and a housing shortage is here and people need safe housing.
You can open a Whole life insurance policy and overfund it. Think of it as a savings account that earns 4-6% interest. When you want to use that $ to buy real estate you borrow against your policy (usually 2-3%) then you use that $ as a down payment for your next purchase, So you are actually sorta buying down the interest rates bc your money in the policy is earning more than the fee to borrow it. You need to work with a lender that will allow the downpayment to come from a life insurance policy. Aaron Chapman does, Look him up- he's not on here, but the best.
@Melissa Nash your on the right track but in this case he is pre-approved for $250,000 not case to put into a Whole Life policy, banks are not going to lend to you to fund your life insurance. Your correct in that when you borrow form your whole life insurance your not taking out principal so your still making a return on that principal that is more often than not more than your paying in interest on the policy loan.
When you say over-funded a lot of times people are talking about over funding an IUL which when taking loans against can be a very dangerous product. You want a whole life product where your paying around 10% to death benefit and 90% to PUA's Paid up Additions. Two very different products with two very different purposes.
- Rental Property Investor · Orange County, CA · Member since 2016 · 740 posts · 529 votes3y
@Ryan Kempkens Thanks for clarifying the wording, I don't sell the product- and I do the Paid up additions--- its been great. And you are correct the buyer can't borrow to put into the Life Insurance. I was assuming they had $250k cash to use. I have found whole-life very beneficial for my real estate growth and working with the right people who understand how to use it for the purpose of buying real estate.
Quote from @Paul Farley:
I am looking at investing into real estate. If you had financing for $250k, what would you invest into for your first purchase?
Look in your backyard, great cash flowing properties, almost as good as Cleveland
- 3ySam McCormackBusiness MemberReal Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 834 votes
There is this super small city named "Cincinnati", you should check it out! But really though, if you are looking for cash flow then the best option in midwest, including Ohio. If you are interested in Cincinnati/Northern KY, let me know, i'd be happy to help
Sam McCormack Realtor - Member since 2022 · 5 posts · 0 votes3y
Quote from @Paul Farley:
I am looking at investing into real estate. If you had financing for $250k, what would you invest into for your first purchase?
Nathan had a great answer. The best thing to do with that $250K is not tell anyone about it until you're ready to pull the trigger.
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes3y
Quote from @Paul Farley:
I am looking at investing into real estate. If you had financing for $250k, what would you invest into for your first purchase?
Paul, you don't need to get fancy. You live in Canton. You have a ton of easy to buy rental properties right in your backyard.
- Developer · Youngstown, OH · Member since 2019 · 129 posts · 121 votes3y
You're taking a big (and often fun) step. Congratulations :)
First, never tell people in a public post how much you have to spend. And there are some nefarious actors (and a lot of good people, but the nefarious ones make it risky)
I invest in Youngstown, and don't know Canton well. But you need to know the area you're investing in fairly well or have a partner who does. You should look for an area that is appreciating well. One that is revitalizing steadily can be a good bet. And of course, it should be in an area that people want to live in.
Then you have to decide if you are going to rent Section 8, average renters or higher end renters.
If you have any questions about whatever, feel free to message me.
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