$3.5M in liquid cash, what is my best approach?

Long Island, New York
Starting Out
3yFollow

$3.5M in liquid cash, what is my best approach?

John S.
Member since 2022 · 53 posts · 27 votes

So to keep things quick and simple, I currently own 2 finance companies which have provided me with approximately $3.5M in LIQUID CASH as of the time of this post.

Given that we are entering and many suggest, currently, in a recession, I saw the writing on the walls and decided to "cash out" in early August 2022. Considering the state of my competitors who have "held on", I made the right decision. I hated the work anyway, as I was working 80-90+ hour weeks for the past 4 years, and it literally robbed me of my happiness.

ANYWAY.. I have about $3.5M in my savings right now. I want to 100% transition from my previous field into real estate investing (with a complete focus in multifamily rental property investing).

I know that in the next 6-18 months, we should be seeing a 20%+ reduction in prices.

I always thought highly of the BRRRR method (in the sense of practice only, since I have never had to execute this myself), but given the interest rates, if you personally had $3.5M in liquid cash, with the intention on going "all-in" on multi-family rental properties for buy and hold strategy...

Would you:

1. Buy all multi-family properties CASH and straight cash flow (to avoid the high interest rates)

or

2. Buy all multi-family properties via mortgage w/20% down payment + deal w/the terrible interest rates, and hope to eventually be able to refinance at a lower late?

I would love any advice or input this community can provide me! Thank you all in advance!!


3Reply
85 views

Most Popular Reply

Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
3y

Congrats on the sale.  Curious on what type of finance company.

Beware, you're gonna get lots of solicitations, "invest with me" replies, and sharks swimming in the waters.

6Reply
See this reply in the discussion

29 Replies

Jump to latestLatest
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    3y

    Congrats on the sale.  Curious on what type of finance company.

    Beware, you're gonna get lots of solicitations, "invest with me" replies, and sharks swimming in the waters.

    6Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from John S:

    Knowing what I know now, I would look for a trust-worthy syndication and start investing in them. Let them do the heavy lifting and you'll get really good returns.

    The DIY Landlord Book4.7247 Reviews
    WebsiteView Page
    1Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    With that much cash I would call the top guys in your market for every type of asset class and put them to work. Let them sell you on why you should be the asset they are pitching. After hearing all these opinions make up your mind 

    1Reply
  • Nate Sanow
    I​nvestor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes
    3y

    Can I add option 3?  

    If I was in your shoes, I would gobble up 10 SFR's with 1/2 of that capital, keeping the other 1/2 for the rainy day fund. I would either have all 10 be brrrr's or value ad rentals, and I'd sit on them for 6 months and see where things go. After 6 months my opinion is that this momentary dip is going to curve back up - and in my market there is 0% evidence of actual value decrease, only asking price decrease (BIG difference). Assuming this prediction is true, I then refi and liquidate and go get another 10.

    Someone like you should be at 100 doors in 3 years tops and that 3.5 should be earning over 10% return through SFR.

    But I get the appeal to MFR, just not my thing. I guess maybe I threw a wrench in the socket…either way, I wish you well.

    4Reply
  • Nate Sanow
    I​nvestor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes
    3y
    Quote from @Mike Dymski:

    Congrats on the sale.  Curious on what type of finance company.

    Beware, you're gonna get lots of solicitations, "invest with me" replies, and sharks swimming in the waters.

     @Mike Dymski sometimes I wonder if these posts are actually written by the new sharks hoping to bait someone into that.  Is it just me?  Seems to be a ton of posts of people talking about all this money they have recently.  I am not accusing this author of it per se, but why is it often the case that someone comes in with no previous content and no picture making that kind of statement?  Hmmmmmm….rant over.  

    6Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y

    you may want to strongly consider being the bank on a good portion of this cash.

    owning rentals that you do yourself is a lot of work .. and BRRR even more so with a ton of risk if you have no experience at it.

    its only my thought process but if your going to buy rentals I would by top shelf not the ones that advertise the greatest returns you U take on risk with those.  Also being a cash buyer today you will be able to negotiate well I think.. you can always refi later. but it gets you in the game.

    Rentals owned free and clear is a very nice place to be frankly.

    Lastly could you just hire an operations manager and keep doing what your doing that allowed you to amass all that cash.. you wont do this in the rental game that quickly by any stretch.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    1Reply
  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    3y

    Feel free to shoot me a PM I work with many investors who have similar goals to yours. Look for class A/B rentals somewhere where can hit atleast a 8% return after your value add. Forget BRRR right now rates too high but if you rehab and create the equity can definitely BRRR that property in the future when either rates have fallen or inflation has driven up rents to create a safe margin. No need to take big risks when you already have solid ammount of capital. Buying cash does not make sense but going 70 LTV or even 65 LTV can be a safe first deal that still provides high returns.

    I personally like recomending clients 4 unit properties at first. They cashflow, you can get fixed 30 year mortgages and are pretty easy to manage/run the numbers. 5+ is good for your 2nd deal etc. 

    When I say class A/B. I mean areas with tenants around high 600s credit, millenials and people who are renting not because they can't get approved to buy but because they are young and want to try out living in desirable locations.

    0Reply
  • John S.
    OP
    Member since 2022 · 53 posts · 27 votes
    3y
    Quote from @Mike Dymski:

    Congrats on the sale.  Curious on what type of finance company.

    Beware, you're gonna get lots of solicitations, "invest with me" replies, and sharks swimming in the waters.


     I own a merchant cash advance direct funding company, as well as a merchant cash advance brokerage. Basically super high risk business to business "loans" (merchant cash advances), at very high rates (but also very high defaults). I've done the part of being "the bank" for over 4 years now, so I'm not too inclined to do it again on the real estate end as some others have suggested on this post. I want to transition this money into rental properties.

    2Reply
  • John S.
    OP
    Member since 2022 · 53 posts · 27 votes
    3y
    Quote from @Nate Sanow:
    Quote from @Mike Dymski:

    Congrats on the sale.  Curious on what type of finance company.

    Beware, you're gonna get lots of solicitations, "invest with me" replies, and sharks swimming in the waters.

     @Mike Dymski sometimes I wonder if these posts are actually written by the new sharks hoping to bait someone into that.  Is it just me?  Seems to be a ton of posts of people talking about all this money they have recently.  I am not accusing this author of it per se, but why is it often the case that someone comes in with no previous content and no picture making that kind of statement?  Hmmmmmm….rant over.  


     I'm not seeking any investors or anything of the like. Genuinely want to know the best way to put my money to work, without having to involve other parties.

    0Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    3y

    Simple , you can buy rental properties with double digit net caps, 100% hand off. You can get SF for about 100k with rents of about 1200-1400, MF ( 4 units or more ) for about 45- 55k per unit, again with double digit net caps, 

    good luck  

    All the best 

    0Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    3y
    Quote from @Nate Sanow:
    Quote from @Mike Dymski:

    Congrats on the sale.  Curious on what type of finance company.

    Beware, you're gonna get lots of solicitations, "invest with me" replies, and sharks swimming in the waters.

     @Mike Dymski sometimes I wonder if these posts are actually written by the new sharks hoping to bait someone into that.  Is it just me?  Seems to be a ton of posts of people talking about all this money they have recently.  I am not accusing this author of it per se, but why is it often the case that someone comes in with no previous content and no picture making that kind of statement?  Hmmmmmm….rant over.  


     100% agree. I usually " play along" to see where it goes, 

    1Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    3y
    Quote from @John S.:
    Quote from @Nate Sanow:
    Quote from @Mike Dymski:

    Congrats on the sale.  Curious on what type of finance company.

    Beware, you're gonna get lots of solicitations, "invest with me" replies, and sharks swimming in the waters.

     @Mike Dymski sometimes I wonder if these posts are actually written by the new sharks hoping to bait someone into that.  Is it just me?  Seems to be a ton of posts of people talking about all this money they have recently.  I am not accusing this author of it per se, but why is it often the case that someone comes in with no previous content and no picture making that kind of statement?  Hmmmmmm….rant over.  


     I'm not seeking any investors or anything of the like. Genuinely want to know the best way to put my money to work, without having to involve other parties.


     Buy rentals, and go on vac for the next 20 years, 

    0Reply
  • John S.
    OP
    Member since 2022 · 53 posts · 27 votes
    3y
    Quote from @Bob S.:
    Quote from @John S.:
    Quote from @Nate Sanow:
    Quote from @Mike Dymski:

    Congrats on the sale.  Curious on what type of finance company.

    Beware, you're gonna get lots of solicitations, "invest with me" replies, and sharks swimming in the waters.

     @Mike Dymski sometimes I wonder if these posts are actually written by the new sharks hoping to bait someone into that.  Is it just me?  Seems to be a ton of posts of people talking about all this money they have recently.  I am not accusing this author of it per se, but why is it often the case that someone comes in with no previous content and no picture making that kind of statement?  Hmmmmmm….rant over.  


     I'm not seeking any investors or anything of the like. Genuinely want to know the best way to put my money to work, without having to involve other parties.


     Buy rentals, and go on vac for the next 20 years, 


     That's the plan! My question is whether it's better to just buy a few properties cash and immediately cash flow, or to buy many properties with debt and little cash flow?

    0Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    3y
    Quote from @John S.:
    Quote from @Bob S.:
    Quote from @John S.:
    Quote from @Nate Sanow:
    Quote from @Mike Dymski:

    Congrats on the sale.  Curious on what type of finance company.

    Beware, you're gonna get lots of solicitations, "invest with me" replies, and sharks swimming in the waters.

     @Mike Dymski sometimes I wonder if these posts are actually written by the new sharks hoping to bait someone into that.  Is it just me?  Seems to be a ton of posts of people talking about all this money they have recently.  I am not accusing this author of it per se, but why is it often the case that someone comes in with no previous content and no picture making that kind of statement?  Hmmmmmm….rant over.  


     I'm not seeking any investors or anything of the like. Genuinely want to know the best way to put my money to work, without having to involve other parties.


     Buy rentals, and go on vac for the next 20 years, 


     That's the plan! My question is whether it's better to just buy a few properties cash and immediately cash flow, or to buy many properties with debt and little cash flow?

    I like having zero debt. My rentals are never less then 20% NET, 
    Good luck 
    0Reply
  • Curtis Mears
    Property Manager · Raleigh, NC · Member since 2014 · 729 posts · 596 votes
    3y

    @John S.

    I would pay cash for properties until you get to the point you need cash. Why borrow cash if you do not need to? Pay yourself the interest and if you get to the point you need cash, then get loans.

    0Reply
  • Steve Cutrer
    Frisco, TX · Member since 2015 · 6 posts · 0 votes
    3y

    Look at vacation rentals- smokie mountains, Colorado, Florida - go 25%

    Single family near big University-25%

    Executive rental property-25%

    Land lord lower income - development with government credits-25%

    0Reply
  • Jon KellyPro Member
    Investor · Bethlehem, PA · Member since 2016 · 929 posts · 951 votes
    3y

    @John S. as a finance guy just keep it simple. Can you achieve a great ROI than the ~8% interest you're paying? I hope so. Put 25% down and finance the remainder. You'll have greater tax benefits and higher change of appreciation due to the size and quality of asset(s) you'll be purchasing.

    Please ignore all of the messages here telling you to invest passively in syndications, invest in vacation rentals, "be the bank", etc. You have a great opportunity ahead of you and most people wish they were in your shoes. Take some risk. Don't play scared. 

    0Reply
  • Bill SchrimpfBusiness Member
    Real Estate Agent · Reno, NV · Member since 2014 · 353 posts · 189 votes
    3y

    @John S.  —congratulations on your past success and new opportunity!  What makes you happy, what scares you?  What is your risk tolerance and what other obligations do you have?  Do you want to work hard, hustle for a few more years or have a flexible schedule?  When you understand these and other related items, then you can effectively formulate a strategy.

    [email protected]775-741-2326
    ERA Realty Central - Bill Schrimpf58 Reviews
    WebsiteView Page
    0Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    3y

    @John S.

    BRRRR is tough. IF you think you're interested in BRRRR, do 1 BRRRR.  Buy in cash - much easier, especially as a first time investor - rehab in cash, refi.  

    If you hate it, don't do it again.  Do something else.

    What market are you in?

    0Reply
  • Kerry Noble JrPro Member
    Investor · Indianapolis, IN · Member since 2018 · 2k+ posts · 1k+ votes
    3y
    Quote from @Nate Sanow:

    Can I add option 3?  

    If I was in your shoes, I would gobble up 10 SFR's with 1/2 of that capital, keeping the other 1/2 for the rainy day fund. I would either have all 10 be brrrr's or value ad rentals, and I'd sit on them for 6 months and see where things go. After 6 months my opinion is that this momentary dip is going to curve back up - and in my market there is 0% evidence of actual value decrease, only asking price decrease (BIG difference). Assuming this prediction is true, I then refi and liquidate and go get another 10.

    Someone like you should be at 100 doors in 3 years tops and that 3.5 should be earning over 10% return through SFR.

    But I get the appeal to MFR, just not my thing. I guess maybe I threw a wrench in the socket…either way, I wish you well.


     I like this option

    1Reply
  • Jason Shackleton
    Investor · Ontario · Member since 2015 · 486 posts · 250 votes
    3y

    Hey @John S.

    Congrats on your recent exits. I know a lot of people in the MCA and business funding space. That business is definetly a grind. However as proven by your success it can be very profitable. 

    You have provided two investing strategies. One is using max leverage and the other is using none at all. Perhaps a blend of the two might be a better fit for you. 

    0Reply
  • Jonathan Feliciano
    Accountant · Miami, FL · Member since 2020 · 89 posts · 57 votes
    3y

    @John S.

    Hi John! Personally, I would go with option 2. One of the advantages of rental real estate is the loan payoff you receive from your tenants. Plus, going the mortgage route will force you to carefully evaluate your rental properties and see which ones will offer the best cash flow.

    Hope this helps!

    0Reply
  • Jonathan Taylor
    Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes
    3y

    @John S. you will get various answers since there isnt one way to accomplish your goals. Here is my advice. We are entering a time of uncertainty in terms of rates and the market. This is a great time to buy if you have cash, as you do. Cash is king when markets are tight and poorly run properties need an exit. Id buy with 50% down so as not to use up all your cash, then proceed to purchase more under valued or cash strapped properties at discount throughout this recession. When you have stabilized the properties and rates are more favorable than the 8%s we are seeing now, you can refi out and buy more. Rinse and repeat. 

    0Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    3y
    Quote from @Nate Sanow:
    Quote from @Mike Dymski:

    Congrats on the sale.  Curious on what type of finance company.

    Beware, you're gonna get lots of solicitations, "invest with me" replies, and sharks swimming in the waters.

     @Mike Dymski sometimes I wonder if these posts are actually written by the new sharks hoping to bait someone into that.  Is it just me?  Seems to be a ton of posts of people talking about all this money they have recently.  I am not accusing this author of it per se, but why is it often the case that someone comes in with no previous content and no picture making that kind of statement?  Hmmmmmm….rant over.  


     Prime example of your thesis below...this is like a softball pitch to the providers.

    https://www.biggerpockets.com/...
    1Reply
  • Nate Sanow
    I​nvestor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes
    3y
    Quote from @Mike Dymski:
    Quote from @Nate Sanow:
    Quote from @Mike Dymski:

    Congrats on the sale.  Curious on what type of finance company.

    Beware, you're gonna get lots of solicitations, "invest with me" replies, and sharks swimming in the waters.

     @Mike Dymski sometimes I wonder if these posts are actually written by the new sharks hoping to bait someone into that.  Is it just me?  Seems to be a ton of posts of people talking about all this money they have recently.  I am not accusing this author of it per se, but why is it often the case that someone comes in with no previous content and no picture making that kind of statement?  Hmmmmmm….rant over.  


     Prime example of your thesis below...this is like a softball pitch to the providers.

    https://www.biggerpockets.com/...

     Sigh. Yeah. You’re right. 

    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free