$300,000 What would you do?

Question

Hello,

I am approved for a conventional loan with 3% down for up to $300,000. My goal is to replace my current income with cashflow from rental properties. In this situation, what would you do? How would you start?

Lance Williams

Reed Rickenbach · Answer

The quickest way to get life-altering cashflow would be to find a multi-unit property and live in one of the units. Eliminating most or all of your housing expense will be the most bang for your buck. It would take a lot of RE to cashflow enough to cover your living expenses otherwise.

Nathan Gesner · Answer

You have to occupy the property to qualify for 3% down. The median price of a single-family home in C-Springs is $445,000 so you'll have a tough time finding anything.

As others have said, you want to househack a multi-family, up to four units. Those are expensive and hard to find, so the next option is a big house with 5+ bedrooms where you can rent out the spare rooms. Given the price of homes in your market, you'll have a tough time finding something.

You may want to consider focusing on increasing income, cutting expenses, saving up, and investing in a more affordable market to get started.

Bob S. · Answer

Buy rental properties with 10% or better net caps,

Ryan Thomson · Answer

Hey @Lance Williams Thanks for starting with your goals! That is super helpful. Unfortunately, 300k will not buy much in CS.  I would recommend getting a combination of the cheapest property with the most bedrooms you can get. Then rent out the bedrooms.

Other options could be finding a co-signer.

Jay Thomas · Answer

Living in one of the units in a multi-unit property may be the fastest way to get life-changing cashflow. By eliminating most or all of your housing expense, you can maximize your return on real estate investment. Investing in a single property may not be enough to cover your living expenses, but investing in a multi-unit property could provide those life-altering gains you're looking for. Take advantage of this opportunity and start achieving financial freedom!

Adrian Smude · Answer

Can you buy a single family house there for 300k? If so I’d buy one that you can turn a garage and/or living room into a bedroom and rent the place out by the bedroom. Make sure you’re at least breaking even so that you live for free.

Hunter Reed · Answer

Lance, if I had $300,000 to invest I would find a 4 + unit complex. Depending on the purchase price you're maximum purchase would be $1.5 million to put a 20% down payment on. You do not have to invest in a expensive area. As long as the area appreciates, low crime, good income, 1% +  price rent ratio then by all means go for it! Good luck!

Steven Foster Wilson · Answer

Hey Lance, I would take a multi family home and go for good cash flow opportunity. I'd choose the in-state option for starters provided that your local market can give you that 1-2% rule deal and if it's affordable. If that isn't available locally, then you should consider out of state investing in markets that are bound to provide a great amount of appreciate like Columbus.

Before jumping in on this, make sure you have the right systems in place. Get a professional project manager, build a reliable team and get proper education of the market you're investing in.

The risk will be there but you'd be able to lessen it. The key is to make sure that you have those systems in place.

You can learn more from this link here: https://www.biggerpockets.com/blog/core-four-real-estate-team

Lance Williams · Answer

Thank y'all for the input! It's very helpful!

Lance Williams · Answer

@Steven Wilson

Thank you! I will check out the link.

$300,000 What would you do?

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