200k a year to invest in properties
Most Popular Reply
Eric TaitPro Member
Investor · Houston, TX · Member since 2013 · 314 posts · 146 votesMr. Gulley,
I was responding to a post about Medical Centers by Joe Fairless,
since many medical centers do sale lease backs of their buildings to large publicly traded REIT's, Medical Properties Trust being the big player in the industry.
So that would leave an investor with 200K looking at much smaller (non-medical center) type properties in the medical world to invest in.
As for this -
"Where did this stuff come from? And, you advise banks and of that? I'd say they've been doing that before you were born. I'm in a regional medical center area, hospitals are doing fine, I think the doctors here are still eating well, one was last night at the club, I didn't hear him choking. Just saying.....gosh!
Sounds like you think the OP must be a Doc and attempting to find his pockets, LOL. What if he owns a fleet of garbage trucks? Really.... :)"
I actually don't really understand what you were trying to say here.
To give you some background so that we are all on the same page.
I am a practicing physician with an MBA in Healthcare management, I am a partner in the largest physician owned (minority stake) hospital in the country, I also am president of an independent practice association that has an equity partnership with a publicly traded medicare advantage insurance company.
I was relaying a conversation that I had with a regional V.P. at BBVA Compass bank where he asked me about the coming changes in Healthcare ( about 3 years ago before Obamacare was passed). The bank was looking to expand their medical portfolio and were looking to build out MOB's for INDIVIDUAL physicians, allowing the physicians to sign notes using their professional corporations as the guarantor.
So that is where my comment came from, as someone who is intimately connected with the Healthcare industry from the facility, insurance, and provider side of the equation.
14 Replies
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes12y
Bunch of these types of posts ZEE.
Have to define your end goals. You aren't buying any sizeable apartment for 200k without some of it debt unless you partner up with others for the total down payment or do a syndication etc.
What cash flow return are you looking for off the 200k??
- Investor · Bellingham, WA · Member since 2013 · 50 posts · 28 votes12y
Happy New Year, Zee!
Welcome to Bigger Pockets.
Here's a link to a post from someone who had a similar question to yours http://www.biggerpockets.com/forums/12/topics/99226-where-would-you-start-with-200k-to-invest?page=1
The answers to the post are guaranteed to get you thinking about different options for your investment dollars.
Best wishes and happy reading.
- 12yEric TaitPro MemberInvestor · Houston, TX · Member since 2013 · 314 posts · 146 votes
One of the first things when I am mentoring or doing a client consultation is to ask the person what their personal investment philosophy is.
You seem to have settled on real estate, but what your post did not state is whether you have the requisite knowledge to be an owner operator yourself (or if you even have the time or inclination to do so), or do you want to passively invest your dollars with an experienced investor?
Also, are you just looking for cash flow, or do you expect your principle to appreciate as well as receive the cash flow? (has implications on the property type, area/region as to where you might invest)
Is there a time limit in your mind on the investment? Meaning, do you expect to sell in 3-5 years, some longer time frame, or hold as part of your legacy to pass onto children, grandchildren, charity etc...
All of these things are important considerations to think about before you deploy your resources.
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes12y
Buy notes! Never fix a faucet or a toilet. Annually, you have enough to get into the business, might consider getting legal and partner with an existing brokerage.
If it must be dirt, your area and market will determine your best route. Starting out, residential if you're going to manage them. Keep your inventory marketable, which usually means a SFD.
Either way, you have some learning to do first, when you learn what you need to know you can answer this yourself. :)
- Real Estate Investor · Los Angeles, CA · Member since 2013 · 24 posts · 31 votes12y
As a long-time passive cash flow investor, I agree with Eric above in that the first thing you need to decide is whether you want to be "passive" or "active". I define passive as someone who invests in Managed (aka Syndicated) opportunities, which is what I do. Some people are much more comfortable being active because it gives them full control over the investment (ie. when to sell, refinance, etc) but you clearly have to be more knowledgeable and it takes more time to be active.
I have been a "passive" investor in alternative cash flow opportunities for over 11 years and I managed to get out of the corporate world back in 2007 thanks to the cash flow. Cash flow has changed my life and the "passive" route proved to be best for me but may/may not be right for you. Feel free to send me a message if you would like to connect directly, as I am happy to help.
Good Luck!
Jeremy - Investor · Cincinnati, OH · Member since 2013 · 2k+ posts · 1k+ votes12y
@Zee Meer - agreed with what's already been said so won't repeat it. Only additional thought would be that multi-family is positioned to do really well in the upcoming years so I'd lean towards that. If you do office, I'd focus on medical centers because of ObamaCare.
- 12yEric TaitPro MemberInvestor · Houston, TX · Member since 2013 · 314 posts · 146 votes
I would be a bit careful on focusing on medical centers because they are not all created equal. Obamacare is actually going to cause quite a few hospitals to close their doors. It will also help to increase the rate at which healthcare switches from a fee for service model to a bundled value payment model. This is going to severely curtail what Specialist physicians make, causing many of them to sell their practices (as they are already doing).
When I advise banks about the MOB (medical office building) market, I always tell them to make sure that they get personal guarantees from the physicians to protect themselves, otherwise, they could be left holding an empty professional corporation as the physician moves on to sell the practice.
- Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes12y
I like @Bill Gulley suggestion. With that size of seed, I would buy notes and use cashflow to buy rentals (maybe).
If you're a hands on guy and like tinkering with things (like I do), then buy a multifamily.
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes12y
Originally posted by @Eric Tait:
I would be a bit careful on focusing on medical centers because they are not all created equal. Obamacare is actually going to cause quite a few hospitals to close their doors. It will also help to increase the rate at which healthcare switches from a fee for service model to a bundled value payment model. This is going to severely curtail what Specialist physicians make, causing many of them to sell their practices (as they are already doing).
When I advise banks about the MOB (medical office building) market, I always tell them to make sure that they get personal guarantees from the physicians to protect themselves, otherwise, they could be left holding an empty professional corporation as the physician moves on to sell the practice.
Where did this stuff come from? And, you advise banks and of that? I'd say they've been doing that before you were born. I'm in a regional medical center area, hospitals are doing fine, I think the doctors here are still eating well, one was last night at the club, I didn't hear him choking. Just saying.....gosh!
Sounds like you think the OP must be a Doc and attempting to find his pockets, LOL. What if he owns a fleet of garbage trucks? Really.... :)
- Real Estate Investor · Los Angeles, CA · Member since 2013 · 24 posts · 31 votes12y
Zee,
I have an additional thought for you beyond the "passive" or "active" feedback that I wrote above. As you're already seeing based on the other replies, there are MANY different ways to invest. Once you figure out whether you want to be passive or active you'll need to decide what asset classes make the most sense for you.
The best way to figure out the best fit for you is to educate yourself on the various asset classes and decide which ones you think are the most sustainable investment depending on your timeline, your risk profile, your diversification needs, and your thoughts about the future of the economy and each asset class. For example, I personally believe that we'll have another recession in the US in the next 1-5 years (based solely on typical economic cyclicality and past history) and, given that I'm currently a longer-term investor, I'm focusing on asset classes that I think will sustain well during downturns (ie. Mobile Home Parks, Self Storage Facilities, Student Housing Apartments, Retail Strip Malls (that offer everyday needs such as food, pharmacy, etc)). But what's not important is what I am investing in or what anyone else here is investing in it - it's what you end up most comfortable investing in once you educate yourself. People have posted some very good ideas but the key will be for you to learn about each one, understand the risks associated with each one, and decide what makes sense for you.
In summary, my further suggestion beyond determining whether you want to "passive" or "active" is to educate yourself on various asset classes and determine which ones are best for you. And don't forget to diversify, as you increase your risk if you put all of your eggs in one basket!
I hope this helps,
Jeremy - 12yEric TaitPro MemberInvestor · Houston, TX · Member since 2013 · 314 posts · 146 votes
Mr. Gulley,
I was responding to a post about Medical Centers by Joe Fairless,
since many medical centers do sale lease backs of their buildings to large publicly traded REIT's, Medical Properties Trust being the big player in the industry.
So that would leave an investor with 200K looking at much smaller (non-medical center) type properties in the medical world to invest in.
As for this -
"Where did this stuff come from? And, you advise banks and of that? I'd say they've been doing that before you were born. I'm in a regional medical center area, hospitals are doing fine, I think the doctors here are still eating well, one was last night at the club, I didn't hear him choking. Just saying.....gosh!
Sounds like you think the OP must be a Doc and attempting to find his pockets, LOL. What if he owns a fleet of garbage trucks? Really.... :)"
I actually don't really understand what you were trying to say here.
To give you some background so that we are all on the same page.
I am a practicing physician with an MBA in Healthcare management, I am a partner in the largest physician owned (minority stake) hospital in the country, I also am president of an independent practice association that has an equity partnership with a publicly traded medicare advantage insurance company.
I was relaying a conversation that I had with a regional V.P. at BBVA Compass bank where he asked me about the coming changes in Healthcare ( about 3 years ago before Obamacare was passed). The bank was looking to expand their medical portfolio and were looking to build out MOB's for INDIVIDUAL physicians, allowing the physicians to sign notes using their professional corporations as the guarantor.
So that is where my comment came from, as someone who is intimately connected with the Healthcare industry from the facility, insurance, and provider side of the equation.
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes12y
Well, you knocked my socks off, Doc, you sounded like a Realtor, but obviously I missed that one. I know the ACA isn't popular but ask me in a couple more years how it's going, yes, it costs me more, but hopefully it will bring some costs down, it's the cost of living in an equitable society filled with gouging medical providers, in a couple years, I won't have to worry about it.
:)
- 12yEric TaitPro MemberInvestor · Houston, TX · Member since 2013 · 314 posts · 146 votes
No problem Mr. Gulley, I assumed we just had a slight miscommunication.
Interestingly, Obamacare will actually do very little to curb costs in the long run, because all it is is insurance reform. Until you have physicians begin to change the way medicine is practiced (by force or voluntarily, likely by force), costs will continue to escalate. It's what happens when you have a price fixed system, you decrease the payment per unit of work, and the number of units of work go up, simple economics.
So Obamacare just forces more people into a dysfunctional insurance market, but it then caps the profit margins that insurers can have (80-85% of all premiums must go to medical costs), how long before insurers get out of that business? Then the only one left standing is the government and that is how we will get into a single payer system. I don't know the timing, but that is how it will ultimately play out.
Enough hijacking of a real estate site, PM me if you want the nitty gritty details, I lecture on this stuff all the time.
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