If you had $300k liquid how would you start RIGHT NOW?
Member since 2024 路 13 posts 路 10 votes
If you had $300k liquid how would you start RIGHT NOW?
Most Popular Reply
Travis TimmonsPro Member
Rental Property Investor 路 Ellsworth, ME 路 Member since 2021 路 1k+ posts 路 2k+ votesNever sure how real these posts are, but I'll take the bait and answer. What does $300k liquid mean? You have the cash or you have equity that will be converted to a HELOC, a retirement account that you will pull money out of and be subject to 10% penalties plus your tax rate? Not all $300k liquid is created equal.
As for your goal of replacing your W2, it's going to take longer than you expect and be harder than you hoped. Step 1 is getting your expenses to bare bones, next to nothing cost of living beyond the basics. Step 2 is developing a real subject matter expertise to get outsized returns in real estate.
I'm a fan of Wes Moss's work. If you want to retire, you need a paid off house, $500k+ in liquid assets (usually a retirement account or after tax brokerage), and more than 1 source of income (RE, retirement account, social security for those of qualifying age, part time gig, etc.).
My path was short and mid term rentals alongside a successful business that I recently sold AND swapping houses (from Houston to small town Maine) to pocket the difference in price. The rental income is nice, but the pile of cash in an after tax brokerage account and our monthly expenses being around $3500 (post move) is why I am able to leave the day job, not real estate. RE income is about $35k in a normal year, which is nice, but I'm one busted furnace was from that number essentially being cut in half. I also have a very part time contract gig that pays $8-10k per year as a supplement.
I hope that was helpful. I'm happy to connect and talk in more detail if you think that it would be productive. I have nothing to sell, am not an expert, but have made good and bad investments, gone slowly, and learned a thing or two along the way.
53 Replies
- Real Estate Agent 路 Kansas City 路 Member since 2018 路 4k+ posts 路 3k+ votes2y
I think it depends on you. If you have no track history I would park most in a high interest savings account or in a passive vehicle. Start with one deal whether it's a house hack or a simple one. Take it slow. As you learn then scale. Don't rush it or partner with anyone who promises returns.
- Real Estate Agent 路 Atlanta, GA 路 Member since 2020 路 1k+ posts 路 1k+ votes2y
@Vernon Huffman, the answer to these scenarios is that it always depends on many other factors/variables. What's your age? Are you risk averse? Do you hold other assets? Do you have experience with real estate investing? What does your DTI look like? Are you considered an accredited investor? Etc. If you're predominantly focused on cash flow and have a high-risk tolerance, considering cash flow strategies such as rent-by-the-room, short-term rentals, or medium-term rentals is likely the avenue. If you're new to real estate and are risk averse, strategies like house hacking and long-term turnkey rentals in B/C-class markets are worth exploring. Based on how you answer the questions above will dictate the responses from other BP members.
- Real Estate Agent 路 Colorado | stan.store/JamesCarlson 路 Member since 2014 路 2k+ posts 路 2k+ votes2y
Not a bad situation to be in. I agree with @Caleb Brown. Park most of it in a 4.5% saving account right now, and then I'd take one of two tracks.
STR/Vacation rental
Take some of it and buy a nice vacation rental/STR in a mid-size market (like maybe not here in Colorado where you're looking at $100k outlay on the low end).Get your systems down, and then repeat with that savings on another short-term rental. You should be able to get maybe 3 properties out of that, and the cash flow from them should start replenishing that savings.
Aggressive house-hacking
House hacking will be a quicker path but requires you live with others. Buy a 4-5br home, rent the other rooms ($700-$1000 here in Denver and Colorado Springs), save what you would have spent. Move out in a year and buy another. Rinse and repeat, and in five to seven years, you could have a handful of properties.It's not a fast process, so keep your head down and put in the work.
- Real Estate Consultant 路 Cleveland 路 Member since 2020 路 6k+ posts 路 3k+ votes2y
Quote from @Vernon Huffman:
Not a hypothetical. Goal is to replace W2 income, initially.
Buy rentals with 105 or so net caps, refi and buy more, rinse and repeat
- Member since 2024 路 13 posts 路 10 votes2y
Quote from @Michael Dumler:
@Vernon Huffman, the answer to these scenarios is that it always depends on many other factors/variables. What's your age? Are you risk averse? Do you hold other assets? Do you have experience with real estate investing? What does your DTI look like? Are you considered an accredited investor? Etc. If you're predominantly focused on cash flow and have a high-risk tolerance, considering cash flow strategies such as rent-by-the-room, short-term rentals, or medium-term rentals is likely the avenue. If you're new to real estate and are risk averse, strategies like house hacking and long-term turnkey rentals in B/C-class markets are worth exploring. Based on how you answer the questions above will dictate the responses from other BP members.
Thank you for the reply. I am 42 years old. Willing to take a little risk, yes. We currently own our home and land. No experien ce in RI yet. Though we've been in the analysis paralysis phase for a year now. I make $100k a year and only have one vehicle payment for total debt.
We we're thinking long term buy and hold SFH's. Or the 4 unit multi's etc.
- Member since 2024 路 13 posts 路 10 votes2y
Quote from @Caleb Brown:
I think it depends on you. If you have no track history I would park most in a high interest savings account or in a passive vehicle. Start with one deal whether it's a house hack or a simple one. Take it slow. As you learn then scale. Don't rush it or partner with anyone who promises returns.
Thank you.
- 2yTravis TimmonsPro MemberRental Property Investor 路 Ellsworth, ME 路 Member since 2021 路 1k+ posts 路 2k+ votes
Never sure how real these posts are, but I'll take the bait and answer. What does $300k liquid mean? You have the cash or you have equity that will be converted to a HELOC, a retirement account that you will pull money out of and be subject to 10% penalties plus your tax rate? Not all $300k liquid is created equal.
As for your goal of replacing your W2, it's going to take longer than you expect and be harder than you hoped. Step 1 is getting your expenses to bare bones, next to nothing cost of living beyond the basics. Step 2 is developing a real subject matter expertise to get outsized returns in real estate.
I'm a fan of Wes Moss's work. If you want to retire, you need a paid off house, $500k+ in liquid assets (usually a retirement account or after tax brokerage), and more than 1 source of income (RE, retirement account, social security for those of qualifying age, part time gig, etc.).
My path was short and mid term rentals alongside a successful business that I recently sold AND swapping houses (from Houston to small town Maine) to pocket the difference in price. The rental income is nice, but the pile of cash in an after tax brokerage account and our monthly expenses being around $3500 (post move) is why I am able to leave the day job, not real estate. RE income is about $35k in a normal year, which is nice, but I'm one busted furnace was from that number essentially being cut in half. I also have a very part time contract gig that pays $8-10k per year as a supplement.I hope that was helpful. I'm happy to connect and talk in more detail if you think that it would be productive. I have nothing to sell, am not an expert, but have made good and bad investments, gone slowly, and learned a thing or two along the way.
- Member since 2024 路 13 posts 路 10 votes2y
Quote from @Travis Timmons:
Never sure how real these posts are, but I'll take the bait and answer. What does $300k liquid mean? You have the cash or you have equity that will be converted to a HELOC, a retirement account that you will pull money out of and be subject to 10% penalties plus your tax rate? Not all $300k liquid is created equal.
As for your goal of replacing your W2, it's going to take longer than you expect and be harder than you hoped. Step 1 is getting your expenses to bare bones, next to nothing cost of living beyond the basics. Step 2 is developing a real subject matter expertise to get outsized returns in real estate.
I'm a fan of Wes Moss's work. If you want to retire, you need a paid off house, $500k+ in liquid assets (usually a retirement account or after tax brokerage), and more than 1 source of income (RE, retirement account, social security for those of qualifying age, part time gig, etc.).
My path was short and mid term rentals alongside a successful business that I recently sold AND swapping houses (from Houston to small town Maine) to pocket the difference in price. The rental income is nice, but the pile of cash in an after tax brokerage account and our monthly expenses being around $3500 (post move) is why I am able to leave the day job, not real estate. RE income is about $35k in a normal year, which is nice, but I'm one busted furnace was from that number essentially being cut in half. I also have a very part time contract gig that pays $8-10k per year as a supplement.I hope that was helpful. I'm happy to connect and talk in more detail if you think that it would be productive. I have nothing to sell, am not an expert, but have made good and bad investments, gone slowly, and learned a thing or two along the way.
Thanks for the feedback. I have $300k cash to invest.
Our current cost of living is whittled down. That's what we've focused on in the past two years.The only expense I have is utilities and one vehicle payment.
I will look further into Wes Moss. Our home and property is paid off right now and I have the deed at the house etc. I have non qualified stock options through my W2 employer now that has potential in about 5-8 years to exercise. I am a disabled veteran and receiving about $2k every month for my 15 years all over the map.
That information was very much helpful and I appreciate the time.
- 2yTravis TimmonsPro MemberRental Property Investor 路 Ellsworth, ME 路 Member since 2021 路 1k+ posts 路 2k+ votes
@Vernon Huffman I'd also try to get creative about some sort of house hack. Part of our plan is that our property in Maine is on 5 acres. We've bought an airstream to throw on the other side of the lot to be a short term rental unit. We also plan on leaving for 4-6 weeks every summer to get the short term rental income from our primary residence in peak season. It's not the traditional 2-4 unit multifamily or rent by the room house hack, but you get the idea - get creative about ways to make money off of your primary residence as well.
Overall point is that you probably need to get scrappy to get you to the point of leaving the W2.
- Member since 2024 路 13 posts 路 10 votes2y
Quote from @Travis Timmons:
@Vernon Huffman I'd also try to get creative about some sort of house hack. Part of our plan is that our property in Maine is on 5 acres. We've bought an airstream to throw on the other side of the lot to be a short term rental unit. We also plan on leaving for 4-6 weeks every summer to get the short term rental income from our primary residence in peak season. It's not the traditional 2-4 unit multifamily or rent by the room house hack, but you get the idea - get creative about ways to make money off of your primary residence as well.
Overall point is that you probably need to get scrappy to get you to the point of leaving the W2.
Oh man, I like that. Thats sharp. I'm an apiarist as well and have been for a few years and I'd like to grow that into a little revenue stream as well. I'd like to scale that here in the next little bit to pad and cushion every month. We live on 6 acres so I've been thinking about getting a few head of cattle to raise and sell off. A bred heifer here and there etc.
Again, I appreciate your time in replying and taking me serious here. I know I'm just popping in here but I'd like to get some of the more aggressive folks to reach out and be heard. Squeaky wheel and all that.
- 2yEngelo RumoraBusiness MemberInvestor 路 Toledo, OH 路 Member since 2013 路 4k+ posts 路 2k+ votes
Quote from @Caleb Brown:
I think it depends on you. If you have no track history I would park most in a high interest savings account or in a passive vehicle. Start with one deal whether it's a house hack or a simple one. Take it slow. As you learn then scale. Don't rush it or partner with anyone who promises returns.
US Treasury bonds looked so bloody attractive above 5%.
Would be nice having $10m+ and parking in a 30 year bond and sleeping in till 10am for the rest of the life hehe
How do super rich folks go broke...?
It was always mind boggling to me lol
They could do nothing and still stay loaded...
- 2yEngelo RumoraBusiness MemberInvestor 路 Toledo, OH 路 Member since 2013 路 4k+ posts 路 2k+ votes
Quote from @Vernon Huffman:
Not a hypothetical. Goal is to replace W2 income, initially.
Active = Buy, fix, flip, learn from mistakes, repeat, don't make same mistakes.
Passive = Buy, hold, buy more over time, never sell, collect cashflow (If investing out of state, you could consider turnkey. Yes, I'm bias 馃榿)
Just my opinion and wishing you much success
- Member since 2024 路 13 posts 路 10 votes2yYou da man. Thank you.
Quote from @Engelo Rumora:
Quote from @Vernon Huffman:
Not a hypothetical. Goal is to replace W2 income, initially.
Active = Buy, fix, flip, learn from mistakes, repeat, don't make same mistakes.
Passive = Buy, hold, buy more over time, never sell, collect cashflow (If investing out of state, you could consider turnkey. Yes, I'm bias 馃榿)
Just my opinion and wishing you much success
- 2yEngelo RumoraBusiness MemberInvestor 路 Toledo, OH 路 Member since 2013 路 4k+ posts 路 2k+ votes
Quote from @Vernon Huffman:
You da man. Thank you.Quote from @Engelo Rumora:
Quote from @Vernon Huffman:
Not a hypothetical. Goal is to replace W2 income, initially.
Active = Buy, fix, flip, learn from mistakes, repeat, don't make same mistakes.
Passive = Buy, hold, buy more over time, never sell, collect cashflow (If investing out of state, you could consider turnkey. Yes, I'm bias 馃榿)
Just my opinion and wishing you much success
I try to be hehe 馃榿 - 2yNicholas L.Pro MemberFlipper/Rehabber 路 Pittsburgh 路 Member since 2018 路 6k+ posts 路 5k+ votes
welcome. sounds like you're being thoughtful about this and you got some really thoughtful responses back, including from
just to pile on - it is very, very difficult to, in the short term, replace W2 income with income from long term rentals. i have started to think of the first few years of ownership as a long stabilization period. especially with interest rates where they are. after about 6-8 years, depending on the timeframe you pick, my portfolio generates what I consider to be one part-time income. so that gives me some flexibility... but it just has not 'replaced' a healthy W2. with that said, i get another benefits as well, including depreciation that helps offset taxes on my W2 income, and i love watching the debt get paid down every month.
creative strategies can generate more income, but they are higher effort and higher risk. so there's the trade-off.
- Investor 路 Atlanta, GA 路 Member since 2016 路 43 posts 路 18 votes2y
I haven't explored this much but I think it would be an interesting strategy (this is assuming you don't need the cash for the next ~3-5 years minimum):
Invest the whole amount in something like VTSAX or the S&P500 or whatever big blue chip stocks a lender likes and pull like half the amount out in a loan or some kind of line of credit. Then use that money to buy properties in cash from motivated sellers, close the purchase super fast (use this to your negotiating advantage to make the deal more profitable), rehab (target a light-moderate job mostly cosmetic), and then you might be able to BRRRR profit but if it's not THAT profitable, then sell. Rinse and repeat.
- Attorney 路 Columbus, OH 路 Member since 2023 路 193 posts 路 145 votes2y
I'd buy a multi-family property that cash flows in an appreciating market with a growing economic base, like Columbus, Ohio.
- Member since 2024 路 13 posts 路 10 votes2y
Quote from @Nicholas L.:
welcome. sounds like you're being thoughtful about this and you got some really thoughtful responses back, including from
just to pile on - it is very, very difficult to, in the short term, replace W2 income with income from long term rentals. i have started to think of the first few years of ownership as a long stabilization period. especially with interest rates where they are. after about 6-8 years, depending on the timeframe you pick, my portfolio generates what I consider to be one part-time income. so that gives me some flexibility... but it just has not 'replaced' a healthy W2. with that said, i get another benefits as well, including depreciation that helps offset taxes on my W2 income, and i love watching the debt get paid down every month.
creative strategies can generate more income, but they are higher effort and higher risk. so there's the trade-off.
I live in WV and the housing costs here are extremely cheap relative to the rest of the country. What about potentially purchasing cash $40-$50,000 homes that rent at about $900-$1,000? That way they're not financed and they cash flow at 100%, minus insurance, tax, maint etc I could purchase 4-5 of those and have a decent $3k-$4k monthly.
- Member since 2024 路 13 posts 路 10 votes2y
Quote from @Hari Mann:
I haven't explored this much but I think it would be an interesting strategy (this is assuming you don't need the cash for the next ~3-5 years minimum):
Invest the whole amount in something like VTSAX or the S&P500 or whatever big blue chip stocks a lender likes and pull like half the amount out in a loan or some kind of line of credit. Then use that money to buy properties in cash from motivated sellers, close the purchase super fast (use this to your negotiating advantage to make the deal more profitable), rehab (target a light-moderate job mostly cosmetic), and then you might be able to BRRRR profit but if it's not THAT profitable, then sell. Rinse and repeat.
I like that idea as well. The wife would like to keep one "revenue stream" revolving for one asset. By that I mean, In addition to buy and hold she would like to always at least be flipping one deal that makes sense. I appreciate the time and response, brother. Thank you.
- Member since 2024 路 13 posts 路 10 votes2y
Quote from @Jason Allen:
I'd buy a multi-family property that cash flows in an appreciating market with a growing economic base, like Columbus, Ohio.
I saw that there are several multi-families that are available right now on the market that made sense to me. Wouldnt I have a hard time getting financing for somethin like a 1 million dollar deal with $2-$300k down with it being my first deal? The idea of buying one multi deal is very appealing to me for a "one purchase replacement" of what I currently make monthly now. Though I have heard a lot of RI's teach shying away from a large muli for a first deal. We've been educating ourselves and preparing for this for two years. I'd hate to see something that we're unaware of because we're new and just bomb completely on one deal. BUT I've heard the financing for commercial is like pulling teeth.
- 2yNicholas L.Pro MemberFlipper/Rehabber 路 Pittsburgh 路 Member since 2018 路 6k+ posts 路 5k+ votes
those are paper numbers - it won't actually turn out like that in practice. maybe in 5-10 years, after you've improved, stabilized, refined, sure. but not in year 1, or 2, or 3...
if that's something you're interested in, start with 1, hire a great PM, and see what happens.
here in Pittsburgh you can buy 50K houses in decent neighborhoods... and they have years or decades of deferred maintenance and need lots of work.
- Member since 2024 路 13 posts 路 10 votes2y
Quote from @Nicholas L.:
those are paper numbers - it won't actually turn out like that in practice. maybe in 5-10 years, after you've improved, stabilized, refined, sure. but not in year 1, or 2, or 3...
if that's something you're interested in, start with 1, hire a great PM, and see what happens.
here in Pittsburgh you can buy 50K houses in decent neighborhoods... and they have years or decades of deferred maintenance and need lots of work.
What about fixing those issues up front? I see a lot here that are around that $40-$60 (even less) number that would take $5-$15k to get modern and current. I would do quite a bit of the work myself as I'm pretty handy. I built two rooms onto our current home etc. And with my current W2 gig, I have all the time I need. In theory my idea is to address any deferred maintenance up front and continue mission.
You're saying that practical applicability only shows (has proven) that will only be profitable after a decade? Thank you for the response.
- 2yNicholas L.Pro MemberFlipper/Rehabber 路 Pittsburgh 路 Member since 2018 路 6k+ posts 路 5k+ votes
yes, fixing everything up front is a great way to do it. that's basically the BRRRR method! and if you're handy that can be a huge advantage, as you reduce the cost as compared to someone that has to hire a GC. but think back to 'netting' anything - if you buy and fix, you have 2 options:
1. don't refinance. OK, you paid 50K for a house, spent 5K in closing costs, 15K to rehab, and you net (let's say) $500 a month. that's 140 months to get your investment back, from the monthly cash flow. i'm not saying that's not a good option - there are other benefits to real estate, such as depreciation and appreciation - but again, let's be realistic about how long it takes to recoup the cash. $300K in a savings account paying 5% nets you $1250 in month 1. period. no funny business. no risk.
2. refinance. you improve that property such that it's now valued at 100K. you refinance and cash out 70K. congratulations! that's a BRRRR and you've recouped your investment... but now you have financing on the property, and your monthly cash flow is probably <$100 a month.
- Member since 2024 路 13 posts 路 10 votes2y
Quote from @Nicholas L.:
yes, fixing everything up front is a great way to do it. that's basically the BRRRR method! and if you're handy that can be a huge advantage, as you reduce the cost as compared to someone that has to hire a GC. but think back to 'netting' anything - if you buy and fix, you have 2 options:
1. don't refinance. OK, you paid 50K for a house, spent 5K in closing costs, 15K to rehab, and you net (let's say) $500 a month. that's 140 months to get your investment back, from the monthly cash flow. i'm not saying that's not a good option - there are other benefits to real estate, such as depreciation and appreciation - but again, let's be realistic about how long it takes to recoup the cash. $300K in a savings account paying 5% nets you $1250 in month 1. period. no funny business. no risk.
2. refinance. you improve that property such that it's now valued at 100K. you refinance and cash out 70K. congratulations! that's a BRRRR and you've recouped your investment... but now you have financing on the property, and your monthly cash flow is probably <$100 a month.
Awesome. Thats more or less what we've seen. This may seem silly but for the last year we've become members of the local landlords association even though we own zero rentals and are not, in fact landlords. Tring to be sponges. And thats more or less what we've gathered. After reading Kiyosaki and a ton of others I feel a hybrid and a mix would be most beneficial on a monthly basis for what I'm looking for. Sure, the debt could "work for us" more in the long run but that would be something i feel I should worry about on the back end. I'm not looking at recouping the investment capital as soon as possible. My goal is to get as close to my salary monthly as quickly as possible on a monthly basis.
$40-$50 for the home, BRRRR it and keep the renter in it for the long term. And realistically I'm looking at that $6-$700 a month. I see that as being 1/10 closer to my financial freedom number.
Also, when you get to a certain number of units I keep hearing the magical phrases like "creative financing." Theres going to come a point thats NOT going to get me to $10k a month if I chose to finance as many as I possibly can. Unless its 100 units. A bank will eventually just say "no." IF I take the rehab and refinance route. Sure, I've got $100 cashflow but I've also got new debt that will only allow me to get one or two more before I have to get "creative." Which I'd like to shy away from all together. I hope that makes sense.
- 2yNicholas L.Pro MemberFlipper/Rehabber 路 Pittsburgh 路 Member since 2018 路 6k+ posts 路 5k+ votes
-joining the landlord association isn't silly at all - kudos to you for doing that. meeting people and going to meetings is actual work, and shows me that you are not in analysis paralysis. most people want to sit in the dark and look on Zillow and call that 'investing.' it's not.
-creative financing is its own thing. you can start looking for creative financing deals - i highly recommend seller finance, where the property you're purchasing has no mortgages on it - now, or wait. they're hard to find, but the more work you put in, the more people you meet, and the more you know what you're doing, the more likely you are to find one. it took me 3 years to find my first.
-there's no issue with financing anymore, or a bank saying 'no,' as there is no limit to how many DSCR loans you can get. they weren't a mainstream product 20 years ago, and now they are. so there is no limit to how many mortgages you can have. i have a mix of conventional and DSCR on my portfolio.
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