What can I do with $140K cash?
Austin, TX · Member since 2023 · 10 posts · 16 votes
What can I do with $140K cash?
Most Popular Reply
Randall AlanPro Member
Investor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votesQuote from @Account Closed:
Hi,
I want to get into real estate but don't know how and where. I have a remote job living in Austin and $120K cash and $20K on my employer 401k. If you were me, what would you do? My goal is to work for myself and stop my 8-4 job at some point. I am willing to relocate to anywhere in the US. I think my best option is to relocate to a cheap market, buy land, build a cheap house, and sell and once I gain more experience I can come back to Austin. Another option is to buy foreclosures but then I am scared that I mess up since I don't have any experience. Another option is to flip a house. But like I said I am very confused about which route to go. What would you do? I am single and can save around $4000 each month.
@Account Closed
Hi John,
I probably wouldn't recommend foreclosures as a starting point. While you have enough money to probably buy into and repair one foreclosure, your money would go farther by financing properties and putting as little as possible down. The short version of that is if you can buy 4 houses financed, it will make more money than 1 free and clear house; especially when taking into consideration all the benefits that come with each house - your tenant paying down your mortgage, 3.3% depreciation on 4 houses, market appreciation on 4 houses, plus the rental income on 4 units.
Foreclosures also come with A LOT of inherent risk - you don't know the condition of what you are buying until after you have bought it. We have bought 4 foreclosures - 3 went great - the other one literally wreaked of cat urine so strong we had to wear respirators to walk into the house. We ultimately sold that one to a handyman and only made about 1/2 the profit we could have made on it - but we were worried about being able to sell it on the open market with how bad it smelled. So point being - you never know what you are buying there.
I also probably wouldn't touch the money in your 401k. That has a different purpose in life and you should leave it alone to be there for you down the road (especially since you have other money and income available).
Just know that the whole "stop working my job" thing is a long term goal. We have gotten to that goal post - but we were at 20 units when we decided to do it where we were replacing about $200k worth of W2 jobs. We are now at 37 units and our full time job is managing those properties. It's not quite a passive as the RE world makes it out to be (we self manage our own properties)... but it is a very nice lifestyle. No alarms to wake up to and as many vacation days as we want in a year!
So presuming you are on the "add one rental a year plan" after maybe buying 4 with the money you have, I would think it would take a number of years to achieve that retirement goal - but your mileage could vary depending on how much income you need to live on.
Flipping houses is good for big chunks of cash... but it comes with lots of questions - Who is going to do the work? You while you are working? Do you have the skill set to do that? If not, managing contractors and not getting exploited in the process is a whole different set of skills as well. It's really hard to pay retail prices on renovations and come out ahead on a flip. We went the "Do what we can do ourselves" route, and then worked with more handy-man type people for the things we didn't know how to do. But we never had a shiny truck show up with people in monogrammed shirts. It's was all about maximizing every dollar spent and minimizing every expense we could to have as many dollars left over for profit for us.
All the best!
Randy
49 Replies
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes2y
Quote from @Tanner Lewis:
The midwest is good, but I am mainly a fan of Ohio markets like Cleveland. I also like North Carolina, Tennessee and Georgia since they are more hybrid markets that have both appreciation and cash flow.Quote from @Account Closed:
Quote from @Tanner Lewis:
Hey John - I'm also in Austin! If you are starting out, I think relocating to a market with higher cash flow and lower taxes makes more sense. You can move to one of these markets and do a 3.5% down FHA loan, live in the property for a year, and then get another 5% down conventional. With this, you will have 8 units with as little down as possible. Then, I would go ahead and start to use hard money and DSCR to BRRRR properties. This is my strategy, but another may be better based on your goals and risk tolerance.
Hi Tanner,
Thanks for your advice. What are the examples of markets that can cash flow well?Cleveland has had some of the highest % increase than any other place I am aware of. Double triple quadruple and more, on TOP of the 30% net caps from 7 8 years ago. IMO EC is going to pop! Its already starting, hence no inventory for a reason
All the best
- Austin, TX · Member since 2023 · 10 posts · 16 votes2y
Quote from @Nicholas L.:
@Account Closed
-you should house hack
-you should not try to build something
-you should not move to a random market solely because of home prices
-i would not tell you where to move to since I don't know you. what is important to you - city, suburbs, weather, sports?
-the goal of a house hack is not to cash flow - it's to repurpose your housing payment
hope helps
So I like Austin. I hate the cold weather of the Midwest (I have lived in 3 states in the Midwest before moving to Austin). What is important to me: To live in a big metropolitan and high population. I really like Austin because I have friends here and the city is wild and there is always something going on. I am afraid of hurricanes so I don't like Houston or Florida in general. I don't care about sports because my favorite sport is soccer, and it's not very popular in the US.
But I get frustrated that I can't find a single deal that cash flows here in Austin. Even with my $120k cash as a down payment. There is nothing. So I am thinking of just ignoring positive cash flow.
But also creating a future is important to me. If I knew that I would become a millionaire in 5 years but I had to move to North Dekota, I would do it. So money comes first for me haha. - Lender · Austin, TX · Member since 2021 · 447 posts · 441 votes2y
Quote from @Bob S.:
Quote from @Tanner Lewis:
The midwest is good, but I am mainly a fan of Ohio markets like Cleveland. I also like North Carolina, Tennessee and Georgia since they are more hybrid markets that have both appreciation and cash flow.Quote from @Account Closed:
Quote from @Tanner Lewis:
Hey John - I'm also in Austin! If you are starting out, I think relocating to a market with higher cash flow and lower taxes makes more sense. You can move to one of these markets and do a 3.5% down FHA loan, live in the property for a year, and then get another 5% down conventional. With this, you will have 8 units with as little down as possible. Then, I would go ahead and start to use hard money and DSCR to BRRRR properties. This is my strategy, but another may be better based on your goals and risk tolerance.
Hi Tanner,
Thanks for your advice. What are the examples of markets that can cash flow well?Cleveland has had some of the highest % increase than any other place I am aware of. Double triple quadruple and more, on TOP of the 30% net caps from 7 8 years ago. IMO EC is going to pop! Its already starting, hence no inventory for a reason
All the best
Yeah I have seen a lot of movement in that market recently on the lending side
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes2y
Quote from @Tanner Lewis:
Quote from @Bob S.:
Quote from @Tanner Lewis:
The midwest is good, but I am mainly a fan of Ohio markets like Cleveland. I also like North Carolina, Tennessee and Georgia since they are more hybrid markets that have both appreciation and cash flow.Quote from @Account Closed:
Quote from @Tanner Lewis:
Hey John - I'm also in Austin! If you are starting out, I think relocating to a market with higher cash flow and lower taxes makes more sense. You can move to one of these markets and do a 3.5% down FHA loan, live in the property for a year, and then get another 5% down conventional. With this, you will have 8 units with as little down as possible. Then, I would go ahead and start to use hard money and DSCR to BRRRR properties. This is my strategy, but another may be better based on your goals and risk tolerance.
Hi Tanner,
Thanks for your advice. What are the examples of markets that can cash flow well?Cleveland has had some of the highest % increase than any other place I am aware of. Double triple quadruple and more, on TOP of the 30% net caps from 7 8 years ago. IMO EC is going to pop! Its already starting, hence no inventory for a reason
All the best
Yeah I have seen a lot of movement in that market recently on the lending side
It's crazy, we used to get 30 -40% NET per year with all in at 25- 30k, Now those same props are 100k+++++ with 15- 20% net. still good though. Biggest mistake of my life was not keeping 50 or so more of the 500 or so I flipped, HUGE mistake. Now we are keeping 4, - 5 out of every 10 we get,
All the best
- 2ySamuel DioufBusiness MemberReal Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes
With $120k, you could get into plenty of different markets.
I'd say house-hacking is one of the best ways to get your foot in the door of investing. You’re able to learn the basics of a real estate investment with lower risk and build equity at the same time. Being able to enter a property with only 5% down means you can leverage your money way more effectively as well. When you leverage money personally, I think it makes more sense to invest in appreciating markets
Columbus, Ohio is a great market to consider if you're leaning towards appreciation. I moved here from Florida after seeing the projected growth. Multiple, billion dollar companies are investing heavy in our area, such as Intel, Google, and Amazon. Which will bring plenty of other investors and general business to the area.
Reafco - Samuel Diouf528 Reviews - 2yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
@Account Closed
again - the point of a house hack isn't to cash flow.
say you can rent for $2000, or you can house hack, and when you house hack, your mortgage is $5000, but you collect $3100 in rent.
you still house hack. no more rent payment.
make sense?
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes2y
Quote from @Account Closed:
....I am very confused about which route to go....
Yeah, because what your asking of the universe and BP is the same as saying "I got $10k in pocket and am standing at airport, where should I go????"
Well, let's see, there is about 14,527 destinations to choose from, and about 47,398 opinions as to what is smart or dumb.... Good luck sorting it all out.
At best you get people promoting what they do or there local. At worst, and I guarantee MOST fit this group, you get pitched because you just said code for "hi, I'm a paycheck, come and sell me".......
If you have 0 focus or intelligent direction for your $$$$, do the smart thing, hire a professional who does and does this as a service.
If you don't know what your doing, and don't know where to do it, well that ain't a recipe for success. Flipping homes is NOT something a person just starts at, that's insane.
Hitch your wagon to a rock-star. Learn via osmosis. And when know what your doing and striking out on own is an option, you will have the knowledge of how-to vs following what random persons online randomly say.
- Real Estate Broker · Austin, TX · Member since 2012 · 1k+ posts · 1k+ votes2y
@Account Closed Hmu. I have two properties that you can cash flow with that amount down. One is a condo and the other is a house. Both are good locations.
- Member since 2022 · 23 posts · 4 votes2y
I have a pretty much simliar situation like you in Austin. I am also a first-time investor and have similar saving but I have a small family with me. Unfortunately, there isn't any good fourplex in Austin as the number never cashflow even if I don't occupy one of the unit. So I expanded my search area these days to house hack.
Here are things I learned last a few weeks.
- Duplexes are generally in a better neighborhood to stay with family than fourplex.
- Fourplex usually has B to C neighborhood but should cashflow better.
- Austin has been bubbled and not a market for cashflow. It is possible that you need to look for appreciation over cashflow. But like I said, it is bubbled already. So appreciation discounts.
- There are fourplexes with better number if you go out of Austin. - Member since 2022 · 1k+ posts · 1k+ votes2y
There's a lot you can do. But don't do it all at once because you don't know what you're doing.
First visit at least 50 houses. learn what you like and dont like about them. Then finally find a crappy fixer in an ok neighborhood that you feel has potential, that you can live in and rent out rooms. Put your remaining money on hold in a high interest account. After you learn a thing or two about working, fixing, repairing houses. Do it again.
- Member since 2024 · 7 posts · 5 votes2y
I am new and do not have experience in RE investing. I have been reading and trying to make sense of how to invest in real estate. I see red flags and my gut says the market will start tanking by this time next year. However, I meet experienced investors and some say "wait, now is not the time to jump in", and others say "you can't afford to NOT be in the market now". I look to the biggest companies in America and see that they are setting records in the amount of cash they are hoarding. I see headlines of successful investors selling stock to stockpile cash. Then I meet lenders and realtors that say "now is a great time. You need to get in the game"
I see people are bending the 'rules' of the game to make the current real estate market make sense. For example, I've been told that the 1% rule is unrealistic these days and was only relevant in 2016 and earlier. I see in this thread people suggesting that the negative cashflow doesn't matter and to instead focus on appreciation.Then I read The Book on Rental Property Investing by Brandon Turner saying the exact opposite (quoted below).
All of that to say, I want some help lol. And please don't go crazy about me asking a what if/hypothetical and get on a soapbox about all the long lists of what ifs that we could come up with. I'm talking about one what-if here in hopes that we can do some risk management and think through a potential worst-case scenario.The scenario: I am purchasing my first property - a big SFH or duplex, with an FHA and I plan to househack the property the first year, make minor improvements, rent it out, and refinance, and then repeat.
What are the obstacles/cons that I will face IF at the end of year 1, my property has a market value of 60% of what I bought it at and the market rents are 60% of my monthly mortgage payment? How would this impact my ability to get my next property? Again, I am inexperienced and am just trying to understand the situation I'd be in if that were to happen, and brainstorm potential strategies to use in that situation to make the best of the situation.The quote mentioned above. Quoted directly from The Book on Rental Property Investing by Brandon Turner: "Great wealth has been built through appreciation, of course. I know numerous homeowners who bought a simple home in California 20 years ago and are now millionaires because of that one purchase. Appreciation is a powerful tool and something investors should seriously consider.
However, as great a generator as appreciation may be, it does have a dark side. In the early 2000s, the real estate market across the country was “appreciating” like crazy. People bought terrible properties and made a killing just on the appreciation. They began losing sight of the math behind an investment and simply bought whatever they could because they could always sell it for more later. “Who cares if the property loses money every month?” they thought. “I’ll just sell it in a few years and make so much more!”
This “greater fool theory” of investing eventually caught America with its pants down.
Prices stopped climbing, unemployment grew, and individuals sud denly realized that they were no longer holding on to investments but rather playing in the world’s largest game of legalized gambling—and they had just lost. This plunged the world into the greatest recession most of us had ever seen and caused more than four million completed foreclosures.
There’s no denying the incredible role appreciation has played in investors’ lives, but there’s also no denying the risk involved in relying on appreciation to make a profit. I recommend that, instead, investors view appreciation as icing on the cake, a bonus that will assist in the investment but is not the basis of that investment. Investing in locations where appreciation is likely is a wise move, but I don’t recommend investing in a bad or marginal deal in hopes that appreciation will bail you out. This is known as “speculating,” and it isn’t much better than getting in your car, driving to Vegas, and betting all your money at the poker table.
Will prices continue to climb because of inflation, scarcity, and greed? I have no doubt they will. Appreciation will make millionaires (and billionaires) out of certain people reading this book, but your deal analysis should not assume it. Treat appreciation for what it is: a possible reward for an investment done right."
Thanks in advance to whoever took time to read all of this and reply. - Realtor · Cleveland, OH · Member since 2023 · 340 posts · 215 votes2y
Hi, these are some great ideas but, I would invest in real estate after you choose your location. Ohio is a good place to start people from all over the world are investing in real estate in Ohio's market. Feel free to reach out and best wishes!
- Virtual Assistant · Memphis · Member since 2022 · 29 posts · 19 votes2y
Hi John! Great to hear you want to get into real estate! With $140K, you have a few good options. You could buy a rental property, flip a house, or look into foreclosures. If you're open to moving, consider cheaper markets like Memphis for good deals. I work with investors in Memphis, and we have many out-of-state clients finding success here. Learn as much as you can, join local real estate groups, and maybe find a mentor. Real estate is a great way to build wealth if you start smart. Good luck!
- 2yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
i can't predict the future, and i can't tell you that you won't run into any unforeseen obstacles.
with that said... i do think a 40% reduction in prices or rents is very, very unlikely.
I'll also say this... I don't really watch the "prices" of my rental properties. the price is what someone would pay if i listed one for sale... which i haven't done and don't intend to do.
since 2016, the rents in my little portfolio have never gone down. sometimes they're flat... but never down.
- Member since 2019 · 5 posts · 1 vote2y
Quote from @Account Closed:
Hi,
I want to get into real estate but don't know how and where. I have a remote job living in Austin and $120K cash and $20K on my employer 401k. If you were me, what would you do? My goal is to work for myself and stop my 8-4 job at some point. I am willing to relocate to anywhere in the US. I think my best option is to relocate to a cheap market, buy land, build a cheap house, and sell and once I gain more experience I can come back to Austin. Another option is to buy foreclosures but then I am scared that I mess up since I don't have any experience. Another option is to flip a house. But like I said I am very confused about which route to go. What would you do? I am single and can save around $4000 each month.
Hey! I'd say start by educating yourself on real estate investing, specifically in areas that interest you like land development, foreclosures, or house flipping. Then, network with local investors, start small, and save aggressively. Once you've gained more experience, you can relocate to a cheaper market and scale up your investments. - Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes2y
Quote from @Nicholas L.:
.... i do think a 40% reduction in prices or rents is very, very unlikely.
To predict housing prices/rents WONT drop by 40% anytime soon is like predicting the sun will rise in the East, not the N,W or S tomorrow morning......
Ok look, I will be brutally honest to all sitting around saying there "waiting" on some giant ridiculous 30%+ reduction in prices: GOOD RIDDENCE!
Lol, yeah, seriously, go for it, please sit the sidelines I am VERY a-ok with that. I strongly prefer as little competition as humanly possible.
It just blows my mind the mass delusion going on in the US with people nowadays. Every book, every econ study for like a bajillion years has said "real estate is the best hedge against inflation" and everyone agreed.... until.....
Than when inflation is happening and the issue of the day for some reason everyone lost there freakin minds and cold is now hot, up is down.... Saying blatantly idiotic things like inflation will make real estate prices go DOWN! What in the words "BEST hedge against inflation" is hard to understand?
Ok, hold on, let's see if I can find the "crayola" font to try put it in terms they maybe understand.....
HEDGE against inflation means the price, the market value, moves WITH inflation. So with real estate being the BEST hedge against inflation that means it MOST accurately dollar for dollar moves UP in price with inflation. Up not down UP.
This is not complicated folks, what happens as affordability to OWN your home decreases? More-people-RENT. Duh!
What happens when there is MORE renters?
Johnny sells apples. Johnny has 5 apples to sell and 10 people want apples from Johnny, what happens to the price of Johnny's apples??????
Come on people, 3rd graders get this, come on....
We are living in the GREATEST housing 4 profit enviroment EVER in our life times, our parents, grandparents EVER!
Never has the market been so cornered. Almost every/any action results in appreciation.
If economy tanks, recession, depression, people can't afford squat, RENTS GO UP. because the demand for the supply will be insane.
Economy booms, median incomes rocket to the moon, rents and property prices go UP, because of new affordability basis.
Interest rates go up rents go up. Rates drop prices surge.
Are ya following the bouncing ball here folks.
If you operate real estate for profit, that means the "value" is based on revenue. So as revenue goes UP the "value" of that also goes up.
Why do you think there has been no magic solution for last years? Because there isnt any.
So go ahead, sit the sidelines, yap on about some fantasy how some day it's all just gonna be half off. There is a reason we are called the 20% or the 2% or whatever but the exception, because most live a life of woulda, shoulda, coulda DIDNT.
No, I won't rub your ego about how smart your scared spectator approach to life is people, waiting for a guaranteed result before make effort. Success is MADE not had, and if ya don't get that you will never have it. And thats ok, the world needs more employees in ratio than sigma-psychos like me.
But if ya want a champions life, step it up, spit in fears face, stop making excuses and start making results.
- Member since 2024 · 7 posts · 5 votes2y
- Member since 2024 · 7 posts · 5 votes2y
Quote from @James Hamling:
Quote from @Nicholas L.:
.... i do think a 40% reduction in prices or rents is very, very unlikely.
To predict housing prices/rents WONT drop by 40% anytime soon is like predicting the sun will rise in the East, not the N,W or S tomorrow morning......
Ok look, I will be brutally honest to all sitting around saying there "waiting" on some giant ridiculous 30%+ reduction in prices: GOOD RIDDENCE!
Lol, yeah, seriously, go for it, please sit the sidelines I am VERY a-ok with that. I strongly prefer as little competition as humanly possible.
It just blows my mind the mass delusion going on in the US with people nowadays. Every book, every econ study for like a bajillion years has said "real estate is the best hedge against inflation" and everyone agreed.... until.....
Than when inflation is happening and the issue of the day for some reason everyone lost there freakin minds and cold is now hot, up is down.... Saying blatantly idiotic things like inflation will make real estate prices go DOWN! What in the words "BEST hedge against inflation" is hard to understand?
Ok, hold on, let's see if I can find the "crayola" font to try put it in terms they maybe understand.....
HEDGE against inflation means the price, the market value, moves WITH inflation. So with real estate being the BEST hedge against inflation that means it MOST accurately dollar for dollar moves UP in price with inflation. Up not down UP.
This is not complicated folks, what happens as affordability to OWN your home decreases? More-people-RENT. Duh!
What happens when there is MORE renters?
Johnny sells apples. Johnny has 5 apples to sell and 10 people want apples from Johnny, what happens to the price of Johnny's apples??????
Come on people, 3rd graders get this, come on....
We are living in the GREATEST housing 4 profit enviroment EVER in our life times, our parents, grandparents EVER!
Never has the market been so cornered. Almost every/any action results in appreciation.
If economy tanks, recession, depression, people can't afford squat, RENTS GO UP. because the demand for the supply will be insane.
Economy booms, median incomes rocket to the moon, rents and property prices go UP, because of new affordability basis.
Interest rates go up rents go up. Rates drop prices surge.
Are ya following the bouncing ball here folks.
If you operate real estate for profit, that means the "value" is based on revenue. So as revenue goes UP the "value" of that also goes up.
Why do you think there has been no magic solution for last years? Because there isnt any.
So go ahead, sit the sidelines, yap on about some fantasy how some day it's all just gonna be half off. There is a reason we are called the 20% or the 2% or whatever but the exception, because most live a life of woulda, shoulda, coulda DIDNT.
No, I won't rub your ego about how smart your scared spectator approach to life is people, waiting for a guaranteed result before make effort. Success is MADE not had, and if ya don't get that you will never have it. And thats ok, the world needs more employees in ratio than sigma-psychos like me.
But if ya want a champions life, step it up, spit in fears face, stop making excuses and start making results.
My favorite part of this post was how you finished with: "I won't rub your ego", after paragraphs of attempting to rub your own. That was great. I understand supply and demand. My second favorite part is how you never addressed the actual question and main point of my post. Which is, 'yeah there's a small (or if you prefer NEGATIVE 100% ) chance of a 40% price reduction, but WHAT IF it does happen? What type of situation would a first time investor be in? And what would be your strategy for making the most of it?"
So regardless of how ridiculous it is in your mind that I believe prices could drop by 40%, please, step off that horse, place your ego on the special shelf for special things, pull out your 'crayola font' for this one and explain as if you were explaining to a '3rd grader'.
'it just blows my mind' how people have so much energy to attempt to share how smart they are and ridicule the question without answering it. I don't mind you insulting the question or me for the question, but if you do that, at least answer the question. - Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes2y
Quote from @Justin Buckner:
Quote from @James Hamling:
Quote from @Nicholas L.:
.... i do think a 40% reduction in prices or rents is very, very unlikely.
To predict housing prices/rents WONT drop by 40% anytime soon is like predicting the sun will rise in the East, not the N,W or S tomorrow morning......
Ok look, I will be brutally honest to all sitting around saying there "waiting" on some giant ridiculous 30%+ reduction in prices: GOOD RIDDENCE!
Lol, yeah, seriously, go for it, please sit the sidelines I am VERY a-ok with that. I strongly prefer as little competition as humanly possible.
It just blows my mind the mass delusion going on in the US with people nowadays. Every book, every econ study for like a bajillion years has said "real estate is the best hedge against inflation" and everyone agreed.... until.....
Than when inflation is happening and the issue of the day for some reason everyone lost there freakin minds and cold is now hot, up is down.... Saying blatantly idiotic things like inflation will make real estate prices go DOWN! What in the words "BEST hedge against inflation" is hard to understand?
Ok, hold on, let's see if I can find the "crayola" font to try put it in terms they maybe understand.....
HEDGE against inflation means the price, the market value, moves WITH inflation. So with real estate being the BEST hedge against inflation that means it MOST accurately dollar for dollar moves UP in price with inflation. Up not down UP.
This is not complicated folks, what happens as affordability to OWN your home decreases? More-people-RENT. Duh!
What happens when there is MORE renters?
Johnny sells apples. Johnny has 5 apples to sell and 10 people want apples from Johnny, what happens to the price of Johnny's apples??????
Come on people, 3rd graders get this, come on....
We are living in the GREATEST housing 4 profit enviroment EVER in our life times, our parents, grandparents EVER!
Never has the market been so cornered. Almost every/any action results in appreciation.
If economy tanks, recession, depression, people can't afford squat, RENTS GO UP. because the demand for the supply will be insane.
Economy booms, median incomes rocket to the moon, rents and property prices go UP, because of new affordability basis.
Interest rates go up rents go up. Rates drop prices surge.
Are ya following the bouncing ball here folks.
If you operate real estate for profit, that means the "value" is based on revenue. So as revenue goes UP the "value" of that also goes up.
Why do you think there has been no magic solution for last years? Because there isnt any.
So go ahead, sit the sidelines, yap on about some fantasy how some day it's all just gonna be half off. There is a reason we are called the 20% or the 2% or whatever but the exception, because most live a life of woulda, shoulda, coulda DIDNT.
No, I won't rub your ego about how smart your scared spectator approach to life is people, waiting for a guaranteed result before make effort. Success is MADE not had, and if ya don't get that you will never have it. And thats ok, the world needs more employees in ratio than sigma-psychos like me.
But if ya want a champions life, step it up, spit in fears face, stop making excuses and start making results.
My favorite part of this post was how you finished with: "I won't rub your ego", after paragraphs of attempting to rub your own. That was great. I understand supply and demand. My second favorite part is how you never addressed the actual question and main point of my post. Which is, 'yeah there's a small (or if you prefer NEGATIVE 100% ) chance of a 40% price reduction, but WHAT IF it does happen? What type of situation would a first time investor be in? And what would be your strategy for making the most of it?"
So regardless of how ridiculous it is in your mind that I believe prices could drop by 40%, please, step off that horse, place your ego on the special shelf for special things, pull out your 'crayola font' for this one and explain as if you were explaining to a '3rd grader'.
'it just blows my mind' how people have so much energy to attempt to share how smart they are and ridicule the question without answering it. I don't mind you insulting the question or me for the question, but if you do that, at least answer the question.I will happily go into grandiose details of strategic planning and answers the moment you can post in same detail for the "what if" when aliens land on front lawn of white house....
Because there is about equal chance of that as you getting your 40% collapse of home prices and rents.
And I dedicate equal amounts of mental time and energy to either consideration, the appropriate amount, ZERO. Because I am too busy thinking about and doing things that matter and are real vs chasing fairy tales.
- 2yJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
Quote from @Account Closed:
Hi,
I want to get into real estate but don't know how and where. I have a remote job living in Austin and $120K cash and $20K on my employer 401k. If you were me, what would you do? My goal is to work for myself and stop my 8-4 job at some point. I am willing to relocate to anywhere in the US. I think my best option is to relocate to a cheap market, buy land, build a cheap house, and sell and once I gain more experience I can come back to Austin. Another option is to buy foreclosures but then I am scared that I mess up since I don't have any experience. Another option is to flip a house. But like I said I am very confused about which route to go. What would you do? I am single and can save around $4000 each month.Hi John, I would definitely look into a cheaper market in this case! I did the same exact thing you're looking to do a few years ago when I moved from my hometown in Portland Oregon to Columbus Ohio to start full time real estate investing. If you're young and single (which sounds like you are), I would definitely take the risk and look into a cheaper market like Columbus Ohio. You can still find amazing positive cash flow, the 1% rule, and tons of appreciation here - along with a lot of great BRRRR and flip opportunities. Additionally, the macroeconomics in Columbus Ohio shows population growth, job growth, and so many companies moving and developing here like Intel, Honda, Amazon, FB, Google! If you have any questions or want to connect, more than happy to help in any way! :)
Jimmy Lieu, Red 1 Realty4.9120 Reviews - 2yLindsay DavisBusiness MemberReal Estate Broker · Birmingham, AL · Member since 2019 · 326 posts · 203 votes
@Account Closed,
I read both your original post and your replies to folks on your thread. What I’ve gathered is:
1. Austin’s out because it’s too expensive and nothing will cash flow
2. The Midwest is out because it’s too cold
3. Florida is out because of hurricanes
In that case, what about parts of the Sunbelt that are inland? Places like Alabama or Tennessee seem to check all your boxes, at least on a preliminary basis: plenty of deals will cash flow, the weather’s warm, and the risk of hurricanes is low.
For instance, I’m in Birmingham, and you can purchase a rent-ready single-family home in a B/B+ neighborhoods here for about $100,000 to $130,000. You can likely fetch rents in the $1,000 to $1,200 range, so cash flow—even on a significantly levered deal—is highly achievable.
Spartan Invest4.8134 Reviews - 2yHenry ClarkPro MemberDeveloper · Member since 2020 · 4k+ posts · 4k+ votes
Stay in Texas.
Google and learn about Texas property tax sales.
Dont go to the auctions.
Pick several areas. Look up the offlist property tax sales.
Only do land. You take possession in 6 months. Don’t do houses. Takes years.
Make ridiculous offers. If $20,000 taxes offer $5,000. Send offers.Develop different buy boxes.
Land that you can subdivide.
Land with two access points or roads.
Rough land that has trees, ditches, nasty property. You can build ponds in the ditches.
Strategic land. In town 6 acres along Highway for $8,000 Sell for $200,000 2 years later.
Texas in the county has no zoning. Out in water and sewer lines. Buy an rv and live there. Then develop a few lots at a time. Rent the lot out for $800 per month.
Put some cargo containers on a piece of land . New one trip 20 foot containers for $3,100. Rent for $150 per month. Again, no zoning in Texas counties.
The more expensive Texas becomes the more the above strategies go up. Even in a down economy.
Why would you leave Texas?
Stay small and Make Your Big Mistakes Early.
- 2ySherry McQuageBusiness MemberReal Estate Broker · Moore County, NC · Member since 2020 · 168 posts · 141 votes
Quote from @Nicholas L.:
@Account Closed
-you should house hack
-you should not try to build something
-you should not move to a random market solely because of home prices
-i would not tell you where to move to since I don't know you. what is important to you - city, suburbs, weather, sports?
-the goal of a house hack is not to cash flow - it's to repurpose your housing payment
hope helps
Nicholas has some good points. Is there a part of the country that you would like to live in? Have family or friends that you can go live near/with to get a feeling for an area? Many military families that move to Moore County NC (Pinehurst, Whispering Pines, Carthage, Cameron) rent a place for a year to see what it's like, and find out more about what area they really want to buy in....maybe move somewhere and rent 1-12 months to get a feel for if you want to buy/live there.
Find a good real estate agent in whatever area you decide to buy in. They can guide you and give advice on what they see is popular or "up and coming"...often, they hear of properties that are going to go on the market before they hit the market (some "for sale by owners").
Keep learning at BP, keep asking questions, read the BP books. You'll find your way. In the meantime, keep saving up money. You might find someone on BP (or in your real life) that is doing what you want to do and will be a mentor or sounding board for you.
Let us know what you decide to do, and how it goes. This is a golden opportunity for you to change your life and finances. Best to you!
- Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes2y
@Account Closed
Not sure if you're still checking BP but I agree with the previous comments on house hacking. I wouldn't buy foreclosures or flip starting out.
I think Texas is a great market. I have several California investor friends with properties in San Antonio, Dallas and Houston. I also met a few investors who live in Texas at recent real estate conference - the advantage living there there's no state income tax and they're able to make the numbers work even with higher property taxes.
If Austin is out of reach even with house hacking, what about cities within a 2 hour drive? I just Googled this and San Antonio is about 75 miles from Austin. If it were me, I would pick investing in Texas if I were living there over investing OOS in some random city. I wouldn't relocate to a cheap market either without visiting many times, doing tons of research and talking to local investors (some unbiased not trying to sell you anything). Good luck!
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