$130k Cash what to do?

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$130k Cash what to do?

Chad Verde
Member since 2019 · 7 posts · 14 votes

Hi BP,

I have quite a bit of equity sitting in a rental property I own. Gathering different opinions here. What would YOU personally do with about $130k cash to invest in real estate. Just want to hear everybody's thoughts.

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Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
1y

I think you need to reposition how you are talking about this equity. You don't have $130,000 in cash. You have $130,000 in equity that you could use as cash, but then it would a second loan on your house. It's not the same thing.

If you have $130,000 in equity, I would not use any more than $65,000 on a new property and $15,000 of that should be held for reserves so you would have $50,000 for downpayment and closing costs really.

Unless your rental property is new construction, you don't want to max out the equity in case of large repairs coming.

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  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    1y

    I think you need to reposition how you are talking about this equity. You don't have $130,000 in cash. You have $130,000 in equity that you could use as cash, but then it would a second loan on your house. It's not the same thing.

    If you have $130,000 in equity, I would not use any more than $65,000 on a new property and $15,000 of that should be held for reserves so you would have $50,000 for downpayment and closing costs really.

    Unless your rental property is new construction, you don't want to max out the equity in case of large repairs coming.

    [email protected]Podcast Guest on Show BiggerPockets Daily 667: 5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t) by Gino Barbaro
    Zen and the Art of Real Estate Investing59 Reviews
    WebsiteView Page
    7Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    1y

    I agree with Jonathan, plus how much is this money going to cost you?

    3Reply
  • Chad Verde
    OP
    Member since 2019 · 7 posts · 14 votes
    1y

    To clarify, $200k in equity so estimating cash out refi around $130k

    3Reply
  • Nicolas Martin
    Member since 2024 · 52 posts · 25 votes
    1y
    Quote from @Chad Verde:

    Hi BP,

    I have quite a bit of equity sitting in a rental property I own. Gathering different opinions here. What would YOU personally do with about $130k cash to invest in real estate. Just want to hear everybody's thoughts.


    With $130k, I'd consider the BRRRR strategy to recycle capital, build equity, and scale quickly. Alternatively, house hacking a small multifamily could cover living expenses while building equity. Buying multiple lower-cost rentals would diversify income streams, or you could go for a short-term rental for higher returns if you can handle the management. Fix-and-flip is an option for faster capital growth, though riskier. For a passive route, private lending or investing in syndications/REITs can offer steady returns without property management. I'd likely go with BRRRR for scalability and long-term wealth building.
    2Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    1y

    @Chad Verde depends on your risk tolerence.

    Your avatar pic shows your family, so you shouldn't be as aggressive as if you were single.

    You should keep some decent reserves and take your time finding a motivated seller deal, so you get a good price.

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    3Reply
  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    1y

    Is the current property cash flowing well? Is it worth doing a 1031 to trade up? I'd also look into a BRRR or a flip. Nothing crazy but those are both great strategies. Be careful on if you do, get multiple bids and vet the GC well.

    0Reply
  • Jacobo B.
    Investor · Miami, FL · Member since 2008 · 20 posts · 10 votes
    1y

    I would look in to buying a small multifamily and start building a portfolio. However, you have to take in consideration the amount that would cost you to use that money plus the new loan on the multifamily. In my opinion, in order to move forward, you have to have a somewhat significant cash flow that allows you to build reserves again.

    1Reply
  • Jaycee GreenePro Member
    Real Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 727 votes
    1y

    Hey @Chad Verde. Rather than commenting on such a broad question, I generally ask some qualifying questions like:

    1. What type of property are you drawn to, Single Family? 1-4 Unit Multi-Family? 5+ MF? Mixed Use?

    2. What's your investment horizon? Do you want to "stash" the money for 5, 10 years? Or do you want to generate a quick profit (like fix & flip)?

    3. And what amount of leverage are you comfortable with in your portfolio?

    [email protected]
    0Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    1y

    It's not real cash, so I wouldn't seek advice on what to do with it. 

    1Reply
  • Amir Khan
    Investor · Coppell, TX · Member since 2018 · 311 posts · 166 votes
    1y
    Quote from @Chad Verde:

    To clarify, $200k in equity so estimating cash out refi around $130k

    Like some wise advise here, this is not cash this is equity.

    If you do $130K cash out refi (on $200K equity), are you also estimating how that will affect your rental property cash flow? In my experience, the cash flow may be substantially reduced (or even become negative taking into account interest rate of original loan and refi closing costs). If that happens, then you will need to set aside certain funds as "band aid" to stop negative cash flow bleeding.

    2Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    1y

    @Chad Verde

    sorry if this comes off as negative / discouraging but rates are high so this is likely what i call expensive money.

    now on the other hand, if you can do a cash out refinance, pull cash out, still cash flow, AND you have a specific opportunity - fine.  but it doesn't sound like that from your post.

    4Reply
  • Chad Verde
    OP
    Member since 2019 · 7 posts · 14 votes
    1y

    I’d have a better picture by sitting down with someone at a bank, but I did a calculation online and the new loan on cashing out $130k would still be covered by the current rental payment. Bought the house for a good deal in 2020 at 2.50% int rate. 

    2Reply
  • Jill F.
    Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
    1y
    I'm about to use about that much to buy me a nice little 6 unit.
    0Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    1y
    Quote from @Chad Verde:

    Hi BP,

    I have quite a bit of equity sitting in a rental property I own. Gathering different opinions here. What would YOU personally do with about $130k cash to invest in real estate. Just want to hear everybody's thoughts.


    I have several properties with over $100,000 in equity. For those that are 1-4 unit properties on fixed-rate 30-year mortgages, I'm generally not making any changes since they were purchased at low interest rates. However, if interest rates continue to decline, I might consider refinancing some of them to improve my liquidity position. 

    For my commercial properties, I refinance every five years, allowing me to continuously access the equity as long as the cash flow can support the debt service requirements. I hope this helps! Ultimately, it depends on your goals and the opportunities available for investing your wealth.

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
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    1Reply
  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    1y

    @Chad Verde

    Investment strategies can be employed to achieve financial goals, such as house hacking, BRRRR, short-term rentals, real estate syndications, property development, long-term wealth-building, flipping, and debt paydown. The choice depends on individual financial goals and 5-10-year goals. These strategies can maximize cash flow, reduce living expenses, and generate potential returns.

    Good luck!

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    1Reply
  • Drago Stanimirovic
    New to Real Estate · Miami, FL · Member since 2024 · 1k+ posts · 472 votes
    1y

    Hi Chad,

    With $130k in cash, I'd focus on leveraging it for maximum returns. Personally, I’d use it as a down payment to expand my rental portfolio, tapping into financing to acquire multiple properties for better diversification and cash flow. Another solid move would be investing in a fix-and-flip project, capitalizing on short-term profit if you know the market and renovation process. For higher yields, buying into short-term rentals in popular areas could be lucrative. Always ensure thorough due diligence to protect your capital and achieve strong returns.

    If you need any support or tailored financing for these strategies, let me know. I’m happy to assist.

    Drago.

    1Reply
  • Steven Olivas
    Member since 2024 · 17 posts · 9 votes
    1y
    Quote from @Jonathan Greene:

    I think you need to reposition how you are talking about this equity. You don't have $130,000 in cash. You have $130,000 in equity that you could use as cash, but then it would a second loan on your house. It's not the same thing.

    If you have $130,000 in equity, I would not use any more than $65,000 on a new property and $15,000 of that should be held for reserves so you would have $50,000 for downpayment and closing costs really.

    Unless your rental property is new construction, you don't want to max out the equity in case of large repairs coming.


     what would you do if you had 100k cash? to equity cash saved to use towards real estate, what are your recommendations?

    1Reply
  • Steven Olivas
    Member since 2024 · 17 posts · 9 votes
    1y
    Quote from @V.G Jason:

    It's not real cash, so I wouldn't seek advice on what to do with it. 


     Ok, what would you do if you had 100k cash? not equity, real cash saved to use towards real estate, what are your recommendations?
    0Reply
  • Steven Olivas
    Member since 2024 · 17 posts · 9 votes
    1y
    Quote from @Nicholas L.:

    @Chad Verde

    sorry if this comes off as negative / discouraging but rates are high so this is likely what i call expensive money.

    now on the other hand, if you can do a cash out refinance, pull cash out, still cash flow, AND you have a specific opportunity - fine.  but it doesn't sound like that from your post.


    Ok, what would you do if you had 100k cash? not equity, real cash saved to use towards real estate, what are your recommendations?
    0Reply
  • Steven Olivas
    Member since 2024 · 17 posts · 9 votes
    1y
    Quote from @Remington Lyman:
    Quote from @Chad Verde:

    Hi BP,

    I have quite a bit of equity sitting in a rental property I own. Gathering different opinions here. What would YOU personally do with about $130k cash to invest in real estate. Just want to hear everybody's thoughts.


    I have several properties with over $100,000 in equity. For those that are 1-4 unit properties on fixed-rate 30-year mortgages, I'm generally not making any changes since they were purchased at low interest rates. However, if interest rates continue to decline, I might consider refinancing some of them to improve my liquidity position. 

    For my commercial properties, I refinance every five years, allowing me to continuously access the equity as long as the cash flow can support the debt service requirements. I hope this helps! Ultimately, it depends on your goals and the opportunities available for investing your wealth.


     Ok, what would you do if you had 100k cash? not equity, real cash saved to use towards real estate, what are your recommendations?

    0Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    1y
    Quote from @Steven Olivas:
    Quote from @Remington Lyman:
    Quote from @Chad Verde:

    Hi BP,

    I have quite a bit of equity sitting in a rental property I own. Gathering different opinions here. What would YOU personally do with about $130k cash to invest in real estate. Just want to hear everybody's thoughts.


    I have several properties with over $100,000 in equity. For those that are 1-4 unit properties on fixed-rate 30-year mortgages, I'm generally not making any changes since they were purchased at low interest rates. However, if interest rates continue to decline, I might consider refinancing some of them to improve my liquidity position. 

    For my commercial properties, I refinance every five years, allowing me to continuously access the equity as long as the cash flow can support the debt service requirements. I hope this helps! Ultimately, it depends on your goals and the opportunities available for investing your wealth.


     Ok, what would you do if you had 100k cash? not equity, real cash saved to use towards real estate, what are your recommendations?


    There is not much I wouldn't do. You could explore triple net leases, purchase BRRRRs, or buy 1-4 turnkey rentals, among other options.

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
    0Reply
  • Jonathan Chan
    Lender · Clermont, FL · Member since 2020 · 168 posts · 87 votes
    1y
    Quote from @Chad Verde:

    Hi BP,

    I have quite a bit of equity sitting in a rental property I own. Gathering different opinions here. What would YOU personally do with about $130k cash to invest in real estate. Just want to hear everybody's thoughts.


     I would lend that 130K in short term lends at 16-20% annualized turning that money over every 6 months and use the returns to buy real estate.

    1Reply
  • Donald Hatter
    Investor · Houston Texas · Member since 2024 · 41 posts · 28 votes
    1y
    I would vote for buying a new construction home.  A great time of year to do so.  Pick a desirable neighborhood where your home will appreciate and go for it!
    0Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    1y
    Quote from @Steven Olivas:
    Quote from @V.G Jason:

    It's not real cash, so I wouldn't seek advice on what to do with it. 


     Ok, what would you do if you had 100k cash? not equity, real cash saved to use towards real estate, what are your recommendations?
    Depends, what am I trying to achieve? 
    1Reply
  • Cory KingBusiness Member
    Real Estate Agent · Knoxville, TN · Member since 2021 · 167 posts · 78 votes
    1y

    Personally off the cuff, probably invest in local new construction and BRR (build, rent, refinance) those to hold long term. 

    Some follow up questions. Very broad and if this helps you get clarity then aweseome.

    1. What type of property and where would you leverage this toward, Single Family, Multi Family, Commercial, Mixed Use, Land...?

    2. What's your risk tolerance at this point, playing more aggressively or preservation?

    3. And what amount of leverage are you comfortable with?

    4. Have you explored REITs or DST?

    0Reply
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