$130k Cash what to do?

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

    @Steven Olivas

    I would BRRRR something, but that's just me, and the market is VERY tough right now. I've made a few offers in the last few months on very distressed properties, and I keep getting outbid.

    2Reply
  • David Fals
    Member since 2023 · 37 posts · 32 votes
    1y
    Quote from @Donald Hatter:
    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!
    I like this idea, but do families rent new constructions? I'm new to this and would like to learn more.
    1Reply
  • Donald Hatter
    Investor · Houston Texas · Member since 2024 · 41 posts · 28 votes
    1y
    Quote from @David Fals:
    Quote from @Donald Hatter:
    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!
    I like this idea, but do families rent new constructions? I'm new to this and would like to learn more.

    I tend to charge more than market rent for my new construction investments.  People like new, especially in the Houston market.
    0Reply
  • Morgan Tondre
    NJ · Member since 2024 · 207 posts · 91 votes
    1y
    Quote from @Nicholas L.:

    @Steven Olivas

    I would BRRRR something, but that's just me, and the market is VERY tough right now. I've made a few offers in the last few months on very distressed properties, and I keep getting outbid.

     Agreed with @Steven Olivas here!

    0Reply
  • Daniel TanasaBusiness Member
    Realtor · Houston, TX · Member since 2019 · 351 posts · 174 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 keep it in my bank account. Do 1 BRRRR per quarter (4 a year, very doable), try to leave as little of your money as possible in each deal, and keep recycling the same money to buy more properties. Stop when you reach your goal or you want to go in bigger asset classes.

    1Reply
  • John WilliamsBusiness Member
    Property Manager · Clarksville, TN · Member since 2018 · 443 posts · 210 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.


    You have to start with your long term goal in mind. What are you trying to achieve? By when?

    Then, with that in mind, determine your mid and short term goals.

    Only then will you truly be able to determine what you should do with your equity. 

    For some, the answer may be to invest it all in bitcoin and sell in 20 years (not me). For others, it may be diversify into stocks. And still, for others, the answer may be to relocate the funds to another market and purchase additional properties. 

    Once you know your goals and investing time horizon, the optimal choice will appear much more clear!

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