Best bang for my buck

15 Replies

I have a question for some of you people that have long term success in REI. What angle would you start from if you were in my shoes? I work full time and I have about $72,000 cash on hand. I am near the Toledo, OH area. I have some experience with home rehabbing and home building. Homes in my area go for 10k-100k. Just curious if you ha I start all over again with my situation, what you would do.

Hi Jim, what are your goals for investing in real estate? Are you looking to preserve your capital? Are you looking for a slightly better return that stocks? Are you wanting to build a real estate business? Are you looking for giant returns like what you can get flipping? Also, how much work do you want to put into it? 

There are a ton of directions you can go with that much cash in Toledo. It really depends on your goals, your skills and your time. 

@Jim Zatko  Seeing how your time isn't one of the things you have, and as @Ryan Pyle  say, you need to figure out what your goals are, I would look for a partner that does have the time...and is just looking for funding.  In fact, since @Ryan Pyle 

 is in Toledo, why not contact him to see if he's interested?

Joe Villeneuve
REcapSystem
A2REIC

I would say my goal is for good returns, like flipping, or building a real estate buisness. Ie built 2 homes in south east Michigan, so I have a decent amount of experience and connections contracting work. Even though I work full time, I do have time to commit to a flip, I just wouldn't do all the work myself.

Jim, did you build the homes for yourself or for clients? What about spec building?  

In my opinion there is not enough margin in the Toledo market for flipping right now. Or at least I haven't been able to find it. I used to do about 12 flips a year, but since the market picked up there's just too much risk for me. Wholesale prices (foreclosures, absentee owners, etc.) have risen a lot more than retail prices which has squeezed all the profit out. There are a couple of groups still flipping in the area, but they are mostly very wealthy individuals who work as a team and are just looking for returns slightly better than the stock market.

I built 2 homes for myself and sold for a profit after 2 years, ( to avoid capital gains). I am thinking about getting my home builders liscense. If I got that I would be able to spec build.
So what do you do in real estate Ryan?

Originally posted by @Ryan Pyle :

Jim, did you build the homes for yourself or for clients? What about spec building?  

In my opinion there is not enough margin in the Toledo market for flipping right now. Or at least I haven't been able to find it. I used to do about 12 flips a year, but since the market picked up there's just too much risk for me. Wholesale prices (foreclosures, absentee owners, etc.) have risen a lot more than retail prices which has squeezed all the profit out. There are a couple of groups still flipping in the area, but they are mostly very wealthy individuals who work as a team and are just looking for returns slightly better than the stock market.

Hey Ryan,

Still some decent margins on higher end flips here IMO.

We missed out on one in Sylvania recently but picked up another on Roseann for $25,000 that backs onto the golf course.

Once converted into a 3bed, 2.5 bath should push the high $100,000s.

Needs around $20,000 - $25,000 in rehab.

Estate sales have served us best for finding good retail flips.

Thanks.

@Ryan Pyle  Toledo may not be that great for flipping right now, but if @Jim Zatko  has all cash, then why not buy all cash, then refinance the money back out, and reuse it again.  Repeat these steps until you can't refi anymore?  This gets you $75k every time to use, and you don't need to flip to access it.

Up here ( little higher up than you in Michigan), we do this as standard practice.

Joe Villeneuve
REcapSystem
A2REIC

@Joe Villeneuve that's what I do here with multifamilies. But before I made that suggestion to the OP I wanted to get his take on wanting to be a landlord. The comes that matter of capital preservation and making sure he buys in good areas that will hold their value. He could also do the same with commercial properties and do NNN leases with a lower return but a much more hands-off experience.

@Engelo Rumora  that sounds like a good deal. They are definitely out there, but just a lot harder to find than a couple years ago. Maybe I got spoiled!

@Ryan Pyle I love NNN's. I just did a presentation last night at my REI on Commercial REI (an intro). Last month's theme was Property Management. Guess what one of the featured topics involved? NNN leases. Big hit.

Joe Villeneuve
REcapSystem
A2REIC

@Jim Zatko  Great question.  I'm a wholesaler in the Toledo market and have been buying homes that give my end buyers a 30%-50% profit (in one recent case a 100% profit).  These are all in good school districts (Anthony Wayne, Sylvania, Perrysburg, Maumee, Springfield), and in the better parts of Toledo. One option to consider to reduce risk is to do your numbers by planning to sell them doing a lease-option with 20% cash flow for 2 years, and a balloon profit of 30%-50% at the end.  

Originally posted by @Ryan Pyle :

@Joe Villeneuve that's what I do here with multifamilies. But before I made that suggestion to the OP I wanted to get his take on wanting to be a landlord. The comes that matter of capital preservation and making sure he buys in good areas that will hold their value. He could also do the same with commercial properties and do NNN leases with a lower return but a much more hands-off experience.

What is NNN Leases?

Originally posted by @Brandon Bohland :

@Jim Zatko Great question.  I'm a wholesaler in the Toledo market and have been buying homes that give my end buyers a 30%-50% profit (in one recent case a 100% profit).  These are all in good school districts (Anthony Wayne, Sylvania, Perrysburg, Maumee, Springfield), and in the better parts of Toledo. One option to consider to reduce risk is to do your numbers by planning to sell them doing a lease-option with 20% cash flow for 2 years, and a balloon profit of 30%-50% at the end.  

 So basically your suggestions buying a house, offering it as a land contract...Where someone would put some money down and then their lease payments would go the principal and some to me?

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