$100,000...how would you invest it?

Question

If you were completely new to investing, and you had $100,000 available for investment, how would you invest it?

Ryan Billingsley · Answer

I would look for 3/2 SFR in great locations/school districts.  I would target properties that have an ARV around 125-150k that are distressed.  Buy it with cash for 50-70k, rehab with cash, rent it out, and then refinance it to take the money back out and repeat.  (BRRR).  You will end up with perfect rentals ready to go for the long term with equity and the 100k in the bank to continue the process.

Ryan Billingsley · Answer

@Joshua Nobile

I use the MLS to compare the property to similar ones near by that have sold recently or that are for sale.  If you are not a licensed agent you can network to find an agent that would be willing to run comps for you.  That would be the most accurate way to find ARV.

Joshua Nobile · Answer

@Ryan Billingsley@Travis Christl

Sorry guys! forgot to put a mention for you guys to reply. I'm new to the site as you know.

Joshua Nobile · Answer

Hey, @Anthony Gayden!

Sorry I didn't reply right away. I'm in Bloomington studying Russian for the summer, so the schedule can be pretty packed.

1. I would like to invest in flips, buy and holds, residential and commercial. I haven't researched Land so much nor the potential of that kind of investment, so I haven't an opinion of it.

2. I have mainly looked at Urban/Suburban as they seem to be the most successful. I was thinking about properties near universities since those seem to be pretty active. Out of town students are looking for places to stay. Renting makes it temporary housing in the university situation (unless they stick around after they graduate). And there's the potential to have many tenants often.

3. I'm looking for major cash flow. At some point, I'd like to be comfortable on the income from real estate investing alone. Appreciation would work for the fix and flips, but realistically, at this moment, I'm interested in buy and holds with rental property.

4. Risk taking depends on the situation and what the reports say of incidents past. I'm open to hear just about anything then weigh the options.

Anthony Gayden · Answer

I think the answer to that question is dependent on a number of factors. I can't tell you how to invest your money unless you tell me a few things first.

1. How do you want to invest in real estate? Fix and Flip? Buy and Hold? Residential? Commercial? Land?

I'm a buy and hold investor and I love multi-family properties. As a beginner I started with residential multi-family because it was easy to finance, inexpensive in my area, and offered the best cash flow. I do want to move into commercial multi-family in the future.

2. Where do you want to invest? Urban/Suburban? Rural?

I strongly prefer investing in urban/suburban areas. I feel that there will always be a need for housing in these areas and that they offer the best chances for stability and profit in the housing market. Keeping that in mind, I want to invest in areas with population and job growth, but I am turned off by the barriers to entry in certain markets. It amazes me that a person making six figures would have to rent because they could not afford to buy a home in some markets. That is not the kind of area I want to invest. Those areas are great if you are a high net worth individual already, or if you bought a very long time ago, but if you are just starting out, even with a good income and $100,000 cash, you will have a very hard time entering the market.

3. What are you looking for in an investment? Cash flow? Appreciation? A large lump sum of money?

I am looking for cash flow, and am looking for some appreciation as well, but not in the short term, but in the long term (over 15 - 20 years). I like the thought of using cash flow as a snowball to purchase more properties and create more wealth. I don't like the idea of buying the extremely cheap properties with a lot of cash flow unless you are just starting out with very little money. I also don't like the idea of buying the expensive properties with lots of appreciation and little or no cash flow. I feel there has to be a good balance between the two positions.

4. What are your  personal feelings when it comes to taking risks?

I am very willing to take calculated risks, but I am not a gambler. Keeping that in mind if I focus on the area that I know the best (small multi-family), in the locations I know the best (Tucson and Phoenix), I will be able to analyze a deal effectively and determine if i am able to get the return that I desire.

If I were to suddenly try to do a flip in Sacramento, I probably would lose a ton of money because I know very little about flipping and absolutely nothing about Sacramento.

Joshua Nobile · Answer

Awesome. Thanks for replying guys!

Travis, when you say reserves, do you mean like an emergency fund?

Ryan, how do you determine what a house's ARV is?

$100,000...how would you invest it?

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