Need Direction

6 Replies

I have been lurking for a few years here, and have posted a question from time to time, but am closer to being serious about this whole thing. Here is my situation: I have a 40 hour / wk work schedule that is not demanding. I probably "work" 25-30 of those hours each week, and gross 130-150k. After my passive income, I have to come up with probably $700 a month for my family to meet bills (house is paid off). We have 40k cash right now and basically I want to get into real estate - I want to have more passive income! If you were in my shoes, what would you do? Rentals, flipping, commercial etc? Would love to hear your thoughts!

The one component needed in providing a decent response is understanding just exactly where you live? Mid-West, Key West, City Dweller, Peru?

Don't blame you for not wanting to share too much about yourself in profile, but just blindly telling you to invest in something without knowing much more than your income would be irresponsible.

Originally posted by Aaron Pfeffer:
The one component needed in providing a decent response is understanding just exactly where you live? Mid-West, Key West, City Dweller, Peru?

Don't blame you for not wanting to share too much about yourself in profile, but just blindly telling you to invest in something without knowing much more than your income would be irresponsible.

Great Point!

I'd like for the original poster to tell me how to invest in stocks, I have 40K to invest. Should I start with puts or calls, or should I go to green or angel stocks?

Now, if you can help me without looking at my profile, I can help you just as effectively!

You can get some great advice here, but those who assist need to have something to go on, throw us a bone here....Bill

Flipping (or wholesaling, brokering, developing, or managing property) isn't passive. Those are all active jobs, though very much real estate related jobs.

$40K isn't enough, as far as I can tell, to seriously get into commercial. Some of the NNN type commercial properties seem to generate some decent returns, but it seems like you need a million bucks or so to get into a property like that.

I'm not quite sure how to interprete your budget statements. Do you mean you need to come up with an additional $700 a month to make ends meet? Or, that you only need $700 a month out of your $130-150 day job income and have the rest of it left for investment?

If its the former, then you may want to take a run at one of those RE jobs. They take work, but you seem to have the time. Fix and flips should generate 10-15% of the selling price as (fully taxable) profit. If you target $100-200K houses, you would only need to do a few a year to make up that $700. But it will be a job.

SFRs or small multi-s seem up your alley, if its the latter. If you're only using $700 a month out of a $130K a year paycheck, you would have $5000 or more a month to invest. From what people have written here, its entirely possible to find good deals in Houston. Read in the Rental Property forum about the realities of rentals, if you haven't already. You don't have big heating bills there (I lived in Houston in the 80's and 90's), but you have ACs to run and maintain, termites to eat your houses, and killer property taxes. But I think you can find good deals that will have true cash flow even after accounting for the 50% rule. I find bunches of 3BR houses on the MLS under $50K and rentometer says rents of $1000 are on the low side. So, just that very quick and crude check says good deals are possible. With W2 income your borrowing situation is much easier than for someone who's trying to be a self employed landlord. With $40K in cash you have enough for down payments and fix up expenses. Creative techniques like owner financing would help you conserve your cash. If you have $5K a month coming into this process you could accumulate quite a few properties quickly, provided you can get financing. Develop a good relationship with the decision maker at a smaller bank or two. Buying small multis (duplexes, quads) will let you accumulate more units with fewer loans. As you accumulate properties, look at ratcheting up by selling the individual ones and 1031'ing into smaller apartments.

Jon

Hi Jason, another aspect is options. It's very possible to get an option for a thousand, even less. So you could get 40 deals, controling the property with ownership. It's an option to buy. Lease the property when you have a buyer tenant and then give them an option or assign your option with a profit built in. You make money on property you don't own, but control. If you get it down and a good speil going, you could be turning 30 or 40 deals a year!

You still don't have anything listed Jason. Are you a music teacher, a plumber, a stock broker....that gives us some idea where you might "enter" investing. Are you a handyman? Have you ever been in business....any intersts in real estate....what drew you to real estate? Credit OK? Jason, all this will help people assist you. Check out other profiles here on BP! Sorry to be so rough with you, LOL, be sure to thank Jon for his long post for you! There is a vote button at the top right of each post. Good Luck, Bill

Bill, I am in web development and have "decent" credit, though I haven't checked in a while.

I appreciate your straightforwardness, as opposed to being condescending to try to get your point across. As you know, the kind treatment of people commands respect, whereas one who would try and make someone look like a fool on here just to get their point across does not. I mis-labeled you to begin with - your last post appears that I was wrong, thankfully!

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