What would you do with $100k?

54 Replies

Hello all! I did join the pro membership but decided to post this question here since I’m new to Real Estate investing. So my question is this, if you had $100k to get started, and your goal was to get to $4k per month cash flow as quickly as possible.....what would your strategy be? I live in SoCal, but more than likely am looking to invest out of state, since my $100k won’t go far here. I simply want to replace my income, because my knees can’t take my line of work much more (I’m a Respiratory Therapist)....and I would like more time to my family. I will be attending local REI meetings starting this month, but at this point have zero connections. Thanks in advance!

@Mike Williams   Hi Mike,

I think the fastest way for you to get 4,000 monthly income off 100k is to buy rentals under market value, and then find a bank that will allow you to cash out refinance, preferably with no appraisal, just electronic value under a year. For example in my market we have a bank that does lines of credits for high credit worthy individuals off of flips and rentals up to 75-80% of value even if you just purchased the property. So for example a duplex we recently purchased for $131,000, that is renting for $2000 we put 10,000 of capex into the home and the bank had an electronic value of 169k. After a site visit which we did not pay for to get a BPO, the bank reassessed the value at 189k and we were able to take out all the money we put for the down payment and capital improvements and an additional 10,000 that we used to buy another investment. This will allow you to use the BRRR strategy. If you buy turnkey, you could also buy 2-4 properties with 100k and use that cashflow to buy more properties as well but you will run out of money to buy properties because the down payment will still be in the property. If you'd like to invest in the Michigan market, we have invested throughout the state so feel free to reach out.

Buy the new Long Distance Real Estate Investing book.

I do not know about other places, but Texas and Oklahoma you can still get good returns for your money.  

Let me know if you are interested in Central Texas or Oklahoma City

Originally posted by @Mike Williams :
Hello all!

I did join the pro membership but decided to post this question here since I’m new to Real Estate investing.

So my question is this, if you had $100k to get started, and your goal was to get to $4k per month cash flow as quickly as possible.....what would your strategy be?

I live in SoCal, but more than likely am looking to invest out of state, since my $100k won’t go far here. I simply want to replace my income, because my knees can’t take my line of work much more (I’m a Respiratory Therapist)....and I would like more time to my family.

I will be attending local REI meetings starting this month, but at this point have zero connections.

Thanks in advance!

 Leverage (4) turnkey homes, get some income rolling on them, then buy another - until you hit your goal

Steven Gesis, Developer
440-374-8403

Thank you all, and yes I already received that book and have begun reading it.

Definitely interested in any area that works.

@Mike Williams I’d suggest out of state investing an area where you can jump into 3 possibly 4 turn key rentals in a cash flow market like Memphis. As someone stated previously, you could do a cash out refi on one SFH and double your income while collecting rent from your other cash flowing rentals. I’m a local here in Memphis, feel free to reach out if you’re interested in some options. Wish you the best in your success!

Might be kind of tough to get to $4k to start. I see it as buying properties around $70k. 70x23% down (including closing costs) = $16k. $100k/16 = 6.25. If you can find some houses that net you $300/month each, that's $1800.

Originally posted by @Mike Williams :
Hello all!

I did join the pro membership but decided to post this question here since I’m new to Real Estate investing.

So my question is this, if you had $100k to get started, and your goal was to get to $4k per month cash flow as quickly as possible.....what would your strategy be?

I live in SoCal, but more than likely am looking to invest out of state, since my $100k won’t go far here. I simply want to replace my income, because my knees can’t take my line of work much more (I’m a Respiratory Therapist)....and I would like more time to my family.

I will be attending local REI meetings starting this month, but at this point have zero connections.

Thanks in advance!

 Buy Subject To in Phoenix like i do. End of discussion, piece of cake.

Hey Mike! I have the same problem with SoCal!

Ive been looking into Cleveland. From what I can tell it seems to have stabled out. Still has room for the house prices to come up to what they used to sell at. My problem is trying to find people in the local market to work with. Partners, Contractors, Managers. 

Best of luck!

@Mike Williams The Midwest tend to be your highest cash flow markets but even there, you'd be hard pressed to generate $4000/mth on $100K. To get there as quickly as possible, you'll need to invest in multi family. A typical single family in markets like Indianapolis and Kansas City which is where I focus on will give you about $200-$250/mth assuming you are financing. To achieve your $4000/mth goal, you'd need about 20 single family homes. 

@Mike Williams  Welcome to BP!

With an initial investment of 100k to generate 48k annualized, that 48% return on your initial capital. This is a really high expectation especially if you are just getting your feet weet + investing long distance. 

Some comments below suggest buying turnkey, but even with that, 4k/month is still high. 

You may want to start with the  long distance investing book. Learning yourself can be very useful. 

Expectations can lead to disappointments. 

Hope this helps. Goodluck. Thanks! - Ola

@Mike S. New investor here, would like to know more about your comment earlier.. can you elaborate? 

@Mike Williams $4k/month cash flow is $48k/cash flow per year which equals 48% ROI. Just to put that into context Warren Buffet's annual return (1965-2012) averages out to be ~20%.

There will be a lot of folks who claim they can get you this return. But in my experience, no legitimate operator can reasonably provide such returns. To be honest, I don't think even drugs offer these kinds of margins (could be wrong, lack of experience). 

Before investing, your best bet would be to decide your goals, objectives and constraints (some of which you have pointed out). SoCal is an expensive market but you don't want to compound one problem (expensive market) with another (crappy rentals in the middle of nowhere). 

You're on the right path by attending local REI meetings. Keep at it, network with local investors and understand what they're doing. Once you become a regular, more people will be inclined to share their thoughts.

Keep us posted and best of luck!

Thanks everyone, I should clarify....I don’t mean to say I want to generate $4k per mo off my $100k alone, as I know that would be expecting way too much. I just meant that is what I’m starting out with and my goal in passive income is $4k eventually.

Sorry if I confused anyone. And I have been reading that book....definitely a help!

@Mike Williams

you can invest in multi family in inland empire with 100k down. duplex to quadplex are available in Hemet, San jacinto, Lake Elsinore, San Bernadino etc

Contact @Aaron Klatt to set you up on MLS listing. He is afellow investor and a realtor as well

@Lauren Weiss @Mike Williams   

Your question: "New investor here, would like to know more about your comment earlier.. can you elaborate? "

Sure. You can buy a house by taking over someone's loan. You don't have to qualify for bank financing. When you simply take over a loan it is called "Subject To" and then you own the house (proper paperwork being done of course). If their loan is low and they have some equity, you do a "Wrap" and include the equity in the agreement.

For instance, if Sally has a house that is worth $200,000 and has no equity and the payment is $1,200 you pay the closing costs, give Sally a little moving money and take over the property and start making the $1,200 payment. For under $25k you now own a property and rent it out. On average I get about $500 per month per house extra cash flow. In my situation, I actually sell it to a new buyer and get $25,000 as a down payment and use that money to buy the next property. No banks, no fuss, no muss. Find "off market" properties and you are all set. It is a little more advanced technique and there are those on BP who say "pausssshah, you can't do that", (face of disbelief :-O as in yikes, did he really pull that off?) But, I've been doing these for twenty years. Trouble is most people can't get their mind around the financing because THEY wouldn't sell that way. But you know, some people water ski, some people ride horses and some people don't do either. People shouldn't confuse what *they* would do in a given situation versus what someone else will do.

@Mike Williams The fastest way to get to 4k per month is doing the brrr method when buying rental properties. On top of that you can get more cash flow with duplexes or fourplexs. For example, buy a duplex for 80k, put 20k into the property. Then rent it out for 1300 per month. refinance it at a 130k to 135k value take out a 95k loan to get your money back and invest again. You should be able to create 400 per month. The tough part is getting the new appraised value before 12 months is up. Most lenders make you wait 12 months to use the new appraised value. When  you find a portfolio lender that uses the new appraised value before 12 months, you can purchase 2 properties per year then hit your goal of 4k per year in 5 years. You can find properties in this price range in Kansas City. 

Gordon Cuffe, Lender in CA (#1037464)
916-261-2381

BRRRR

And only if you purchase right, and get built in equity. You can do it with commitment and patience.

@Mike S. Thanks for the newbie friendly response! That doesn't sound too bad at all. Is this the situation where I've heard in a worst case scenario the bank can call the loan due? Are Banks generally ok with this scenario? 

@Mike S. Where do you find these people who will sell subject to?

@Lauren Weiss @Jerry Murphy  

You don't involve the bank. There is a Due on Sale clause that the banks can use and I heard one was indeed called due some 10 years ago. If the bank does exercise the DOS (which is very rare) they have to give you time to sell, refinance or correct the situation.

Here is a sample someone posted of how it works: Click on te pics to enlarge. If you want more info you can email 

https://www.biggerpockets.com/forums/311/topics/466533-buy-and-hold-vs-subject-to-how-do-they-compare-actual-deal

@Mike Williams Hey Mike, hope you had a great 2017, and looks like your 2018 will be fun filled getting involved with real estate. Being new to real estate I would not recommend investing out of state, just my two cents. I believe you have enough diversity down in the LA area where you could find something. One idea, this is what I did with 150k in my pocket, is partner up with a good friend and started flipping properties to grow the money to then put into multifamilies. We started with a 315k property in the Bay Area and have grown to much larger projects. We now pick and choose what if any we want to hold, and as of now we only have one holding. We realized that we can make the money grow a little better flipping rather than buying and holding. If you are dead set on a buy and hold you could probably spend some money on marketing to find an off market property and pick and choose what you want to keep and sell what you don’t. Just an idea, if you want to chat pm me.

California is tough, especially if you want to buy and hold. But if there's a market near you that you can buy and hold a property that cash flows (even a little), I would look close to home. If not, consider investing out-of-state, just be really, really careful when doing that. And of course, you can always flip.

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