​What Do I Do With $300k Post Tax?

42 Replies

I have some money and I'm not sure what to do with it in re. Since I know this all depends on my goals and what I'm willing to do this is it (pls don't ridicule me for my goals lol):

⦁I want to be somewhat passive in the investment. I don't care if I can't be 100% passive. I'm fine putting in work but don't want to do any flipping. More like value add buy and hold or something

⦁Down the line I want to net at least $100k/mo

⦁I have all the time in the world

Now the second one has been making me face an issue for months. Obviously you can make money anywhere in re but with my goals I'm not sure where it'd be most effective to invest with my current goals. Honestly just like to hear some different opinions. That's what I love about BP; there's soooo many different ways to accomplish your goals. I'm just trying to find my way.

But for example, I don't want to buy and hold hundreds or thousands of sfh's to accomplish my goal. I want to do something that fits my goals and will be fastest way there. And I'm not thinking overnight or next year or anything like that. Like if it took 20 years to net that with sfh's but there's an option more suited for my goals that'll take 10. I hope that makes sense.

I've narrowed it down to buy and hold multifamily because of the scalability. Still, I'm wondering if there's anyone where I want to be and has any advice on what they would do if they had to restart with only $300k and had the same goals as I do. Or anyone at all who would just like to chime in.

Trust me, I know that much isn't nearly enough for my goals. It's just my starting point. I still wonder if multfamily would be my best option or perhaps even short term lending. I honestly have never researched anything on being a short term lender so I don't know how that is. 

Any thoughts would be appreciated

cheers

If you have 300k, I’d get into value add apartment complexes or note investing. Also FYI if you want to make 100k a month in REI you’re going to need a lot more money than 300k.

At a ten percent return, you’d need 12M and at 20 percent return you’d need 6M

Originally posted by @Ray Hernandez :

I have some money and I'm not sure what to do with it in re. Since I know this all depends on my goals and what I'm willing to do this is it (pls don't ridicule me for my goals lol):

⦁I want to be somewhat passive in the investment. I don't care if I can't be 100% passive. I'm fine putting in work but don't want to do any flipping. More like value add buy and hold or something

⦁Down the line I want to net at least $100k/mo

⦁I have all the time in the world

Now the second one has been making me face an issue for months. Obviously you can make money anywhere in re but with my goals I'm not sure where it'd be most effective to invest with my current goals. Honestly just like to hear some different opinions. That's what I love about BP; there's soooo many different ways to accomplish your goals. I'm just trying to find my way.

But for example, I don't want to buy and hold hundreds or thousands of sfh's to accomplish my goal. I want to do something that fits my goals and will be fastest way there. And I'm not thinking overnight or next year or anything like that. Like if it took 20 years to net that with sfh's but there's an option more suited for my goals that'll take 10. I hope that makes sense.

I've narrowed it down to buy and hold multifamily because of the scalability. Still, I'm wondering if there's anyone where I want to be and has any advice on what they would do if they had to restart with only $300k and had the same goals as I do. Or anyone at all who would just like to chime in.

Trust me, I know that much isn't nearly enough for my goals. It's just my starting point. I still wonder if multfamily would be my best option or perhaps even short term lending. I honestly have never researched anything on being a short term lender so I don't know how that is. 

Any thoughts would be appreciated

cheers

You make some Interesting comments:  "⦁I have all the time in the world" and "Obviously you can make money anywhere in re" - - - - If it was simply everybody would do it. ;-)

 If you awake to the fact that you don't "really" have "all the time in the world" and that real estate investing requires time, smarts and hard work, get back to us. 

Here is the reality from the Wall Street Journal

https://www.wsj.com/articles/my-10-year-odyssey-th...

My 10-Year Odyssey Through America’s Housing Crisis

Misery over real estate hasn’t ended—2.5 million homes are still worth less than their mortgages. Here’s the story of one Wall Street Journal reporter’s upside-down American dream.

@Ray Hernandez my suggestion is:

$100k into a 2-4 unit buy and hold

$100k into ETFs that can get you 10%/year

$100k into one or two trusted flipper(s) who can get you 20%/year

Onward!

sjw

Originally posted by @Ray Hernandez :

I have some money and I'm not sure what to do with it in re. Since I know this all depends on my goals and what I'm willing to do this is it (pls don't ridicule me for my goals lol):

⦁I want to be somewhat passive in the investment. I don't care if I can't be 100% passive. I'm fine putting in work but don't want to do any flipping. More like value add buy and hold or something

⦁Down the line I want to net at least $100k/mo

⦁I have all the time in the world

Now the second one has been making me face an issue for months. Obviously you can make money anywhere in re but with my goals I'm not sure where it'd be most effective to invest with my current goals. Honestly just like to hear some different opinions. That's what I love about BP; there's soooo many different ways to accomplish your goals. I'm just trying to find my way.

But for example, I don't want to buy and hold hundreds or thousands of sfh's to accomplish my goal. I want to do something that fits my goals and will be fastest way there. And I'm not thinking overnight or next year or anything like that. Like if it took 20 years to net that with sfh's but there's an option more suited for my goals that'll take 10. I hope that makes sense.

I've narrowed it down to buy and hold multifamily because of the scalability. Still, I'm wondering if there's anyone where I want to be and has any advice on what they would do if they had to restart with only $300k and had the same goals as I do. Or anyone at all who would just like to chime in.

Trust me, I know that much isn't nearly enough for my goals. It's just my starting point. I still wonder if multfamily would be my best option or perhaps even short term lending. I honestly have never researched anything on being a short term lender so I don't know how that is. 

Any thoughts would be appreciated

cheers

I suggest you set SMART goals.  Specific,-Measurable, Achievable, Realistic, and Time Bound. Looks like you have very good seed money, but quite honestly not enough for $100K a month to materialize. Can you get there in another 15-20 yrs.. Sure.. Why not.  But only if you focus on a shorter goal. At this time $100K/ month in immediate future is just a fantasy

With about $300,000 seed money, you should be able to get loan over  $1 Million. Most lenders will require you to keep reserves, so although 20% of $1.5 MM is $300,000 you won't be getting the loan for $1.5 MM.  But anything over $1 MM should allow you to shop for a multifamily apartment.  With 10% Cap rate, you should be able to make way over 6 figures every year.   If you play it right, and buy it right, you should be able to 1031 your proceeds from one deal to another, thus inching closer to your final goal. 

I recommend that you speak with a financial advisor before you do anything. You should look at your whole financial picture, create an asset allocation strategy/plan, and then determine if you should invest the whole 300k in real estate. Think diversification. Good luck and let me know if I can be of assistance.  

With that amount of starting capital and your goal of being passive, I'd recommend looking in to value-add commercial MF plays with a reputable syndicator. This type of investment matches your goal of being passive, as it's nearly 100% passive, and you could also diversify with investments in a handful of markets/with a number of syndicators. Of course, most syndicators require that their investors are accredited (depending on how the offering is structured with the SEC), but you can sometimes find deals in which non-accredited investors can participate. A few of my blogs to get your wheels turning:

What is Apartment Syndication?

8 Reasons Apartment Syndication is an Appealing Investment Vehicle

Recipe for Successfully Investing in Mult-Family Syndication

I'd be happy to discuss further so don't hesitate to reach out!

@Ray Hernandez it's pretty simple (but not easy!). To get 100k/mo (1.2m/year) in cash flow you'll need approx 10m in equity earning a 12% return. Apartment syndication are a great vehicle for putting capital to work however to reach your goal you'll need to earn or create more capital.  In other words you'll need to use your time and effort to generate more income streams (job, businesses, etc) that you can funnel into income producing assets like apartments. Make sense?

Peel back a layer or two on any great real estate investor and you'll find other related (books, courses, management company, putting the deals together, flips, development, etc) or unrelated (job, other businesses) income streams that they funneled into their income producing assets. 

@Caleb Heimsoth Yeah value add complexes does seem the way to go. And as I stated in my original post "I know that much isn't nearly enough for my goals. It's just my starting point."

@Mike S. I know there's wealth to be made in all aspects of real estate. There's just specific avenues I prefer. And I do really have all the time in the world lol. I don't work a day job, did affiliate marketing for awhile and I have all the time in the world to focus on re if I want to.

@Chinmay J. Yeah I know it's not enough. I stated in the post that it isn't nearly enough, it's just my start. And I wasn't looking for it in the immediate future. 

I was thinking of getting what I can now and when the time comes 1031 into something bigger but do you know which markets are looking good for multifamily right now? 

@John Thedford Very interested in that. I thought of that just barely a few days ago I've never even looked it up before and have no ideas of what to expect. Any good articles you'd recommend for starting?

    Originally posted by @Ray Hernandez :

    @Chinmay J. Yeah I know it's not enough. I stated in the post that it isn't nearly enough, it's just my start. And I wasn't looking for it in the immediate future.

    I was thinking of getting what I can now and when the time comes 1031 into something bigger but do you know which markets are looking good for multifamily right now?

    I don't have a ready made answer for you, but some of the things I would consider buying are:

    • Low Crime (B neighborhoods)
    • Stable jobs in and around neighborhood. A nice blue collar area would be good. Universities are good
    • Political Climate (I like Red over Blue) I will prefer not to buy in California or New York, New Jersey, Maryland. There is a reason why people are moving from CA and NY to TX and AL
    • Low Taxes which is an offshoot of political climate for most parts
    • Strong laws in favor of Landlords (Again an offshoot of Political Climate)
    • I personally don't want to buy something on the other coast, as traveling there can be a hassle. I like to be more involved. I am not a 100% hands off kind of guy. So if that's important to you, you should look accordingly. Couple of hrs by plane would allow you to invest in midwest.
    • Your ability to put together a team
      • Realtor
      • PM
      • Lender
      • Attorney
Originally posted by @Ray Hernandez :

I have some money and I'm not sure what to do with it in re. Since I know this all depends on my goals and what I'm willing to do this is it (pls don't ridicule me for my goals lol):

⦁I want to be somewhat passive in the investment. I don't care if I can't be 100% passive. I'm fine putting in work but don't want to do any flipping. More like value add buy and hold or something

⦁Down the line I want to net at least $100k/mo

⦁I have all the time in the world

Now the second one has been making me face an issue for months. Obviously you can make money anywhere in re but with my goals I'm not sure where it'd be most effective to invest with my current goals. Honestly just like to hear some different opinions. That's what I love about BP; there's soooo many different ways to accomplish your goals. I'm just trying to find my way.

But for example, I don't want to buy and hold hundreds or thousands of sfh's to accomplish my goal. I want to do something that fits my goals and will be fastest way there. And I'm not thinking overnight or next year or anything like that. Like if it took 20 years to net that with sfh's but there's an option more suited for my goals that'll take 10. I hope that makes sense.

I've narrowed it down to buy and hold multifamily because of the scalability. Still, I'm wondering if there's anyone where I want to be and has any advice on what they would do if they had to restart with only $300k and had the same goals as I do. Or anyone at all who would just like to chime in.

Trust me, I know that much isn't nearly enough for my goals. It's just my starting point. I still wonder if multfamily would be my best option or perhaps even short term lending. I honestly have never researched anything on being a short term lender so I don't know how that is. 

Any thoughts would be appreciated

cheers

Ray,

I would not limit your strategy to a single approach or strategy, keep it diversified so that during market downturns you limit your downside risk.

A diversified real estate portfolio would contain residential, public commercial, and private commercial real estate. The portfolio should also contain equity, different types of debt, and be geographically diversified. There are plenty of real estate fund managers out there that can help give you diversification and would be great for you to partner with. Investing in these funds and would also help you accomplish your income goals while still being a passive investor.

I would partner with a fund manager that:

  • You can trust;
  • That provides transparency;
  • That also has equity in the same investment(s);
  • That has a proven track record of performance;
  • Can efficiently diversify your private commercial real estate allocation into different properties/regional markets to ultimately minimize your risk.

-Vince

@Ray Hernandez so I'm biased, but I think multifamily value-add/opportunistic is the way to go. I think you should diversify between different types of buildings and locations though. I'm also assuming you have other liquid assets to offset the illiquidity of equity investments in real estate.

Doing some rough math of you goal of $100k income a month, I'm assuming you mean Cash on Cash return every year and not annualized return. If you did consecutive 5 year deals that netted you an annualized return of 15%, it would take you 35 years to get over $15 million which would net you $100k a month at 8% cash on cash. If you did the same thing, but deals every 3 years, then it would take you roughly 33 years to get over $15 million in value and net $100k a month at 8%.

8% cash on cash isn't a crazy return but you might get a little lower or higher depending upon what type of asset you go with. 15% annualized once the building is sold isn't unheard of either and is a good estimate in my opinion, but obviously could be higher or lower. Also, this doesn't take into account taxes needing to be paid for capital gains, any time lapse between deals, and other factors. 

If you want to know how I did that quickly let me know or if you just want to pick my brain feel free.

@Ivan Barratt Yeah I'll definitely need more capital for the big bucks. I can pull a couple hundred grand more if necessary if I know for sure what to do.

But like you mentioned, apartment syndication is a great way to go.

@Todd Dexheimer Selecting one thing is the problem I'm having lol. I'm a bit overwhelmed but I am leaning more towards multifamily value add. Refi then reinvest is a great way to achieve that but I just don't have the expertise to know what to look for.

@Chinmay J. That's a ton of info and more than I was expecting, thanks! :) I'll make sure to consider all that and look into it all.

@Jo-Ann Lapin Just recently I'd thought about it so I really don't know much about it. I don't know what returns are good/bad or anything else to expect but I am super interested in it

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