Real estate beginners question: What would you do with $200,000?

10 Replies

I would buy 10 single family homes and max out the amount of mortgages that you can have under your name.

10 single family homes out of state will be $70,000 each and cash flow $200/mo in net cash flow.

$15,000 down per property would be $150,000 down to make $2,000 a month in net cash flow.

I would then take that cash flow and use it to pay down the properties over time to eventually own these properties with all cash. 

Originally posted by @Daniel Pickford :

I have $200,000 and I want to turn it into a passive income.
Since it's my first time in the real estate world, what would you recommend to be the best way to start and the best thing to do in my situation?

Read, study, listen then read and study some more. Decide which kind of investor you want to be (SFR, Commercial, Land, Tax Liens, Passive, HML, Multi-Family, Notes, Fix & Flip, Buy & Hold, "Subject To", apartments, duplexes, assisted living, REOs, Foreclosures, Short Sales), etc. Decide how much money you have access to, & the zip codes, city or state you want to focus on. That will determine the next step. Outline where you want to be in five years. Put it all in writing. Start working your plan. There are plenty of people around to help you each step of the way. Personally I wouldn't spend more than a thousand on training and seminars. Most people learn by doing and you can get everything you need to know by partnering with someone once you figure out what kind of investor you want to be.

I would read the other gazillion threads that are the exact same.

I would also not advertise having $200k on a public forum.

Use the money with the BRRRR strategy. Make cash offers to get better deals, rehab, rent, refinance and repeat. I’m on deal #3 of this process and it works.

I would put away some for reserves. It’ll make you look better to credit unions and banks when asking for loans. I’d personally would go a put use them to put some down payments on properties where the numbers makes sense. Maybe even look into commercial. What @Ryan Howell said is also smart. Instead of just doing a buy and hold, fix it up then refinance and then hold it. I would probably do a mix of that and do a flip. All one at a time of course. 

@Daniel Pickford I completely agree with what @Brian Garrett said. Also, when you decide whether you want to be active investor (e.g.,landlord) or passive (e.g., equity partner in syndications), determine what type of properties you want to invest in. Then spend some time educating yourself prior to making any decisions! Talk to others about their strategies and decide what will work best for you!

@Daniel Pickford that depends on a lot of things. How "passive" do you want to be? What is your risk aversion? Are you only interested in your local market or are you open to other markets? Are you pretty firm on one asset class or do you like multiple? Are you okay with that money being tied down for a while or do you need a quick turn around? Are you a self management type of guy or are you okay with giving up some control?

Once you narrow down some of these questions, you'll be able to better answer that question yourself.

Respectfully, I think you are asking the wrong question.  I have an acquaintance who lost $12M in ten years.  I’ve seen people make millions out of nothing.  Having “x” does not translate into “y”.  You can’t just decide to buy “x” to make “y” and poof you are done.  That is a formula for being separated from your money one way or the other.  My best advice SLOW DOWN.  Read, learn, talk to people who know wtf they are talking about.  While you do all that search long and hard for your “why”.  Understand your motivation and your goals.  When you really get to that, the rest will take care of itself. The beauty of knowledge is it can be leveraged. That is, you can get the benefit of someone else’s decades of experience without having to wait decades to get there.  What is hard to replace is judgment and to make a decision about what is best for you, you must first decide what it is you want and why.  Sorry if I don’t just give you an a+ b formula but if you find someone who does, you should probably ignore them.  Good luck.