Advice on how to invest next

7 Replies

Hi BP! This site gives great advice and I could sure use some. I'm going to be selling my house soon and looking for best way to reinvest the money elsewhere, probably in Idaho. We currently live in socal and its to expensive for us to invest here. Hypothetically if you guys had 150-200k how would you try to use it to maximize biggest returns? I'm looking to change careers and start in real estate. I'm unsure if i want to use it to fix/flip a couple houses or spread it out to buy as many properties as possible???  I know its not much but trying to figure out how to flip the  profits off our current home. Any and all advice appreciated! Glad to be a part of BP!

Originally posted by @Thomas M. :

Hi BP! This site gives great advice and I could sure use some. I'm going to be selling my house soon and looking for best way to reinvest the money elsewhere, probably in Idaho. We currently live in socal and its to expensive for us to invest here. Hypothetically if you guys had 150-200k how would you try to use it to maximize biggest returns? I'm looking to change careers and start in real estate. I'm unsure if i want to use it to fix/flip a couple houses or spread it out to buy as many properties as possible???  I know its not much but trying to figure out how to flip the  profits off our current home. Any and all advice appreciated! Glad to be a part of BP!

Hi Thomas, pleased to meet you.

First, 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. Drop me a line if I can help.

Here is how I do what you are wanting to do . . .

https://www.biggerpockets.com/forums/600/topics/584916-average-cash-flow-per-door-in-phoenix-metro-area

Speaking solely from my own perspective here. I'd buy as many small multifamily properties as I could reasonably manage, with a percentage of the cash reserved for repairs/touch-ups of said properties.

This accomplishes two goals:
The money draws in the greatest cash flow possible, and
You don't accidentally over-leverage your holdings.

Let's say you can afford 3 duplexes at $150K total in, with $25K held back for repairs. 6 doors total. If one unit's tenants leave in the middle of the night, you're out 16.667% of net cash flow that month. Hurts, but not crippling.

Contrast this to buying 3 SFHs for the same amount. If one tenant leaves, you're now out 33% of net cash flow. That hurts a lot more.

Also, I did a little bit of research on Idaho a few months back. Decided not to pursue any investments there, as the numbers seemed a little off-balance. (I could easily be wrong, as I do not live in the area.) If I had $150-200K, I'd look at buying more in Ohio cities, the Phoenix metro, Pittsburgh, and maybe Detroit. Lower down payments, lower expenses, better ROI.

Hope that helps. Best of luck.

Originally posted by @Chris Williams :

Speaking solely from my own perspective here. I'd buy as many small multifamily properties as I could reasonably manage, with a percentage of the cash reserved for repairs/touch-ups of said properties.

This accomplishes two goals:
The money draws in the greatest cash flow possible, and
You don't accidentally over-leverage your holdings.

Let's say you can afford 3 duplexes at $150K total in, with $25K held back for repairs. 6 doors total. If one unit's tenants leave in the middle of the night, you're out 16.667% of net cash flow that month. Hurts, but not crippling.

Contrast this to buying 3 SFHs for the same amount. If one tenant leaves, you're now out 33% of net cash flow. That hurts a lot more.

Also, I did a little bit of research on Idaho a few months back. Decided not to pursue any investments there, as the numbers seemed a little off-balance. (I could easily be wrong, as I do not live in the area.) If I had $150-200K, I'd look at buying more in Ohio cities, the Phoenix metro, Pittsburgh, and maybe Detroit. Lower down payments, lower expenses, better ROI.

Hope that helps. Best of luck.

 Thanks Chris, what do you mean about idaho numbers being off balance????

I'll look into those areas you mentioned. 

Originally posted by Account Closed:
Originally posted by @Thomas M.:

Hi BP! This site gives great advice and I could sure use some. I'm going to be selling my house soon and looking for best way to reinvest the money elsewhere, probably in Idaho. We currently live in socal and its to expensive for us to invest here. Hypothetically if you guys had 150-200k how would you try to use it to maximize biggest returns? I'm looking to change careers and start in real estate. I'm unsure if i want to use it to fix/flip a couple houses or spread it out to buy as many properties as possible???  I know its not much but trying to figure out how to flip the  profits off our current home. Any and all advice appreciated! Glad to be a part of BP!

Hi Thomas, pleased to meet you.

First, 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. Drop me a line if I can help.

Here is how I do what you are wanting to do . . .

https://www.biggerpockets.com/forums/600/topics/584916-average-cash-flow-per-door-in-phoenix-metro-area

 Thanks Mike, you make good pionts there. I need to do some researching to see which investment strategy fits us best. Thanks for your input

I remember comparing the Boise area to other West Coast areas. I looked for a lower overall investment, but didn't find it. Now, I could have just done the research wrong; I'm nowhere near experienced to say. But I could find better numbers elsewhere, and so I looked elsewhere. Grain of salt.

@Thomas M. -Congrats on starting the journey.  Yes-  I agree with Account Closed -  totally depends on what your end goals are and what areas you want to focus on.   I would personally use the $200,000 for downpayments on multiple properties for long term acquisitions.   Best to you!

@Thomas M. It all depends on what your investing goals, strengths and passions are at. You can blow the money on an investment you don't care about or understand or spread them out over a few and try out various options. Personally, I'd say you should research what you like, and where you feel your personality fits best. There's a myriad of options under the umbrella of Real Estate Investing. 

If this is your first rodeo, I might recommend just starting out small. Find a "good deal", that even if you own your own home, target a place that is in an area you could stand to live in, and buy the ugliest house in the best neighborhood. It was good enough for Grandma and Mr Nickerson, it'll work for you. :) That will give you some first hand knowledge of analyzing deals and applying them, and if if you don't get a home run out of the gate, at least you have a nice place after the rehab to live. Lessons learned that won't break the bank (if it's a truly 100% investment property.) 

Knowledge is definitely your best first step. Have you tried this book list?  the Investing Book List or this Ultimate Guide to Real Estate Investing yet? It's a good list, but the book list I'm surprised they didn't list William Nickerson's "How I Turned $1k into a Million in Real Estate in My Spare Time" which I consider THE classic and upon which most current RE gurus have based their teachings on. In martial arts they always taught us to learn and master the basics first, and Nickerson teaches the only method that has stood the test of time, 50+ years and still good advice (though the tax advice you can obviously skip... :)

Also, a good sanity check is T Reeds list of gurus and his BS tests that he's done on each. It's a good way to double check you're not over drinking the kool-aide of any one guru.

Happy investing! Let me know if you need any advice on the Phoenix Metro area, more than happy to help.