Turnkey or BRRRR with 200k?

Question

Hey,

I am new on the forum and to residential real estate investing.  I have roughly 200k to spend to get started.  Am I better off to pay cash to BRRRR one property or to put 20% down on 5 turnkey properties?  My goal is to build a portfolio as quickly as possible that will eventually replace my 'active' income.  My active income is as a mulitlocation/multidoctor/multispecialty dental practice owner, so I really don't have a lot of 'free' time and I worry about the time committment for BRRRR even though the same 200k could go much farther in the long run.  Any advice would be greatly appreciated.

Thanks!

Jay Hinrichs · Answer

Neither..  if your accredited  just go in with one of the many very good syndicators out there..

BRRRR is HUGELY risky unless your on top of it.

and just buying rental houses is not going to replace your income with max debt.. you would need hundreds of them

Keep making the big dental bucks and sock that money into managed investments.

Or look at NNN deals set up for you..

Jay Hinrichs · Answer

that's the route I have taken these last 20 years..   and many many physicans do the same thing.. there are funds you can go into there are brokers who help you and U can do it on your own..

Luke Roberts · Answer

Thanks for the feedback Fred... that sounds like a great idea.

To expand this subject, are there any of you that would use this money for hard money loans?  Just be the bank and make the money do all the work?

Fred Cannon · Answer

I agree with Jay. You will not make much money if you carry a mortgage.  You could probably buy a couple of 1 bedroom condos for cash.  That is my niche. Very little maintenance (just between the walls) usually very good amenities for the tenant You have an HOA fee but if you compare that to the upkeep of a house with a yard the HOA fee is a pretty good deal. I make about 10–15% annually and that doesn’t include appreciation and tax deductions.  Pick a good complex that has good management onsite.

Luke Roberts · Answer

Thanks everyone for the feedback.  I will look into the syndications and more "passive" REI techniques.

Jonathan Oh · Answer

@Luke Roberts

Given your lack of free time, definitely not BRRRR especially if you're planning to do it long distance.

Brian Medansky · Answer

While this may not be the best thing to do in the long run, what I would personally do is buy the 3-5 turnkeys, making sure to vet the companies extremely well. As you said, you don't have the time to do the management and eventually those properties will get paid off, and you'll have 5 paid off rentals that can help you buy even more.

Turnkey or BRRRR with 200k?

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