Hello BiggerPockets forums,
I have been reading these forums for a while now and decided to finally make a post. I will be inheriting about $90,000 in the next month and have been very undecided on how to use it for investments. I live in Colorado Springs so the market is very hot, but SFH prices are quite high, and multi-family is seemingly out of budget.
My original plan was to buy and flip, but I am having second thoughts with the amount of time I am away for work, and with it a long, drawn-out struggle to actually get a great deal that doesn't sell right away.
I am also interested to try investing in a townhouse or a condo, yet most HOAs run pretty high. Townhouses and Condos rent for 1%, yet how much cash flow can realistically be expected with an HOA, loan payments, etc.
I was reading about the BRRR method as well, specifically buying a house here for around 225k and renovating to a predicted value of 285-295k and refinancing also seems like a smart move.
I was hoping to get some advice from some more experienced investors than myself in order to quickly get in the real estate market here and start my portfolio.
Thank you in advance!
If your goal is to create passive income from cash flow, you would make more money in the stock market than in rental property in Colorado Springs. Finding a good deal there, if you could, and rehabbing it could make you some money. Then consider 20% capital gains tax, sales commission, etc. Is it worth it? Maybe. You could pay off $90K in debt. That would increase your monthly cash flow without investing in anything.
@David Bourque what’s your living situation like? Can you house hack? If so, it’s 100% viable to eliminate your monthly housing expense and even get some cash flow (plus the long term amortization/appreciation) if you do it right.
BRRRRing is an option but it’s not easy to find a deal priced low enough where it’s worth it, takes a lot of effort.
I think the house hack strategy makes sense, there are several podcasts on Bigger Pockets about it. Pueblo could also be an option for you.
A few quick questions:
- Do you already own a primary residence in Colorado Springs? If not, I always think your first "investment" should be your primary residence, whether that's a house hacking opportunity with a basement apartment for Airbnb/short-term rentals or just a straight up owner-occupied home.
- Have you talked with a lender? Having that cash is great, but you still need to qualify for the monthly payments and a lender will check out your debt-to-income ratio and other factors to confirm what you can buy.
Not sure how you feel about debt and leverage. Some people are Dave Ramsey devotees and want no debt on the books. Me, I think leveraging capital to buy as many properties as possible is a great use.
If you're buying your primary residence, you can put down as little as 3.5% for an FHA loan or 5% for conventional. If you're buying a pure investment, you need to put down 20% most likely (though some lenders will do 15%). If that's the case, I'd look for a good 4/2 SFH in Colorado Springs and rent it by the room. If you're open to work, you might be able to nab a duplex but again it will require some time and capital to bring it up to speed. Sounds like you don't necessarily want that headache, so maybe shoot for something more turnkey.
I wish you luck!
@Account Closed - The four-plexes are a great way to go in the current market but you're going to need just a bit more than $90k to come in with the 25% down requirement. The other option would be to consider a duplex or triplex and put a bit more than the minimum down to ensure cash flow stability for the long run.