44 Years Old w/ $250,000 to Invest

Investor · Indianapolis, IN · Member since 2015 · 126 posts · 141 votes

6y

Kasey,

I'm a retired attorney (44 years old) and it sounds like I'm where you want to be. As you will find, there are tons of different niches. What I did was I bought single family homes to rent. I bought them all to be located on my typical drive to work so that I could stop by on my way to or way home from my legal job and self manage the rentals. Eventually, I acquired enough to quit. It didn't fully replace my income, but it was enough.

With that seed capital, I'd buy a house using the cash (if you can do so in your market), do any needed repairs, and then I'd use delayed financing to get a significant portion of the cash back out. I am married, so I put a number of houses only in my name and then a number of houses only in my wife's name. That way, we could get 10 conforming loans each.

3 Reply

Account Closed

Property Manager · Alpharetta, GA · Member since 2018 · 163 posts · 117 votes

6y

@Kasey Libby Welcome to real estate. I'm a PM in Alpharetta, we're neighbors. Hit me up if you'd like to connect, I'm still pretty new in my journey too, and although not an attorney, the end goal is the same. There are also Atlanta based groups out there for networking and knowledge. Good luck!

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Courtney Buck

Investor · Alpharetta GA and Destin, FL · Member since 2020 · 68 posts · 55 votes

6y

@Kasey Libby Hi Kasey, I live in Alpharetta, GA. I work for the CDC and have been real estate investing for 4 years. I started with single family home but switched to multifamily last year. I just closed on 176 units in Montgomery recently. I can share my journey if you are interested. Thanks!!

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Craig Sloan

Member since 2018 · 200 posts · 123 votes

6y

@Kasey Libby congrats on your life changing decision. I'm a former public school administrator who was able to replace his income through real estate and I now have the time freedom you are seeking. It took me several years to be able to replace my income but I wasn't starting with the seed money that you have. Being an attorney has it's advantages. Sounds like you have a great start. You can do it. Keep learning and keep working. In your situation I would look for several deals. I don't know the Atlanta market well but I'll bet you use your $250,000 to fund several deals. Look for cashflowing properties in good neighborhoods. I'm a fan of multi-family myself. Maybe start with small multi-family and transition to larger properties as your cashflow and experience allow.

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Theresa HarrisPro Member

Member since 2019 · 15k+ posts · 11k+ votes

6y

I would decide what you want to do: long term rentals, single family, multifamily, etc. Find out how much you can borrow and put down as little as possible on each of the rentals, let the tenants pay the mortgage and other expenses. I would start with one place and gradually add others. This gives you a chance to see if this is something you want to do and learn from your experience.

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Jacob Blackett

Specialist · Columbus, OH · Member since 2012 · 176 posts · 98 votes

6y

@Kasey Libby If you're interested in being hands on, and since you're new to the game, you're ideal bet would be to JV with someone more experienced. Ideally, you could find someone who is experienced and willing to put in money 50/50 and share profits 50/50 (or close to it) depending upon responsibilities.

Another aspect would be to invest WITH experienced investors in a syndication. The benefits would be to offset risk by investing with an experienced group, along with less responsibilities since you'd be in a truly passive role. Cash on cash returns of 8% to 10% are pretty standard, then overall annualized returns of 15%+ when the property is eventually sold.

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Keith Perkins

Member since 2019 · 59 posts · 31 votes

6y

@Kasey Libby You really need to ask yourself how hands on you would like to be. I would suggest spent a significant amount of time networking to find which niche you would personally like and then slowly move in that direction. I wouldn't throw the entire amount at something unless I was leveraging my cash to get myself into a better deal than otherwise I could use bank leverage I.E. buying a distressed property that wouldn't qualify for a bank loan.

1 Reply

David BarnettPro Member

Rental Property Investor · Cambridge, MA · Member since 2016 · 634 posts · 415 votes

6y

@Kasey Libby Just wanted to say congrats on having such a sizeable war chest to invest. I would recommend starting out in a smaller deal to get your feet wet. I'm a little more risk adverse, and think that a first smaller deal helps inform future investments. Worst possible scenario is putting all the money into one/two investment and then go bust.

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Jennifer D.

Investor · LA - Honolulu - Reno - Atlanta - Melbourne (Australia) · Member since 2020 · 35 posts · 11 votes

6y

@Kasey Libby, I am 42 and got started two years ago, investing in Atlanta. We had enough capital that getting into a great, cash-flowing property was not hard. However, knowing what I know now, we could have leveraged our cash differently. As a person with a good wage income and significant initial capital, there are two books that have been very useful to me -- but would have been even more useful if I'd listened to them when I was where you are. After listening to these, I realise we got a bit lucky. I am now working on my next deal, and I don't want to rely on luck. I think these books will help. I listened to both as audiobooks:

The Book on Advanced Tax Strategies: Cracking the Code for Savvy Real Estate Investors, By: Amanda Han , Matthew MacFarland

Buy, Rehab, Rent, Refinance, Repeat: The BRRRR Rental Property Investment Strategy Made Simple, By: David M Greene.

Also, I have not tested this one yet, but I have a feeling it's going to be very helpful:

The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property, By: J Scott , Mark Ferguson , Carol Scott

Ping me if you want to chat. I am happy to share our experiences.

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Samuel Pentowski

Member since 2019 · 33 posts · 41 votes

6y

With so much liquid you could actually buy into the stock market right now and that would be a far quicker use of a significant chunk of that money for gains. Almost the entirety of the stock market is on sale with many almost 50% cheaper than usual. That means quality dividend stocks are now providing 4-7% returns on dividends alone and the stock market will likely return an additional ~33% within a year as the market recovers. That is far faster and greater returns in the short term than REI will provide at this moment so is definitely something to consider. You may then leave that money alone and switch to REI after stocks come back quickly as the potential returns would drop as the market recovers. This is also a very safe thing to do as even if the market depresses further it will rebound sharply likely by Q1 or Q2 2021 which will likely double your money.

Example; I bought Wells Fargo (WFC), as it's a quality bank stock and it is now providing over 7% dividends alone. That stock will almost certainly rebound 50% at least once the market recovers after this COVID fiasco, which will nearly double my money in a single year and lock in my 7% dividend returns as well, a good deal. Say you do the same using 200k.

WFC price (or equivalent dividend producer) is $28.38 a share, down from over $50 pre crisis. You can get 7047 shares using 200k. Assuming a rebound to $42 in a year (in line with analysts projections) your 7047 shares are now worth $295,974. Each share offers $0.51 dividend/quarter so every quarter you get $3,593.97 or $14,375.88/year before tax. Those dividends are in addition to your projected $95,974 gain in share price in a single year for a grand total of $119,349 profit on your 200k purchase in a single year. You will not find profits like this in the stock market often but the stock market is full of these deals right now, just like 2008/2009 was for foreclosures.

A hybrid strategy to that is use 50k for a down payment on a 4plex using FHA loan and house hack that to provide near-zero living expenses and/or a small profit while eliminating housing expense. Dump the other 200k into quality dividend stocks (like WFC or similar as I mentioned above) and then your stock market money will likely rebound quickly come Q1 or Q2 2021 and you'll also gain the exposure you desire using REI. Then you can either re-invest those dividends or hold onto a years worth of dividends in order to re-invest in a 2nd property of some kind and you wouldn't even need to add money from your job. All of that while showing a paper net worth of over 400k (following projections and 4plex equity) in a single year off of your 250k investments. I wish I had that much capital as that is exactly what I would do with 250k.

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Jingru Sui

Real Estate Agent · Atlanta, GA · Member since 2014 · 683 posts · 317 votes

6y

Originally posted by @Courtney Buck:

@Kasey Libby Hi Kasey, I live in Alpharetta, GA. I work for the CDC and have been real estate investing for 4 years. I started with single family home but switched to multifamily last year. I just closed on 176 units in Montgomery recently. I can share my journey if you are interested. Thanks!!

I'd like to connect too. How do you find the 176 units in Montgomery? I started 4 years ago with SFH. Want to make the switch this year.

0 Reply

Jingru Sui

Real Estate Agent · Atlanta, GA · Member since 2014 · 683 posts · 317 votes

6y

Originally posted by @Kasey Libby:

I am a 44 year old lawyer who is seeking to transition to real estate investing with a goal of retiring from my legal practice and making a living on income from real estate. I have $250,000 to invest and am interested in different perspectives on how I should start given my goal of replacing my income (or at least getting a significant start on replacing my legal practice income). A motivating factor is that I am not satisfied in my legal career and enjoy many aspects of real estate. I'm a 100% green newbie though, and am at least aware there are a lot of things I need to learn before I start throwing money at any projects. My primary question for this post is, with the money I have in hand, what would be the best types of investments I could start with to get a significant start on real estate as an income source, and what could I reasonably expect in income if I succeeded on any given project suggested. I live in the City of Atlanta, Fulton County, Georgia and would be interested in any community in the metro-Atlanta area, but preferably north of I-20 since that is where I mostly travel for other reasons (including extended family - it'd be kind of nice if I could invest in or near an area where my folks live so I could drop by to see them more often while also looking for and managing real estate). Thanks for any help.

You have so many options! First you probably want to decide if you want to be more hands on or hands off. I started with 4 years ago as recent grad out of school with limited capital. Started small, invested in SFH around 150K. Analysis tons of deals to find one. Did a lot of painting and flooring myself as well. I also self manage all my houses. It's fun but I can see once I reach a certain amount of doors it will become less passive. More like a full time job. But again, you can be more hands off and pay others to do the work. :) I'm only doing all the these because lack of capital and I want to save as much as possible for future investment.

If you want to be more hands off. There are plenty of good JV deals you can be part of being accredited investor.

1 Reply

Patrick Menefee

Real Estate Coach · Charlotte, NC · Member since 2016 · 399 posts · 341 votes

6y

@Kasey Libby congrats! As a lawyer I'm sure you're extremely busy, so your time commitment and desired level of involvement should drive your decision. I'd recommend considering 3 factors:

Type of property - with $250k you could get into a lot of SFH, but small to mid-sized multifamily may be a better way to leverage your time
Level of involvement - are you looking to get hands on and swing some hammers? Or keep your hands off and just generate income by investing alongside someone?
Structure - similar to #2, are you looking to take one down yourself? Invest passively alongside an experienced investor so you can learn and take the next on your own? Be truly passive and invest as a limited partner in a syndication?

Hope that helps provide some perspective, let me know if there's any way i can help!

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Robert Martinez

Investor · Houston TX · Member since 2020 · 27 posts · 16 votes

6y

My advice would be to look for a good multifamily owner operator to invest with and spread the money into 2-3 deals. The returns are solid and the tax benefits are great, especially if you become a "real estate professional" (750 hours per year on RE activities). You could potentially get your ordinary income tax down to $0 with the bonus depreciation.

1 Reply

Roni E.Pro Member

Specialist · Earth 2.0 · Member since 2019 · 598 posts · 271 votes

6y

@kasey Libby The answer is, It Depends. Sorry, I had to put in some law school/law dry humor as law professors would always have that answer. I would first see what real estate type intrigues you. So is it Multifamily, Single Family rental, Flipping, Industrial, Data center, Mobile home parks. I would stay away from Retail and Hotels at this time. I would look at getting you real estate license usually it is a much quicker process as a licensed attorney. If you like multifamily, for example, I would get Joe Fairless book Apartment Syndication and Michael Blank SDA course. Consider these our 1L foundation courses. You want to get the lingo, deal structure, and most importantly know how to underwrite a deal. Next, I would be extremely diligent I do believe a price reset is on the Horizon for real estate. You do not want to be catching a falling knife. I would also look to focus on Cash Flow/Cash on Cash returns. If you have any questions shoot me a message.

@Kasey Libby

1 Reply

James Hamling

Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes

6y

@Kasey Libby I highly suggest you take a little different entry approach, best utilizing your unique resources and tools at hand of being a lawyer, liquid capital and market of Atlanta.

Atlanta is a major market, and that means major competition and as you said your a newbie so if you can't beat them, make them your customer and profit from them.

I suggest to enter the REI world and market as a Private Money Lender. This will be a very low resistance entry point as every investor uses leveraged funds and who doesn't want more, right. And as a lawyer you are best equipped to draft and have a commanding knowledge of the contracts for exactly this.

i would suggest focusing on shorter term bridge financing type situations, and structure them in a manner more akin to a strategic partnership than a lender lender one as an added focus and goal will be REI education, keeping involved in all aspects possible as you will be able to learn from others works, and risks for that fact.

Ideally you will be turning those funds every 120 days, this will be a darn good return. Than I would also suggest working to develop and leverage commercial financing to increase that funding potential as this will increase opportunities and earnings in Private Money Lending but is also part of the REI education and network developing as those relations are key to building a rental portfolio.

Within a very short time you will have learned so much it will make your head spin, as long as you work with professionals as they will already be at some level of scale and volume, and gained valuable network connections. From that point, it will be rather easy to get into the property ownership side as you will most likely be able to simply share your ownership interest in that network and they will be happy to help provide a great turn-key deal to the person who has been helping them via funding.

Best of fortunes,

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Kevin Coleman

Investor · Chicago, IL · Member since 2014 · 143 posts · 37 votes

6y

I say take $50 -$75k and work with that for a year in whatever strategy you have thoroughly studied(flip, buy and hold, single family, multifamily etc.). If you complete a 6month flip, then do it again with the same $50k. Act as if you don't even have the other $175k- $200k. After a year and a couple of deals then start using the balance to accelerate. I'm 41 and I feel like I am too old to make any major mistakes. If this is your seed money to get you out of your job then you don't want t loose it. A big loss may discourage you from ever trying again. Going slow for a year or two will secure your ability to go as fast as you year 3+.

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Ronan DonnellyPro Member

Investor · New York City, NY · Member since 2012 · 332 posts · 385 votes

6y

@Kasey Libby, congrats on starting investing now for there will be bargains to be had, and less competition over the coming year. Since you are starting out I would strongly recommend focusing on your ‘why’ i.e. what do you want to get out of real estate investing. That analysis will better inform your subsequent decisions.

If you start with the end in mind you can then engineer the optimal path to get you there. Study the different ways of investing from single family through syndication, lending, flipping etc. They all require different skill sets. I would also recommend studying the macro picture to see what specific asset class suits you best whether it’s residential, industrial, land, hotels, retail etc.

Lastly, like any other profession the more you do it the better you get at it so plan to get some experience by making mistakes. Real estate is a team sport too so make sure you know what team members you need to compliment your skill set.

Good luck!

Ronan

[email protected]

1 Reply

Paul MoorePro Member

Commercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votes

6y

@Kasey Libby. You got a lot of great advice here! I love what many shared, including @Ronan Donnelly and @Jacob Blackett plus others. I recommend getting to know an operator/syndicator very well and then only invest a portion of your capital with them to see how you two get along. Then consider more later. There are great operators in the Atlanta area who have done well in multifamily, self-storage, and more.

You could try to attempt to invest and get mentoring at the same time, which could be tough but worthwhile - especially if the syndicator is in the North Atlanta area.

If you go this route, you should consider the brand new book by Brian Burke called The Hands-Off Investor. Brian was also on the BiggerPockets podcast this week. Good luck!

Podcast Guest on Show #533

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Jorge AbreuPro Member

Rental Property Investor · Dallas, TX · Member since 2015 · 497 posts · 371 votes

6y

@Kasey Libby Great question. You've received some good advice on this thread as well. I quit my engineering career to do Full Time Real Estate 13 years ago now. I first started in Single Family. I did fix & flips, wholesaling, rentals and then also did some smaller Multifamily. I started investing Passively and Actively in large Multifamily properties over 3 years ago and haven't looked back since. My suggestion to you would be to invest passively in some large Multifamily syndication deals. Vet the Deal Sponsor extensively and ask them if they are willing to teach you along the way and include you in more of the active side of things. This is something we've started offering to our investors that want to learn more about being an active Multifamily Investor and we've got some great feedback. I have checklist of questions to ask a Deal Sponsor so let me know and I can get it over to you.

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Peggy Chan

Rental Property Investor · Charlotte, NC · Member since 2020 · 2 posts · 0 votes

6y

If you are looking at long term hold rental residential (1-4 units) properties, you can definitely leverage your W2 income and your cash on hand and spread that over several purchases by using conventional lending. I work with residential properties mortgage financing; 25% down provides best rate pricing for 1-unit, and is the minimum down payment % for 2-4 units under Conventional lending guidelines. This is assuming you don't plan on "house hack" but if you currently don't own a home (you didn't mention), that's definitely the way to go as your primary home purchase (I would have if I knew better back then). Long term small residential rental holding is the "entry level" investing. $200K can be enough down payment for $800K worth of properties and still have $50K for expenses and light rehab. Best of luck!

Peggy Chan, Rental Property Investor

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Jag C.Pro Member

Rental Property Investor · Member since 2018 · 74 posts · 22 votes

6y

@Courtney Buck Please do share your journey - I am planning to invest a similar amount in a SFH or small multi with a view to building a portfolio that can replace other income.

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Courtney Buck

Investor · Alpharetta GA and Destin, FL · Member since 2020 · 68 posts · 55 votes

6y

Hi @Jag C.,

It would probably be a lot easier to explain over the phone. If you like I can send you a Calendly. It's a long story:) That goes for anyone else, I can send out an invite if you hit me up through messenger.

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Courtney Buck

Investor · Alpharetta GA and Destin, FL · Member since 2020 · 68 posts · 55 votes

6y

@Jag C. I would love too, I don't want to overtake the thread but I more than happy to discuss it on a phonecall if you like. For anyone for that matter. Let me know if you are interested. Thanks!

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44 Years Old w/ $250,000 to Invest

44 Years Old w/ $250,000 to Invest

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