My Cash...is Worthless.

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My Cash...is Worthless.

Casey Roman
Member since 2018 · 26 posts · 34 votes

I have been trying for years to reinvest $100,000 into some form of real estate and have gotten absolutely nowhere. Because I own my own business and deduct HEAVILY off it, I qualify for zero mortgages, even with perfect credit. Moreover, Coronavirus has successfully killed my shot at non-traditional loans. 

I live in a highly desirable coastal area. There is no such thing as buying the $60k house here, doing repairs and re-listing at $250k. Even complete dumps are $150k so my $100k goes nowhere. Land is a fortune.

Without a mortgage I can't buy a rental property with just $100k. I've tried wholesaling but given the desirability of this area, most homeowners think they have oil under their property and can sell for far more than I can offer them.

It seems like my only option is to buy a double wide or invest in REITs - neither of which overly thrill me. 

The biggest need here is affordable housing. 

Its easy to feel like you've run out of options after slamming your head into the wall so I wanted to check in here. Are there other avenues of real estate investing I'm overlooking? Other financing I've ignored? Or...do the cards just fall sometimes where it's just not favorable under your personal circumstances?

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Joseph CacciapagliaBusiness Member
Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
6y

You could be a private lender, yields on private loans have jumped up lately. You could invest with a partner or in a syndication. You could invest out of state. Most of my clients are from a more expensive market. If you have cash, you can certainly get into the game. You might just need to get a little more creative.

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  • Grayson Spittel
    Rental Property Investor · Wake Forest, NC · Member since 2017 · 128 posts · 131 votes
    6y

    @Casey Roman it sounds like you have a fantastic opportunity to find a different area to invest in. I’m in Wilmington NC and understand the feelings you described. However, by finding another market, establishing a team, utilizing a Property Manager from day one, that $100K can very quickly be utilized effectively. In my view, the appeal to investing locally is imaginary. You don’t need to be close, and you don’t need to manage your own properties. There are plenty of deals out there. Best of luck!

    1Reply
  • Brian Ploszay
    Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes
    6y

    It is very common for some businesses to have substantial depreciation write-offs, and their federal income taxes look meager.   Landlords are one of them.  But don't think for one second that landlords are not contributing;  Their paid real estate taxes are substantial.

    Back to the original topic, your challenges of getting a loan.  Most landlords don't get regular loans, but commercial loans.  I'd try establishing a relationship with a local bank.  You would have to put 20% or more down-payment.  Set up several meetings with different banks and tell them your situation.   Local banks, however, are going to lend on local properties.  

    Now, you live in an expensive Coastal City.  Keep your eye on the local market.  There may be some opportunities because of this downturn.  

    0Reply
  • Casey Roman
    OP
    Member since 2018 · 26 posts · 34 votes
    6y
    Originally posted by @Adam Frank:

    There’s hampstead, holly ridge, Sneads ferry, swansboro. 
    All are far more affordable than Wilmington with the exception of hampstead.

    That's true but you're still not buying much in Sneads Ferry with $100k. Especially not that close to a military base. 

    0Reply
  • Casey Roman
    OP
    Member since 2018 · 26 posts · 34 votes
    6y
    Originally posted by @Brian Ploszay:

    It is very common for some businesses to have substantial depreciation write-offs, and their federal income taxes look meager.   Landlords are one of them.  But don't think for one second that landlords are not contributing;  Their paid real estate taxes are substantial.

    Back to the original topic, your challenges of getting a loan.  Most landlords don't get regular loans, but commercial loans.  I'd try establishing a relationship with a local bank.  You would have to put 20% or more down-payment.  Set up several meetings with different banks and tell them your situation.   Local banks, however, are going to lend on local properties.  

    Now, you live in an expensive Coastal City.  Keep your eye on the local market.  There may be some opportunities because of this downturn.  

    This is a really good point and one I forgot to mention. I can make the 20% down and if I can prove cash flow a commercial loan may be a very viable option. Its rare that a mulit-family gets listed here unless its one of our 110 year old houses that's been converted but I can absolutely keep an eye out.

    0Reply
  • Casey Roman
    OP
    Member since 2018 · 26 posts · 34 votes
    6y
    Originally posted by @Patrick Menefee:

    @Casey Roman just went back and realized this is almost the same as what @Joseph Cacciapaglia explained! Oops

    You asked about if you can get started with just $100k...the short answer is absolutely. The long answer depends on your goals, what you want to invest in, where you want to invest, who you're investing with, etc. If you're partnering/lending on single family or small multifamily properties, it's absolutely enough. You may be able to work together with someone to provide most or all of the down payment, fund a rehab, or provide some other type of partnership and/or short term money

    As far as resources go, I can't recommend books that directly speak to your side, but I can provide personal case studies from my own partnerships with private lenders/money partners and I can also highly recommend the book "Raising Private Capital" by Matt Faircloth. This is written for the investor looking for capital, but allows you to get a look at what the investor/potential partner is looking for and thinking about

    Again, feel free to reach out with questions!

    Thank you Patrick,

    Lots of great idea here but the one that has really stood out to me is private lending. I am not ashamed to admit that I would be a terrible landlord because of my personality. I am extremely blunt and impatient. In the past this has lead to nothing but unnecessary stress with tenants. While private lending is certainly risky, I perceive it as lacking all the emotional elements that I find unbearable to have to deal with (like listening to the dramatic story of why rent is late again for the 5th time). I'm going to look for this book now. Thank you!

    0Reply
  • Mike D.
    Investor · Marion, IA · Member since 2010 · 177 posts · 117 votes
    6y

    @Casey Roman

    I would be afraid of investing in your market anyway. Sounds like the market is way over valued.

    If I were you I'd look at investing in a desirable smaller town nearby or look into long distance investments in the midwest.

    0Reply
  • Hai Loc
    Specialist · Toronto, Ontario · Member since 2012 · 2k+ posts · 891 votes
    6y
    Originally posted by @Steve Vaughan:
    Originally posted by @Casey Roman:

    My go-to idea was seller financing but the investors I know here are not overly optimistic about the idea because of what can happen if the seller decides not to sell after all or any judgements are placed on the property. We have MANY retirees here though...

    Proper seller-financing was my first idea, too. By proper I mean you own it day 1 with a note and mortgage/deed of trust. Not an option, land contract or CFD where the above scenarios can happen. I like to target tired plexes.

    But, you are smart to realize you're not built to be a landlord.  I am one and am emotionally flat to a fault.  Not for everybody.

    So my next idea is seller financing on a NNN commercial building or warehouse/industrial property or vacant land you could build a flip on.

    Seller financing on a NNN commercial deal would be wild. I don't see how a seller would want to do this with lots of years left on the lease.. Unless you propose a plan on a lease that is about to expire to potentially redevelopment.. and chances are you need to be dealing with sellers with little to no debt

    0Reply
  • Aaron K.
    Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
    6y

    LOL this guy thinks that Wilmington NC is a high cost coastal market, forgive me for laughing but, you have many properties under $150k in your city itself and Fayetteville is only a 2 hour drive where there is tons of stuff under $100k.

    5Reply
  • Nancy Wallace-Laabs
    5605 Fm 423, Suite 500-305 · Member since 2018 · 1 post · 0 votes
    6y

    Hi Casey - I feel your pain! I have had success with using private money lenders. These are people who have a self-directed IRA, and they are normally not earning any interest on their IRA account. It takes some networking to build your network of private money lenders, but it is a great way to buy properties if you can't go traditional routes. And you are right, lenders are being super conservative right now. Since this is based on relationships, terms are negotiable. You can also become a passive investor using your $100K. One more suggestion, look to your community lenders. I just did a cash out re-fi on one of my rentals, yes during this time, and it was easy smooth process. The bank was local to my area, made all of their decisions in house, and I just stopped by and introduced myself. Hope this helps, and good luck!

    0Reply
  • Corbin Marcotte
    Real Estate Agent · Tulsa, OK · Member since 2016 · 98 posts · 60 votes
    6y

    @Casey Roman you have many options. Have you read the book on long distance real estate investing? The Mid west offers many great investment opportunities with often better returns than the coast. If you can get connected with an agent that has a lot of investment experience they should be able to connect you with a complete team to invest remotely such as insurance, contractors, inspectors, etc. Just make sure that agent puts their money where their mouth is and tells you when and why deals don't make sense. You want someone looking to build a long term relationship not just sell you one ****** deal and split. In Tulsa Oklahoma 100k goes a long way! 

    0Reply
  • Kevin Grinstead
    Realtor · Denver, CO · Member since 2016 · 499 posts · 129 votes
    6y

    @Casey Roman there are many other markets where your 100k would go or one or two properties and then after some time and history that can build your income and your portfolio to then be able to buy locally.

    0Reply
  • Justin R.
    Developer · San Diego, CA · Member since 2015 · 1k+ posts · 1k+ votes
    6y
    Originally posted by @Casey Roman:
    Originally posted by @Joseph Cacciapaglia:

    You could be a private lender, yields on private loans have jumped up lately. You could invest with a partner or in a syndication. You could invest out of state. Most of my clients are from a more expensive market. If you have cash, you can certainly get into the game. You might just need to get a little more creative.

    This is actually what interests me the most. I'll be quite blunt...I am NO landlord. I have been in the past and I have also done AirBnb rentals and I find that my zero patience, zero brain-to-mouth editing function has severed me little in those realms. Joseph do you think I could get started in this with just $100k? Are there any education sources you recommend? I imagine the legal aspects are enormous and I'd like to start learning asap. 

    You can read up on private lending or syndications or whatever, but I think it all boils down to two things: 

    (1) Do the economics of the deal work?  Is the deal a deal?

    (2) Do you trust the skills and integrity of the person you're lending to / investing with?

    Whether it's lending or investing, at the end of the day you're putting your money on a person.  So, the logical place to start is in finding that person/people/group.  I would do so locally, both because (A) leveraging real human networks (not so much electronic ones) is the best way I know of to get things done in real estate and (B) if you're doing something local, you will learn in a way that you won't be doing something passive remotely.  If you want to grow, you need to learn as much and get exposed to as many ideas and people and processes as you possibly can.  That's what opens up real doors.

    Anyways, not the easiest thing to do in our current CV19 world, but if you were in my market I'd give you a list of people to reach out to, go see their projects, understand what they're trying to accomplish, and be in a position to partner on a future project.  For people who put together projects, equity is always needed, and understanding the person you're tying up with BEFORE you tie up is critical for everyone involved.

    $100k is meaningful for a coastal project, so there's no reason you shouldn't be able to get in the game in a meaningful way. 

    0Reply
  • Paul Gimmarro
    Real Estate Agent · Kansas City, MO · Member since 2019 · 23 posts · 10 votes
    6y

    @Casey Roman Have you looked at out of state investing at all? It’s a good way to invest you’re money if where you live is too expensive for you. Let me know if I can answer questions for you!

    0Reply
  • Danny Webber
    Real Estate Broker · Austin, TX · Member since 2016 · 834 posts · 449 votes
    6y

    non qualified mortgage assumptions. I can get you 3 properties in Austin in 1 week with 100k.

    0Reply
  • Steven Ko
    Sunnyvale, CA · Member since 2018 · 191 posts · 178 votes
    6y

    @Casey Roman you need more Brandon Turner in your life. It seems like you have a lot of limiting beliefs.

    I’ll bite. How many lenders have you talk too? Have you tried any smaller banks?

    5Reply
  • Bretney Lindley
    Investor · Portland, OR · Member since 2016 · 6 posts · 1 vote
    6y
    can you tell me which highly desirable coastal area your refering to,town and state?just so i can research options...

    0Reply
  • Michael Slockers
    Real Estate Entrepreneur · Owasso, OK · Member since 2015 · 220 posts · 154 votes
    6y

    Originally posted by @Steven Ko:

    @Casey Roman you need more Brandon Turner in your life. It seems like you have a lot of limiting beliefs.

    I’ll bite. How many lenders have you talk too? Have you tried any smaller banks?

    @Steven Ko NAILED IT. All I hear the original post saying is excuses. Every response from the original poster is "great idea, BUT". I would recommend reading the book Extreme Ownership and deciding if you want to be a real estate investor, and what kind? Congratulations for saving up that much cash, but to say it is worthless, it just blows my mind. There are so many great options already listed in the responses in this forum. No more excuses, you need to jump in with both feet, or you can only blame yourself!

    I haven't been at this too long and we've done flips, rentals, private lending (as lender and lendee), traditional loans, local bank borrowing, borrowing from family, sweat equity, owner carry (owner side), new construction, wholesale, and seller finance (on buyer side). GET AFTER IT! You CAN do it! But nobody else can do it for you!

    3Reply
  • Scot Howat
    Investor · Hoffman Estates, IL · Member since 2014 · 434 posts · 185 votes
    6y

    You should try lending that money, stick it into a IRA and lend it out. Or pool it with other people that have the ability to secure a mortgage

    0Reply
  • Anna Sagatelova
    Property Manager · Cleveland, OH · Member since 2019 · 446 posts · 566 votes
    6y

    I hear a lot from investors like you who openly acknowledge that they are not great at being landlords themselves. Your $100,000 will go a very long way in other markets, Cleveland included, and professional management will take away the headache of managing tenants and turnovers yourself.

    Like others posting, I think you have quite a few viable options available, but from my own experience, investing in another market is a solid choice.

    0Reply
  • Paul DoCampo
    Specialist · ID · Member since 2015 · 121 posts · 53 votes
    6y

    @Casey Roman Maybe worthless to the bank but not worthless to sellers who want to get rid of a property. They don't care how you fund it. Look into seller financing, subject-to transaction. lease options and/or a combination and create a deal with them. There's more than one way to fund a deal. 

    Also, your $100k is valuable to private investors that value you having skin in the game. 

    0Reply
  • Roger Hefner
    Yuma, AZ · Member since 2015 · 140 posts · 137 votes
    6y

    @Casey RomanI have been thinking of being a lender to sellers that need to do upgrades to their homes to sell. I have not done but if anyone else has done chime in. Short term loan higher interest rate. I'm sure always a risk if sellers decided not to sell but I think possible with good contract..

    0Reply
  • Jason Wenino
    Member since 2018 · 5 posts · 6 votes
    6y

    @Casey Roman look into Apartment Syndication

    1Reply
  • Casey Roman
    OP
    Member since 2018 · 26 posts · 34 votes
    6y
    Originally posted by @William Walker:

    @Casey Roman I’m in Wilmington and just bought a house for 87k that rents for 950. Plenty of houses downtown that are under 100k

    If you bought a house downtown for $87k that was either a probate that needed quite a bit of work or its in a bad area. There ARE plenty of houses downtown that are cheap because they are above 6th St. or Red Cross, usually in bad condition and usually in high crime pockets. I can get a house for >$80 but <$100k on Gores Row. Gores Row...the most notorious place to buy dope in Wilmington. 

    0Reply
  • Casey Roman
    OP
    Member since 2018 · 26 posts · 34 votes
    6y
    Originally posted by @Mike D.:

    @Casey Roman

    I would be afraid of investing in your market anyway. Sounds like the market is way over valued.

    If I were you I'd look at investing in a desirable smaller town nearby or look into long distance investments in the midwest.

    It wasn't when I moved here. Then we were listed on a few rankings for "best places to retire" and a tsunami of retirees from NY/NJ sold their house for $750,000 and bought down here in cash.

    1Reply
  • William Walker
    Investor · Wilmington, NC · Member since 2016 · 211 posts · 262 votes
    6y

    @Casey Roman

    House was renovated in 2019 with new roof, HVAC, appliances, etc. 
    long term tenant in place. 
    house was never on MLS

    And it’s not in a high crime pocket.

    Sometimes if you put in enough time and effort you find good deals. But other people will sit back and complain about how it can’t be done till the cows come home. 

    0Reply
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