What would you do with 70k cash during Covid?
Rental Property Investor 路 Columbia, MD 路 Member since 2016 路 19 posts 路 9 votes
What would you do with 70k cash during Covid?
Most Popular Reply
Zach LemasterBusiness Member
Rental Property Investor 路 Denver, CO 路 Member since 2015 路 2k+ posts 路 3k+ votesI'll let @Joseph Schweizer speak about his personal experience, and cash flow that he is achieving. Since you've mentioned you were looking for more people's experience with TK, I've posted some good forum links below that should help you get a better idea of investors experience going that route. Jason brought up the brrr method, but what everyone fails to mention is that strategy can involve significantly more time, risk & money. It can be a productive way to increase equity, but if you are a newer investor, or looking to invest away from where you personally live, then I would not recommend that strategy for someone who is just getting started. Just because you attempt a brrr, does not mean you are guaranteed equity, or that everything will go as planned and turn out the way you anticipate. Just be prepared for that if you attempt your own flip as it is very time intensive, has many working parts involved, and there are a lot of variables. I will be the first to tell you from the perspective of someone who flips or brrrs professionally & has done 3,000+ homes over the past ten years, very rarely does everything go as planned to work out perfectly, and this can very easily become another full time job! The variability of unforeseen rehab, missed calculations on ARV, extensive holding costs, delays in completion that become rather costly (especially if using hard money), market changes, permitting issues with the city, unknown title issues, potential vandalism/theft on vacant units, dealing with contractors & other trades that don't complete work to standards, or have to be fired, etc. the list goes on & on. I'm not trying to discourage the brrr strategy as that is essentially the business we operate in, but it is important to know what this strategy truly involves, and the risks associated with it. Many people on BP fail to mention those aspects, or are not actual flippers themselves to fully understand the process. Most people lose money on their first few flips, which is fine if you learn from that experience & keep going, but unfortunately many people call it quits after those first few expensive lessons. There is a learning curve like any new endeavor & sometimes you simply don't know what you don't know. This is why I feel a TK investing is an excellent place to start for a newer investor where you tap into an immediate team & network to take an easy entrance into investing with a higher propensity for success to learn the ropes. This will allow you to become familiar with a market, and start to build your own network leveraging the experience & team that we have already built successfully for many years. As you become a more experience investor, you can then decide if you prefer to take a more active role to attempt some of your own rehab jobs, or simply scale up your rentals via TK investing like you already have been & diversify across multiple markets. TK allows you to likely scale much quicker than you could achieve on your own, and you have immediate access to a team that has a proven path to success to guide you throughout the process which really is more valuable than the property itself in my opinion. I digress...and will get off my soap box, but the last point I'd like to make is that there is no reason in the world you can't do multiple strategies over time as you become a more experienced investor. Many people think there is this brrr vs turnkey, when in reality I think employing both over time is the best approach depending on your goals. It just depends where you get started, and that you DO get started. Don't let analysis paralysis prevent you from taking action like it does for so many!
Rachel, if you have any questions on anything I discussed please let me know. Below are some forum threads to read that will allow you to see more investors experiences buying TK properties.
https://www.biggerpockets.com/users/ZacharyCole/references
https://www.biggerpockets.com/forums/92/topics/518583-feedback-on-renttoretirement-and-zach-lemaster
https://www.biggerpockets.com/forums/92/topics/765347-rent-to-retirement-review
https://www.biggerpockets.com/forums/92/topics/808479-rent-to-retirement-experiences
https://www.biggerpockets.com/forums/12/topics/533693-anyone-worked-with-renttoretirement-turnkey
https://www.biggerpockets.com/forums/92/topics/581730-rent-to-retirement-zach
34 Replies
- Specialist 路 Plano, TX 路 Member since 2020 路 2k+ posts 路 861 votes5y
Great question. I would become a limited partner on multifamily syndication deals. This would diversify my income, which brings me peace of mind during a pandemic. @Marcus Palm
- Investor/Agent/Entrepreneur 路 Dallas, TX 路 Member since 2016 路 464 posts 路 564 votes5y
Today? Yes, some sort of interest bearing account. A 1-2% net loss from potential inflation is far better (to me) than whatever "good" deal is out there.
Unless you find amazing deals, with great value add, and put in the sweat to find them, with desperate sellers (in a seller's market), then sure. Otherwise, I wouldn't touch any of these so called deals out there I see.
- Rental Property Investor 路 Columbia, MD 路 Member since 2016 路 19 posts 路 9 votes5y
@Marlen Weber can we talk more about this?
- 5yMack BensonPro MemberRental Property Investor 路 Woodbury, MN 路 Member since 2018 路 299 posts 路 299 votes
@Marcus Palm I think it depends on your goals and what your strengths are and if you are looking to take an active or passive role. A savings account won't pay much in interest but your capital would be quickly accessible if you want to deploy it. You could partner with a local flipper and finance it but that would require vetting them and the deal and you may not be comfortable with the idea.
Another option would be to start networking with syndicators. If you are looking to invest in a 506(b) offering you'll want to get to know the sponsor well in advance of them getting a deal under contract so you both can show a relationship exists. On the other hand if you are able to invest in a 506(c) offering you can start checking out sponsors online, they can advertise their deals in the open but are restricted to accredited investors.
- Specialist 路 Plano, TX 路 Member since 2020 路 2k+ posts 路 861 votes5y
Sure thing. Feel free to send me a message and we can chat some more on this topic. @Marcus Palm
- Rental Property Investor 路 Fishers, IN 路 Member since 2016 路 337 posts 路 470 votes5y
Tough to answer without more background....what are your goals? - preservation of capital, growth, income? Active vs Passive? I'd get a good handle on risk tolerance so you're investing rather than gambling.
Then consider a diversified balanced portfolio. Is $70k part of larger sum of money that's already invested, or is that the whole? Some have mentioned investing as an LP in syndications.....great idea as part of a portfolio, combined with other assets/classes. But if $70k is your net worth, then that will likely get you into maybe 2 syndication deals, and that doesn't sound too diversified.
If real estate is where you're heads at, maybe BRRRR. Keep recycling that $70K through value-add. Refi and get your money back. Rinse repeat. ?
- 5yJohn MorganPro MemberRental Property Investor 路 Grand Prairie, TX 路 Member since 2018 路 2k+ posts 路 2k+ votes
Buy a couple properties with 20% down.
- New to Real Estate 路 Perris, CA 路 Member since 2020 路 32 posts 路 18 votes5y
@Joseph Schweizer
Hey Joseph, someone I know also had good things to say about Zach, when you did your first rental property through rent to retire did you have good monthly passive income? I hear when doing turnkey the monthly passive income is a lot less. I'm a new investor and want to do turnkey, just not haven't heard too much about people's outcome after.
- Rental Property Investor 路 Kailua-Kona, HI 路 Member since 2019 路 31 posts 路 14 votes5y
Educate yourself more on the BRRRR method and do that. That way you can increase the velocity of your money.
- Realtor 路 Columbus, OH 路 Member since 2016 路 170 posts 路 227 votes5y
I would and do continue to invest in B-C assets that have strong cashflow. Something that I can add value too. I want to be able to increase value 25+% and have at least 250 per unit in stabilized cashflow. Highly unlikely even in an economic melt down I would have to drop 900 dollar rent more than 250 dollars in my market to get them leased up to people with good jobs.
I dont believe you should ever stop investing based on the market. I believe that your criteria should change...For example im much more strict now for safety but also because I think good deals are coming soon and so I won't stretch to invest in an OK deal now.
- 5yZach LemasterBusiness MemberRental Property Investor 路 Denver, CO 路 Member since 2015 路 2k+ posts 路 3k+ votes
I'll let @Joseph Schweizer speak about his personal experience, and cash flow that he is achieving. Since you've mentioned you were looking for more people's experience with TK, I've posted some good forum links below that should help you get a better idea of investors experience going that route. Jason brought up the brrr method, but what everyone fails to mention is that strategy can involve significantly more time, risk & money. It can be a productive way to increase equity, but if you are a newer investor, or looking to invest away from where you personally live, then I would not recommend that strategy for someone who is just getting started. Just because you attempt a brrr, does not mean you are guaranteed equity, or that everything will go as planned and turn out the way you anticipate. Just be prepared for that if you attempt your own flip as it is very time intensive, has many working parts involved, and there are a lot of variables. I will be the first to tell you from the perspective of someone who flips or brrrs professionally & has done 3,000+ homes over the past ten years, very rarely does everything go as planned to work out perfectly, and this can very easily become another full time job! The variability of unforeseen rehab, missed calculations on ARV, extensive holding costs, delays in completion that become rather costly (especially if using hard money), market changes, permitting issues with the city, unknown title issues, potential vandalism/theft on vacant units, dealing with contractors & other trades that don't complete work to standards, or have to be fired, etc. the list goes on & on. I'm not trying to discourage the brrr strategy as that is essentially the business we operate in, but it is important to know what this strategy truly involves, and the risks associated with it. Many people on BP fail to mention those aspects, or are not actual flippers themselves to fully understand the process. Most people lose money on their first few flips, which is fine if you learn from that experience & keep going, but unfortunately many people call it quits after those first few expensive lessons. There is a learning curve like any new endeavor & sometimes you simply don't know what you don't know. This is why I feel a TK investing is an excellent place to start for a newer investor where you tap into an immediate team & network to take an easy entrance into investing with a higher propensity for success to learn the ropes. This will allow you to become familiar with a market, and start to build your own network leveraging the experience & team that we have already built successfully for many years. As you become a more experience investor, you can then decide if you prefer to take a more active role to attempt some of your own rehab jobs, or simply scale up your rentals via TK investing like you already have been & diversify across multiple markets. TK allows you to likely scale much quicker than you could achieve on your own, and you have immediate access to a team that has a proven path to success to guide you throughout the process which really is more valuable than the property itself in my opinion. I digress...and will get off my soap box, but the last point I'd like to make is that there is no reason in the world you can't do multiple strategies over time as you become a more experienced investor. Many people think there is this brrr vs turnkey, when in reality I think employing both over time is the best approach depending on your goals. It just depends where you get started, and that you DO get started. Don't let analysis paralysis prevent you from taking action like it does for so many!
Rachel, if you have any questions on anything I discussed please let me know. Below are some forum threads to read that will allow you to see more investors experiences buying TK properties.
https://www.biggerpockets.com/users/ZacharyCole/references
https://www.biggerpockets.com/forums/92/topics/518583-feedback-on-renttoretirement-and-zach-lemaster
https://www.biggerpockets.com/forums/92/topics/765347-rent-to-retirement-review
https://www.biggerpockets.com/forums/92/topics/808479-rent-to-retirement-experiences
https://www.biggerpockets.com/forums/12/topics/533693-anyone-worked-with-renttoretirement-turnkey
https://www.biggerpockets.com/forums/92/topics/581730-rent-to-retirement-zach
- Investor 路 Member since 2020 路 291 posts 路 592 votes5y
First, I would like to link my post about my first property (just closed on it in October) just for a little more info.
https://www.biggerpockets.com/...
I am not sure how familiar you are with Brandon Turner and the BP podcast, but Brandon says he looks for deals with over 10% Cash on Cash return (CoC) and $100-$200 cash flow per unit. My single family turnkey purchase exceeds both of these benchmarks. My CoC is around 12+% and my cash flow will be about $230-$240 per month. These numbers also do not account for many of the other benefits of investing in real estate as well (appreciation, tax implications, debt pay down, etc.).
In my opinion, you also have to compare the return to the amount of effort required. For me, I reached out to Zach and we identified how his team could help me reach my goals. I was shown a list of properties, ran some of my own calculations to see if the numbers worked for me, and selected a property. I was then walked through the entire process of closing on a property step by step with Zach and his team there to answer all of my questions and handle any concerns I may have had. The ability to make the returns I am with what I see as little effort compared to a lot of other real estate investing methods is incredible.
With any investing method, you definitely have to do your own due diligence. I did extensive research on the turnkey process (mostly BP forums). I reviewed Zach's references, recommendations, posts, etc.. I ran my own calculations on the property and made sure the numbers worked in a few different cases. Everything checked out for me so I felt very confident moving forward.
If there is anything else you would like to know from my experience or any other way I can help, feel free to reach out!
first, I would not post on a public forum that you have x amount of cash..... (esp using your real name)
As for what I would do with any liquid funds? I would keep it as reserves, assuming you dont have other savings and have a home etc.....
If you want to invest, I would carefully weigh the options of waiting until loan reserve requirements have returned to normal as they can really mess up an investment.....I would put the funds in a diversified portfolio of exchange traded funds etc.
ETA, note that many of the folks responding to these kinds of threads are selling something.... and your inbox may explode with folks wanting to help by having just the right deal for you......
- New to Real Estate 路 Perris, CA 路 Member since 2020 路 32 posts 路 18 votes5y
Thanks Zach for reaching out and reassuring me! I've been on analysis paralysis for such a long time and have been told by people real estate isn't a good investment for years especially because we're not well versed with fixing up homes. I do feel turnkey is our first best option. I will have to connect with you, because it is my goal to start soon. How do you feel investing will be as of now with the current pandemic situation and with the tenants?
- New to Real Estate 路 Perris, CA 路 Member since 2020 路 32 posts 路 18 votes5y
Thanks Joseph for sharing with me your positive experience and detailed investment! It really does make me feel better leaning towards turnkey and using Zach as my mentor! I've waited too long, and now I feel unsure because of the pandemic and unemployment LOL. It's always something holding me back, but I'm definitely more convinced then ever. Thanks for the help!!
- 5yZach LemasterBusiness MemberRental Property Investor 路 Denver, CO 路 Member since 2015 路 2k+ posts 路 3k+ votes
As long as you are investing in the right asset class where there will always be rental demand, and affordable rents, rental RE will be stable. People always need a place to live. Here is an informative blog post on the topic that might ad some insight: https://www.biggerpockets.com/member-blogs/11965/89453-coronavirus-influence-on-re-and-why-sfrs-have-increased-demand
- Real Estate Agent 路 Texas Tennessee 路 Member since 2019 路 93 posts 路 83 votes5y
@Marcus Palm I鈥檓 selling my vacation rental for a 6 figure profit after 1 1/2 years of ownership and sinking the profit via 1031 into a bigger/better property thanks to them amazing @Avery Carl. If the pandemic has taught me anything, it鈥檚 the smoky mountains are bomb proof.
- 5yAvery CarlBusiness MemberReal Estate Agent 路 USA 路 Member since 2016 路 909 posts 路 1k+ votes
@Reagen Natho thanks!!
To answer the OP's question: it was my goal for this year to buy an apartment building, but with the eviction moratoriums that kept getting pushed out, I pivoted and took advantage of the low interest rates right now and 1031 exchanged 2 smaller STR units for 2 larger ones. I did this because the STR markets I invest in are booming, while the LTR situation is a little uncertain. Next years goal is still the apartment building. So there's no wrong answer to your question, you just have to invest intelligently based on market conditions.
- Rental Property Investor 路 East Wenatchee, WA 路 Member since 2014 路 10k+ posts 路 16k+ votes5y
Originally posted by @Account Closed:
Originally posted by @Ujwal Velagapudi:
Today? Yes, some sort of interest bearing account. A 1-2% net loss from potential inflation is far better (to me) than whatever "good" deal is out there.
This is the first time in I don't know how long on these forums that I've seen someone stop worrying about conforming to a "can do attitude" and just flat out say the truth.
Me too, David. If you set aside the self-interest like invest in my area or invest in my fund...
OP- do more of what got you the $70k in the first place. We know nothing about your or your financial picture. If you want to be hands on or off or what property type or niche interests you.
Search for the hundreds of other I have $x, what should I do threads for fun and see whose selling what.
And all these low post shill references to how great Zach and rent to retirement are pissing me off. No history or credibility established yet. All I'll say about that for now. Earn it.
- 5yHenry ClarkPro MemberDeveloper 路 Member since 2020 路 4k+ posts 路 4k+ votes
I'm going to steer away from traditional REI because it's great now
You specifically referenced covid so I鈥檒l go down that road
Your in Maryland high population. Your a realtor so you are comfortable with REI transactions and marketing on the internet
Seek out a hotel or motel with low vacancy. Ask to rent out an entire floor or wing on an as needed room basis. Advertise Covid recovery rooms. Offer services. Food, wash, check up or call program, etc.
Oh, pshaw, $70K, that's chump change. When this thread usually shows up, it's so much more. I even know this local handyman who found $894K in a wall! He spent it all on...well, I've been cautioned repeatedly not to mention ladies of questionable reputation and a certain white powdered substance with stimulant properties here on Bigger Pockets.
Or give it to guru-boy and his shills.
- Real Estate Agent 路 Winston Salem, NC 路 Member since 2014 路 486 posts 路 303 votes5y
@Marcus Palm I would look into a flip if it鈥檚 a good deal which is what my husband and I are searching for. We鈥檙e a little nervous about multi families right now.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.