I had a friend ask me this question: If you had 100K to invest in just real estate, what would you do?
Since we are in Chicagoland I would move because I truly think the real estate market does not favor starting a business here (I am also a realtor here). They want to move to the Nashville area.
I suggested investing in single family homes, 3 all at once, paying them off ASAP with renters, and just to keep investing.
If you had 100k to solely invest in real estate (assuming they have other investments), what would you do?
Just like Wallace said. I am in a similar situation, this year i invested around 100k in out of state markets. I mostly purchased cash flowing properties, starting out cashflow will really help you jump start your investing! If far as you were saying pay them off asap. With rates being so low I don't see a great need to pay them off any faster then need be. Personally I never pay a penny more towards equity, I would rather make that money go further with more investments. Yes, equity is great but it leverage is better!
@Merri Chocola they have a lot of options, many more than the average joe. They can either invest in the Chicagoland area or do out of state investing. If they’re looking for bang for their buck, then out of state investing preferably in the south where prices and taxes are low would be best. But the appreciation probably won’t be there as much as it will be in the Chicagoland area. So it really up to them, if they’re looking for more cash flow right away or less cash flow now but higher resale value later.
Great question, @Merri Chocola. I would invest in apartment syndications. It would allow me to invest in real estate, diversify my income, and earn monthly payouts without having to put landlord hours in.
Just like Wallace said. I am in a similar situation, this year i invested around 100k in out of state markets. I mostly purchased cash flowing properties, starting out cashflow will really help you jump start your investing! If far as you were saying pay them off asap. With rates being so low I don't see a great need to pay them off any faster then need be. Personally I never pay a penny more towards equity, I would rather make that money go further with more investments. Yes, equity is great but it leverage is better!
@Marlen Weber how do you go about finding apartment syndications? I’ve been interested in investing in one, but don’t just want to ask people randomly if they have an apartment syndication or not.
@Wallace Pendleton you will find a bunch here on BP. They can usually be found in syndication threads discussing past experiences. Look at their bio, do a youtube search as some have been on podcasts. Don't be afraid to reach out and ask questions.
It depends what they want to do. Investing in syndications is great if you want to invest passively and don't want to deal with managing the property yourself. The other benefit is that you don't have to move markets or manage from afar. The syndicator/sponsor of the syndication handles that for you.
@Aubrey Tatarowicz, thank you! If I was to do this I personally would want to be an active property manager (and realtor so I can help them buy and sell eventually too.) Once I made enough income I would then hire a property manager if it became overwhelming. I wouldn't want to be more than 30 min away from the properties.
Agree with @Marlen Weber. I'd put it all into a syndication as an LP. They'd be looking at quarterly cash flow in addition to appreciation without having to lift a finger. I don't buy into the whole "Chicago is a bad investment" chatter. There's plenty of meat on the bones here.
@Merri Chocola All depends if they want to be active or passive. They can go the syndication route and invest anywhere and live anywhere while investing passively. If they want to be a little more active they can invest where this live and use property management. The size/number of homes they could purchase will entirely depend on where they want to buy. A more active approach would be house hacking and BRRRR their own purchase. For me I am going the most active route. I live upstate New York where we have good rents, little home value depreciation, and stable job market. Buildings are definitely more expensive but they are stable and always in demand. New York is not the most landlord friendly state but that has not scared me away. Good legal representation and strong background checks on tenants is essential. Best of luck to you and your friend.
For the average busy professional who is not located in a friendly rental market and has a limited time to manage - syndications and/or funds. You can diversify across a couple of asset classes and invest in more preferable markets with experienced operators.
@Merri Chocola - Buying RE is great for the obvious reasons. But I'd take 25-50k (or whatever amount needed) and work on developing, iterating, and perfecting off-market dealflow that works for you and your market. If you can establish a proven process to buy deals at a discount, it will pay much more dividends than whatever property(ies) you can purchase with 100k.
Hi Merri, I recommend choosing cities in safe and economically diversified areas with above-average income and population growth. It can also be safer to diversify your investment properties across the country. There is still good money to be made in AZ, FL, GA, TX and other states, however, picking the right submarkets is key.
@Merri Chocola the Chicago area isn't perfect, but with 100k I doubt it would make sense to go out of state. Chicago is probably the most affordable primary market in the US, and there are so many sub markets where you can find what you want. Also, the building stock here is incredible, and you can easily find 2-4 units or if you want to jump to small apartment buildings there are blocks and blocks of 6-12 unit properties all over the place.
@Merri Chocola creating a marketing arm of the company and focus on direct mail, text message or cold call campaign on single family's. When a prospect comes through decide whether it'd be best to flip or rent it depending on how dilapidated the house is and if you have a good contractor or not.
@Merri Chocola I think it would highly depend on my goals and what I want to do. I've seen comments ranging from note investing to buying cash flowing single family homes and paying them off to syndications.
Note investing isn't a bad idea but I personally think it takes a good amount of research and I haven't been willing to dive deep into the readings plus it doesn't really match with my long term goals. To me it seems like it could pay off but the amount of time I would need to dedicate to learning about it does not make sense right now.
The single family space is another very common option but it takes time. Time to find the properties and time to manage the properties or manage the manager. If I assume I have the life I have today and 100k is dropped on my I'm not sure how I can do what I do and try to buy properties in my local market. If my market wasn't conducive to cash flow investing and I wanted to go out of state it would take time to build a team. This can be very lucrative but again, it depends on the goals and investment strategy of the individual.
Syndication can be a great option too but as you pointed out it can be difficult to find sponsors. That isn't for a lack of sponsors in the industry, there are a lot. One of the biggest hang-ups is the restrictions put on us regarding solicitation. If a sponsor goes out and advertises then they are only allowed to work with accredited investors which is fine for some sponsors but not all. Many sponsors work in the 506(b) space which means they need potential investors to reach out to them so the contact can be well documented in case there are any future questions from regulators. If you are looking at potential sponsors I would check out their website, there should be a contact us or invest with us form to fill out. Many will even have a link where you can schedule an introductory call.
I had a friend ask me this question: If you had 100K to invest in just real estate, what would you do?
Since we are in Chicagoland I would move because I truly think the real estate market does not favor starting a business here (I am also a realtor here). They want to move to the Nashville area.
I suggested investing in single family homes, 3 all at once, paying them off ASAP with renters, and just to keep investing.
If you had 100k to solely invest in real estate (assuming they have other investments), what would you do?
I think I answer this question once per year on this forum. I'd do (we did) the following
Get approved for a Hard Money loan - levering OPM & use the $100K to cover cost & emergencies
Then purchase a single-family home, renovate then sell it
Repeat bullets above 2x more
Purchase a multifamily home using profits from the flip to hold for cash flow
Repeat the process
Take experience from bullets above and raise $ from private lenders in lieu of Hard Money