Starting with $400k to Invest

9 Replies

Recently I've been fortunate to realize some significant gains in crypto currency. My strategy has always been to move gains from these more speculative assets into real estate once I hit certain targets. After debt paydown, taxes, giving, etc. I'll net about $400k to use toward real estate. I've been researching multiple strategies and have had a single family rental in the past. That said, I'm considering multi-family properties between 10 and 30 units to get started. My ultimate goals align with wealth generation over time as opposed to quicker cash with fix and flips.

I'm open to building any portfolio (single family, multi family) that align with my long term goals but want to become more aware of the opportunities that may exist starting with this amount. Looking for any insight from the BP community...

Hey @Beau Garrett congrats on your Crypto gains. You are wise to set money aside for taxes on your gain here. Many Crypto investors are unawars of this as it's new. I now own some crypto myself. I stated with real estate investing however. You will love the more predictable and secure returns that long term real estate ownership will provide.

Starting with 400k comes with many options. Actually almost all the options lol. You could easily buy houses for cash from a wholesaler. This allows you the best possible buy price. Then flip for short term profits. However after doing your taxes this year especially I am sure you are now ready for a more tax advantaged strategy. Long term buy and hold MF real estate can provide this for you. Instead of flipping it or selling it down the road you can borrow against the gain and since this is a loan you pay no taxes. Then take advantage of the 1031 exchange down the road. 

Also leave some cash behind for value add renovations and to live a little. Easy to get in over your head on your first larger deal. Always good to have some extra cash on hand.

Good Luck!

Move to Arkansas and help me with this land development project. Entitlements are almost all wrapped up and its about time to start building homes. Ive found rental properties are far too many headaches to deal with. Did a few spec homes and decided thats the way to go if you can control the contractors.

Congratulations! 400 K is a lot of money, but it is not a lot of money if you know what I mean. It can get away from you real fast. In the right location you could probably do two or three Brrr at once and keep your seed money Recycling while you learn more about real estate at the same time. There’s so many niches in real estate and surrounding real estate that it can become overwhelming for people that are newly entering the field of real estate. My suggestion is Start with something that you understand even if it’s not a ton of doors at once. Once you have started with something you understand expand from there.

All thank you for the advice!

@Jason Shackleton I like your points about the longer term advantages. Since I'm not looking to generate cash right now the idea to leverage against equity in the future makes sense to me, along with the tax advantage strategy of the 1031 exchange (hopefully that doesn't go away anytime soon). 

@Account Closed - indeed! I took the plunge last year, did a ton of research on the market and found a project I really liked. Fundamentals were very strong, and price was way undervalued, significantly lower that its all time high. Since the market tends to follow Bitcoin, the project I invested in has gone on a similar run. Thank you for the kudos!

@Dmitriy Fomichenko thank you!

This new subdivision, we bought 45 acres in a growing city that has very low inventory, new homes sell before they are completed usually within 10 days of listing, and the price per sqft has increased above $130. This neighborhood we are building on to an existing division and will have an additional 160 homes. It's a TON of work and costs a bunch of money to get going but deals are made everyday. I did a subordinate deal on the land and my bank is fine with that on the funding for the new construction loans.

I do roughly 17-22% profit on each home plus the land development profit.

Originally posted by @Thomas Weidner :

@Bill William are you still profiting 17-22% with the lumber prices currently?

 Yes I am. People complain about lumber prices and sure they are high but it's only increased the house price by $6500 per house. 2.57 or so percent... Inventory is low so price per sqft goes up and more than covers that.

contractors just complain too much.