If this were you, what would you do?

34 Replies

I would buy in Austin (love the ROI over any other US city) and to cash flow I would rent by the room. That way you will get the best of both worlds and there are PM companies to help you rent by the room.

one thing I think folks just starting out always need to realize before they invest is that if 20%+ ROI was possible everyone would be doing it.... but its not.... Usually folks get 5 to maybe 10% ROI... so to make 5k/mo you would need $1 million invested at about 6% return to get 5/k month cash flow. In the city I invest in the cap rate is more like 4-5%.... not sure where Austin is...

IMO, the OP needs to get real about the possibilities and the number one goal should be preservation of capital not large returns. why? because if you lose your capital you are out of the game.  So IMO buy something safe and learn the ropes....  trade up and over time you can get to your 5k/mo but target 5 years not 1 year.  

Also remember that many (most?) of the folks on BP are selling something so keep that in mind. 

Originally posted by @Carissa Holmes :

If the below was representative of you & your position what would you do to take full advantage of the inherited capital and launch your REI business?

  • - Recently inherited roughly $250k
  • - Long-term goal: Passive cash flow of $5k per month from buy and hold investments. With a balanced portfolio of high cash flowing properties & high appreciation properties that also cash flow)
  • - Primary residence is in Austin Tx
  • - Very attracted to the BRRRR model
  • - More than willing to invest out of state. Will not invest out of country (yet :))
  • - Capable of and would enjoy doing the majority of the rehab work if the property were in or close to Austin
  • - Obtaining a mortgage likely not an issue given W2 income, credit score & DTI
  • - The only market with applicable relationships (to help until a reliable team is established) is in Jacksonville, FL
  • - Have 20 - 30 business hours and 10 - 20 outside of business hours per week to dedicate to this effort(s)
  • - Have been learning REI like a machine for the last 6 months and ready to move on 1st deal now
  • Thanks in advance!

1. Move out of TX - utility infrastructure is dangerously fragile (life threatening).

2. Mortgage? Start learning about business credit and asset protection.  "Control everything, own nothing". Also, learn about self-directed retirement accounts so you can tap otherwise idle funding sources and - for your family and friends - provide opportunities for more stable investments and better returns with less risk.

3. Start with what you  have - relationships in FL, and build from there.

My $0.02 ...

Hi @Carissa Holmes , I'm in the same position with a similar goal of cash flowing 5k/month on rentals. Hoping to do this in 5 to 8 years. I've started looking in South Florida. May have to start with an STR to make it work, but we'll see. I'd love to connect and compare notes though.

@Carissa Holmes I would look at private lending until you have figured out your acquisition strategy. You could make $2,000-$2,500/month in short term, low risk private loans for the time being, and then roll over your capital into acquisitions as they come up. That's what I do. And it allows me to be a little more patient and not chase acquisitions. I just lend my money out, and when I want to buy something I buy it.

@Carissa Holmes congrats and I hope condolences are not needed. With that much time on your hands you might want to consider doing an Airbnb arbitrage/furnished corporate rental. These can be very profitable and if it works you could scale up and still have a lot of money left to invest elsewhere, perhaps in a syndication. You can learn all about this from my friend @Al Williamson . Good luck! 

@Carissa Holmes

I think the advice of buying something to fix and flip into a bigger property to build up your equity is the best course of action. Like someone said in an earlier post $250k is a lot of money but it also isn't. I would look to get something with as many units as possible and get the rehab financed through a local bank/credit union. If you have never owned an investment property that may hurt you but the lenders I know in PHX will go 75% LTC. Once you renovate the property you should have really boosted the NOI (which is how you value commercial properties). With the higher value you can sell and do a 1031 exchange to go to a bigger building. If you like the building or the 1031 exchange is eliminated then you can refinance pull out a good chunk of your money out and use that for the next investment. If it were me and I am investing in a highly desired market where rents are increasing I would go for agency debt and put long term debt on the asset with as many years of I/O as possible.

CASH FLOW IS KING