Rental Property Investor · Russellville, AR · Member since 2014 · 688 posts · 509 votes
5y
My 1st choice:
Find two properties that could sale for less than $100k combined, rehab, and rent. Now I have two properties with amazing equity to draw from, amazing cash flow, and probably some sweet appreciation.
My 2nd choice:
Put a $45k down payment on four cash flowing properties (dont forget about closing costs and emergent repairs!)
My NEVER choice:
Put it all into one property (unless it was a large multifamily)!
Rental Property Investor · Russellville, AR · Member since 2014 · 688 posts · 509 votes
5y
My 1st choice:
Find two properties that could sale for less than $100k combined, rehab, and rent. Now I have two properties with amazing equity to draw from, amazing cash flow, and probably some sweet appreciation.
My 2nd choice:
Put a $45k down payment on four cash flowing properties (dont forget about closing costs and emergent repairs!)
My NEVER choice:
Put it all into one property (unless it was a large multifamily)!
Lender · Nationwide · Member since 2018 · 571 posts · 310 votes
5y
This may be different than a lot of the advice you'll get here, but I would not put all of it into real estate. I would figure out my risk, return, and liquidity preferences and then invest in a diversified portfolio that matched, knowing that real estate is going to be a significant part of that portfolio, and that it usually sacrifices liquidity for higher returns and lower risk.
Within real estate my strategy would be to split that 200k, or whatever is left, into as much diversity as possible, maybe putting it into a local property and maybe a few partnerships spread across different geographies, asset classes, operators and other factors. 50k can get you into most partnerships and some have even lower barriers to entry.
To do that though, you have to know your preferences clearly and also what all the investment options out there are, which can be tough.
I was thinking of doing your 2nd choice too, with of course some rehab potential. Just wondering, why 45k downpayments rather than higher or lower downpayments?
This is good advice. I will have another large amount put into stocks, which will act as a savings just in case any disaster repair happens. However stocks don't provide consistent cash flow like real estate, and create a taxable event every time you cash out and there are no 1031 exchanges to sidestep capital gains on appreciation.
I think your partnerships idea is interesting, but have no idea where I would begin to find them. I've heard of fundrise...How do you go about partnerships?
Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
5y
@Richard V., clearly there is no right or wrong answer, and is heavily dependent on your risk tolerance. In this current market, I am a flipper versus active rental buyer. Of course this doesn't help your tax situation, but finding cash flow in rentals today is very, very challenging, and most deals I see people on this site going into are going to be cash flow negative.
So what would I do: probably hunt down a modest flip, that I could turn my 200 into $240/250 in 4-6 months, and repeat. Clearly this is pretty active in nature.
If I was dead set on rentals, I would be looking for a 600-700k multifamily property (of course contingent on condition), and renovate units while holding a few years. Sell/1031 into a hopefully $1mm+ property with renovation needs and repeat a few times.
OR, go all in on bitcoin and hope it doubles in value each year for a while.