Investment Ideas with $550,000 Cash in Hand

15 Replies

Hello fellow BPers,

What would you do if after selling your primary residence, there's $550,000 cash left over to invest in real estate? Suppose you'd like to squeeze as much cash flow out of the investment as possible and wouldn't mind venturing out of state. Where and what type of real estate (SFR, MFR, Apartment building, etc.) would you go for?

FYI: I've been MFR investing in the Newburgh Heights, Cleveland Heights, Garfield Heights area of Cleveland but currently reside in the Portland Oregon area.

Would appreciate any ideas/suggestions!


Sasang - Congratulations on selling your house! I'll assume by your question that you've already take into consideration any financial needs you have on your next primary residence, SO if $550k is available to invest I think the biggest question is whether in the future you want to be an "active investor" or "passive investor" in real estate. As a passive investor there are opportunities to have ownership but not get involved in the daily/monthly operations of the opportunity. Conversely, as an active investor you are overseeing the acquisition, asset management, and disposition/exit strategy of the investment. Once you know that personal goal/aspiration I would target opportunities accordingly. Personally, I'm investing in small/mid sized multi-family properties now under assumption that over the next few years inflation will increase incomes/rents and provide some support for increasing income. I'd like to use my capital sooner and "get it working" sooner given my own personal assumptions/biases. Just my two cents! Good Luck! 

Hello Greg,

Thank you very much for your insights! 

Since I currently have a full time job, I'm hoping to passively invest in these properties. And, oh yes! Thanks for reminding me (he, he) I would need a place to live (house hack or fix/flip). 

Wishing you the best in your investments too. Smart moves!

-Sasang 

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Congrats Sasang! Personally, I would buy as many UNITS as possible. I am a huge believer in quantity. Quality is certainly important, but you can always add that value as you go. Load up on units!

Hi @Sasang Doc

This is Swanny.  I have quite a few apartment complexes in Lake County, Ohio.  In Painesville I have a 24 unit, 21 unit, 20 unit, 15 unit, 12 unit, 8 unit, and a 6 unit.  In Mentor, I own a 57 unit and in Akron a 24 unit.  Feel free to message me to discuss why I have moved to all Multifamily!!

You may want to listen or watch Podcast 238, where I was a guest.  That goes for anyone else on BP that wants to pick my brain!! I just retired from my teaching job this past June.  

If you change the way you look at things, the things you look at, change right before your eyes!!!  It did for me!!!!

Swanny

Hello Swanny,

Thanks for sharing! Thoroughly enjoyed Podcast 238 and tapping your knowledge about real estate investment. Are those multi-units mentioned in your response condos or apartments? Are you partnering with these investments or owning them on your own?

I'm still a newbie and have a few MFH's in Cleveland area but hoping to start investing in 1 or more 6+ unit buildings after the sale of my primary. 

All the Best!

Sasang

Hi @Sasang Doc

Those are all Apartment complexes now that I own.  The only single family I own is my personal residence in San Diego.  Most of the Apartment complexes I mentioned I own half with my mom owning the other half.  We 1031 exchanged those condos we purchased in San Diego in 2011 and 2012 for apartment complexes I mentioned.  The 57 unit in Mentor we syndicated that one and another package deal for 34 units in Painesville we syndicated too.  We also invested in those two deals as Limited partners and we and we are the GP’s in those deals too!! 

Right now we are in the harvest stage I call it now.  Refinancing on these great Freddie non-recourse 10 year fixed interest only the first three years too!! We are taking tons of tax free cash back on these refinances too.
We did one refi a few months ago, sold a 12 unit in Euclid about 3 months ago and refinanced another 21 unit back in March of this year.

Setting a 24 unit in Akron up for a refinance in about 9 months to do the same.  Also a 20 unit in Painesville in about 6 months to do the same.  At the same time repositioning the 57 unit deal in Mentor to possibly sell or refi at a 5 to 5.5 mil valuation in the next 12 months.  We purchased that one for 2 million Aug of 2019.  Not bad for only owning that thing a little more than 2 years ago.

Like I said, the Harvest period!!  Feel free to message me.  I love to talk shop!! 

Swanny

 

@Sasang DocI find this thread interesting as I'm in a similar position myself. Diversification and leverage are key to me, so I'm doing just that. Residential multi in my local market, one AirBnB (this one is the furthest out from execution, as I'm still only narrowing down the market), and throwing the rest into syndications as they're about as passive as can be and syndication funds offer the most diversification bang for your buck, in my opinion. If you want more info on the latter, feel free to reach out.

Certainly do something with it soon before inflation swallows it up! 

If you want to remain active, then I would say continue to buy a multifamily property or commercial property. If you want to take a passive role, then invest in several syndications. You could of course mix and match. 

Here is a guide to passive investing: https://www.biggerpockets.com/...

Hey Sasang, congratulations on the sale firstly! I am a real estate agent in Nashville, TN, and our market here has been booming lately. We're predicted to be the hottest housing market of 2022 actually! STRs in this area are about to be limited by the end of the year, but LTRs are a great investment here as well

$550K leveraged at 75% LTV will get you roughly a $2M deal. I'd suggest targeting a B-class apartment building in the 20-30 unit size range. That size will allow for good economies of scale with a PM company too. An alternative would be to find a few more partners that also have a similar investment amount and go after a 100+ unit apartment deal.

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@Sasang Doc That is a pleasant situation to be in. If you have the time to be active, it sounds like Swanny is the guy to talk with. Perhaps you can JV and partner up with some local boots on the ground. Maybe spread your risk and diversity into some syndications as well if you want a more passive role. Make sure you and the operator you choose understand the downside risk, supply and demand of the market, as well as having a clear upside on rents. If you do this, you'll be good.