Buying & Selling Real Estate Discussion

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Eric Sebast
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$75,000 to invest, whats best?

Eric Sebast
Posted Aug 12 2022, 12:30

Just closed on our first duplex a month ago, have about $75k that we can use to buy our next property(ies). Not willing to doing a house hack, whats the best option for cashflow?

Upstate New York, New York

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Ruchit Patel
  • Bay area, CA
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Ruchit Patel
  • Bay area, CA
Replied Aug 12 2022, 12:35

Hello Eric,

Congratulations on the closing and for the cash you have. You are in a sweet position. Message me and as per your goals, I can share juicy deals I did recently as well as some of my contacts with you.

In general, if you like maximum cash flow, turnkeys in the midwest are the way to go, I know a team for that too.

If you can wait around 18 months, then build to rent is the way to go, that will boost your net worth significantly, sometimes 100% ROI in 2 years on your $75,000.

--Ruchit

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Andrew Garcia
  • Lender
  • Silver Spring, MD
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Andrew Garcia
  • Lender
  • Silver Spring, MD
Replied Aug 12 2022, 13:36

Hi @Eric Sebast, congratulations on the duplex!

That depends on a lot of different factors. What strategy are you looking to employ? Are you investing locally or do you prefer out of state? Short-term or long-term?

Anyone would need more information prior to answering this question to the best of their ability.

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Scott E.
  • Developer
  • Scottsdale, AZ
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Scott E.
  • Developer
  • Scottsdale, AZ
Replied Aug 12 2022, 14:07
Quote from @Ruchit Patel:

Hello Eric,

Congratulations on the closing and for the cash you have. You are in a sweet position. Message me and as per your goals, I can share juicy deals I did recently as well as some of my contacts with you.

In general, if you like maximum cash flow, turnkeys in the midwest are the way to go, I know a team for that too.

If you can wait around 18 months, then build to rent is the way to go, that will boost your net worth significantly, sometimes 100% ROI in 2 years on your $75,000.

--Ruchit


The poster has said that his only experience is buying a duplex and you are recommending he consider build-to-rent?? Even for the most experienced production builders build-to-rent is a very risky and nuanced strategy.

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Wesley Sherow
  • Rental Property Investor
  • Upstate, NY
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Wesley Sherow
  • Rental Property Investor
  • Upstate, NY
Replied Aug 15 2022, 06:45

Having cash to invest is a great first step to growing in Real Estate (Ironically, not required). I think what you have here is an identity issue to resolve. Cash is only a minor factor. The biggest is what you are looking for in your investing career. 

I know many people who invest their cash into turnkey investments and reliably generate 5-10% ROI. Now for most that's more than enough wherein you beat inflation (hopefully this year), but it's entirely a passive role. The second type of investor is likely looking into growing in real estate actively, and that's precisely when I would stop recommending turnkey investments. If you're looking to do real work but also maximize the return on your investment, you could be seeing 15%+ returns depending on how diligently you push to find and execute excellent deals. In a recent investment with a small group of investors we turned $350,000 into $500,000 in one year using the BRRR method. The difference is that I myself had some pretty serious work before, during and after to see those returns. In this case I spent almost a year finding this deal (as with all deals I captured that year) by underwriting hundreds. In addition, I had to manage contractors, budgets, and eventually bring a bank in both for purchase and the eventual refinance.

In essence, my best recommendation on how to use the $75k is to first decide what level of involvement you want. After you've picked a Real Estate identity, then decide how to proceed be it actively or passively. In my own experience, I'm more in tune with the active side, but there's a lot of great agents out there who excel at finding the best passive turn key deals. 

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Eric Sebast
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Eric Sebast
Replied Aug 15 2022, 13:49

So, to answer some questions, I'm thinking that we want to try more than just another ready to go duplex, so looking at either a BRRRR, or a STR (with no preference on the STR being in state or out of state). We are currently looking locally at a few buildings that we could either BRRRR, as well as a couple of vacation STR friendly locations to see if we can find one that fits.

If we do BRRRR, we would plan on it being local so we can drive there for and be closer to it in case anything goes sideways since it will be our first.

If we STR, then it would be at least 75 miles away so we can use a second home loan for a lower down payment.

Those are the two avenues we are looking at currently. Level of involvement, we can be fairly involved.

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Aj Parikh
  • Rental Property Investor
  • Centreville, VA
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Aj Parikh
  • Rental Property Investor
  • Centreville, VA
Replied Aug 17 2022, 08:19

One of the options to use is buying turnkey properties in the mid west and scaling your portfolio. You have good enough capital to do 1-2 deals or even invest in new construction if you are willing to wait. Let me know if you want to connect

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Mackaylee Beach
  • Real Estate Agent
  • Kansas City, MO
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Mackaylee Beach
  • Real Estate Agent
  • Kansas City, MO
Replied Aug 17 2022, 09:18

@Eric Sebast I have an awesome duplex in Kansas City that's undergoing full rehab!  Shoot me a message if you're interested in the details.

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James Wise
  • Real Estate Broker
  • Cleveland, OH
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James Wise
  • Real Estate Broker
  • Cleveland, OH
Replied Aug 19 2022, 05:12
Quote from @Eric Sebast:

Just closed on our first duplex a month ago, have about $75k that we can use to buy our next property(ies). Not willing to doing a house hack, whats the best option for cashflow?


 Probably the turnkey markets. Cleveland, KC, Toledo etc....

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Eric Sebast
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Eric Sebast
Replied Aug 19 2022, 05:32

@Mackaylee Beach@James Wise, real rookie question here I'm sure, but what makes Cleveland, KC, and similar "turnkey" markets? And I'm sure there isn't a "list" of turnkey markets, but where do I go to find out that type of information?

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Mackaylee Beach
  • Real Estate Agent
  • Kansas City, MO
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Mackaylee Beach
  • Real Estate Agent
  • Kansas City, MO
Replied Aug 19 2022, 05:50

@Eric Sebast  Any market could supply a turnkey property (meaning it's purchased, rehabbed, tenanted and managed by the provider with out YOU as the buyer having to do any of that "work").  However, most investors are looking to midwest markets like Kansas City because you can see positive cash flow after all of the expenses.  The rental demand is high (so you'll have minimal vacancy), the taxes are low and the entry prices are between 100-200k.  

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James Wise
  • Real Estate Broker
  • Cleveland, OH
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James Wise
  • Real Estate Broker
  • Cleveland, OH
Replied Aug 19 2022, 06:29
Quote from @Eric Sebast:

@Mackaylee Beach & @James Wise, real rookie question here I'm sure, but what makes Cleveland, KC, and similar "turnkey" markets? And I'm sure there isn't a "list" of turnkey markets, but where do I go to find out that type of information?


Low cost, high rent to price ratio, tons of affordable housing etc...

 Here is a ton of info on both Cleveland and KC.

The Ultimate Guide to Grading Cleveland Neighborhoods

The Ultimate Guide to Grading Kansas City Missouri Neighborhoods