I'm about to inherit around $200k. How can I invest this money in real estate? Specially with complicated the market is at this time. I have been trying to simulate different scenarios by buying property with 20% down and none of them show a positive or not even close to be breakeven.
I'm willing to invest in different states but all this is new to me and it's complicated.
You could use the money to purchase a primary home and live in, start building equity instead of the money sitting in a bank. When you're ready, go buy another primary and turn this one into a rental. At least your money is working for you in this scenario.
You could use the money to purchase a primary home and live in, start building equity instead of the money sitting in a bank. When you're ready, go buy another primary and turn this one into a rental. At least your money is working for you in this scenario.
I already own a home. Where else could I put it? CA is too expensive
Hey Felipe, I'm a local real estate broker and investor, and I manage over 100 STR properties.
STR/MTR is the best residential cashflow available right now, and if you're trying to invest in Sacramento you'll find a pleasant and stable environment as compared to more seasonal "vacation" markets.
There are so many ways to invest, it can be overwhelming. I personally put about 90% of my capital into Sacramento metro real estate and will continue to do so unless I find a really good reason not to.
Of course, be sure to consult with a CPA and assemble a team you can rely on. That means brokers, lawyers, accountants, and depending on how active you want to be, general contractors and property managers.
I'm about to inherit around $200k. How can I invest this money in real estate? Specially with complicated the market is at this time. I have been trying to simulate different scenarios by buying property with 20% down and none of them show a positive or not even close to be breakeven.
I'm willing to invest in different states but all this is new to me and it's complicated.
Thank you.
That's a good problem to have. Like Bill said maybe park it for %, then network through forum & REI meetups here in CA. Diversify your portfolio. Best of luck
Pretend you don't have it and learn this business first. Wholesaling and being an investment friendly Realtor goes a long way to learning a market. Once you know what a good deal looks like, you will be much more comfortable knowing where to put that 200k.
Don't rush into anything with the $200K, network with some local investors and continue to educate yourself about the business, as you could easily waste that money on a bad bet.
Have you considered being a private money lender on other people's real estate deals? You work out the terms with them but these are shorter term loans often for fix n flip properties (but not always) where you could earn 10-12-15% on your money, and learn the business from an arm's length deal. Just a thought.
If you are determined to buy rental property instead then get connected with other investors to have a few sets of eyes on any deal you consider buying as your first purchase.
If you're looking to start a portfolio, you could use the money to fix and flip a property, then turn those profits into new acquisitions. As long as you have a strong team, you can be fairly hands-off, leaving you time to focus on your studies. As the portfolio grows, you can then move into fix and holds, and hire a property manager, and your business becomes virtually autonomous.
You could use the money to purchase a primary home and live in, start building equity instead of the money sitting in a bank. When you're ready, go buy another primary and turn this one into a rental. At least your money is working for you in this scenario.
I already own a home. Where else could I put it? CA is too expensive
Turn you current primary into a rental and go buy a new primary - buying a new primary will have a much more favorable lending experience for you. Rates, down payment and underwriting requirements.
You could use the money to purchase a primary home and live in, start building equity instead of the money sitting in a bank. When you're ready, go buy another primary and turn this one into a rental. At least your money is working for you in this scenario.
I already own a home. Where else could I put it? CA is too expensive
Turn you current primary into a rental and go buy a new primary - buying a new primary will have a much more favorable lending experience for you. Rates, down payment and underwriting requirements.
And go value addflip, 500k exempt, rinse n repeat. Many folks don't like that route tho.
Reduce your debt(besides your mortgage), buy performing debt, a T-Bill, and relax. You're not equipped to go much further. Unless your W2 can start covering physical assets investment, don't use this to jump into it.
You need to first eliminate debts then make money from this money. Not dig yourself a hole.
@Felipe Burga A house hack or a live in flip are great ways to get started. Look for someplace you'd like to live or can stand to live for a year that has good appreciation and land lord friendly. I'd suggest Reno since it's close to Sac, has good appreciation, landlord friendly and still has some relatively affordable options. As a primary residence there is also no state income tax. It's a great gift you received to build wealth. You can also invest in multiple areas with a combination in real estate and some high yield savings accounts.
Congratulations man I would first like to start by saying I am not a financial advisor and everything is based off my experience. Consider putting all the money to work for you like little soldiers! Focus on an annual yield that you would be good with at this point in your life! Consider your goals and find an avenue that aligns with that. Example: cashflow rental properties. Are you considering to be a landlord and handle the tenants directly or are you utilizing a property management company to give you a barrier between you and the tenants? Think about your risk tolerance level. Fix and flips give you a great lump sum of profit considering your underwriting process is on point prior to acquisition. Fix and flip business is an active job where “you only eat what you kill”. Capital gains is a factor. Rentals allow you to reduce your taxable income due to depreciation. As you scale utilizing cost segregation and other tools such as 1031 exchange which can be a great tax strategy as well. I’d be more than willing to talk further with you just message me. Well wishes!
It is definately a process. Looking at different states can be challenging and daunting. I think KC (Ks and MO) are excellent choices and provide a lot of benefit to investors - landlord friendly etc...