Investor · Atlanta, GA · Member since 2015 · 39 posts · 8 votes
Hello BP community,
I have a questions that I am looking to get an answer to : how would you invest $200k cash in real estate in order to maximize return on investment. All input is welcome.
Draper, UT · Member since 2016 · 6 posts · 5 votes
10y
I'm with Zack Karp, I would look at buying apartments in a very good area and have a property management company manage the apartments, make sure you keep cash on hand in case there are vacancies or unexpected expenses.
I have bought over $5M in property, I have had apartments and flipped single family homes, if you do decide to buy single family homes, do it under 200k a piece, in other words do not buy the big expensive property even if it is a great foreclosure deal, because if you can't sell it quickly, at a higher price it is nearly impossible to rent it out and cover your mortgage payment.
You could buy 7 or 8 100k homes and put 20k down on each and at that price point definitely look for some good deals i.e foreclosure, distressed home owner, whatever you do, take your time, regardless of what any realtor tells you, take your time and make smart decisions.
Rehabber · Woodbridge, NJ · Member since 2015 · 60 posts · 4 votes
10y
Personally I would take a portion and use a few lenders to do multiple rehabs and flips and then loan the other portion of that money so that way it can multiple faster
To maximize your return? Buy a foreclosure on the court step. Buy some tools if needed. Fix it and sell it just below market value. Should be within 6 months.
I would spend the next 6 months doing the exact same thing. Shoot for at least a 60% return.
Well the liens can be understood prior to the sale. The inspection is a bit more complected. That being said, I can not think of any other maximize your money in real estate. Primarily because your working it. The MLS usually has lame deals, marketing campaigns take a while to bare fruit, chasing leads is well chasing leads.
How much competition is in your area, and for what strategies. That is probably the 1st question to answer.
Buy a McDonalds franchise! McDonalds....the world's largest real estate company that also sells burgers. Seriously, like @Ryan Dossey said your options are endless. Make money, but do it in a way that is fun and makes you happy. Do you want to be a landlord? Do you want to do multiple projects at once? BRRR? For me, I would use it as a down payment on an apartment complex, hire a great property manager, and sit back and collect. Or maybe I would BRRR. Depends how I'm feeling that week. :)
Investor · Atlanta, GA · Member since 2015 · 39 posts · 8 votes
10y
@Account Closed
When you say "liens can be understood", do you mean hiring a title company? That could be pretty expensive if you bid on number of houses at the auction. How else would you investigate your liens?
That is a great point. Around my parts you can get a current owner search for $40. That's all most investors, not all, use. However It can add up. Lets say you do 20 searches to get your first house. IMO $800 is money well spent compared to what you can save.
That being said it still goes back to how much competition is in your area with regards to the courthouse sales. Maybe attend a few sales and see how many homes get sold and how many folks show up.
I do my own searches but it took me a while to come up with a system.
To maximize your return? Buy a foreclosure on the court step. Buy some tools if needed. Fix it and sell it just below market value. Should be within 6 months.
I would spend the next 6 months doing the exact same thing. Shoot for at least a 60% return.
Unless the courthouse steps are ultra competive like they are here. And it's not always smart to do the work yourself
Draper, UT · Member since 2016 · 6 posts · 5 votes
10y
I'm with Zack Karp, I would look at buying apartments in a very good area and have a property management company manage the apartments, make sure you keep cash on hand in case there are vacancies or unexpected expenses.
I have bought over $5M in property, I have had apartments and flipped single family homes, if you do decide to buy single family homes, do it under 200k a piece, in other words do not buy the big expensive property even if it is a great foreclosure deal, because if you can't sell it quickly, at a higher price it is nearly impossible to rent it out and cover your mortgage payment.
You could buy 7 or 8 100k homes and put 20k down on each and at that price point definitely look for some good deals i.e foreclosure, distressed home owner, whatever you do, take your time, regardless of what any realtor tells you, take your time and make smart decisions.
Specialist · Salt Lake City, UT · Member since 2015 · 533 posts · 378 votes
10y
@Tony Kogan, you seem to have a great problem. I think everyone is right that has posted on this thread. The question becomes what is your experience? If you have no experience fix and flipping I would suggest staying away from buying at the courthouse steps. If you have no experience with buy and holds how do you know if you are getting a good deal? Are you prepared to deal with tenants, maintenance and the property managers? These are all great ways to make money on your money but just like anything else you need to know what you are doing.
You could lend your money at a pretty good rate of return to another investor. You could invest in tax liens! Notes - performing and non-performing! What type of risk are you willing to endure? Typically, the higher the risk the higher the return! I could keep going with some out of the box ideas but until you determine how involved you want to be with the degree of risk it is very difficult to steer you in a particular direction. One way might be to partner up with an experienced investor and use your funds to acquire, rehab or hold propeties. Whatever you do, be careful! Real estate is a fantastic vehicle to develop wealth but it can take away everything just as easily! Good luck! If you want to chat further email me.
To maximize your return? Buy a foreclosure on the court step. Buy some tools if needed. Fix it and sell it just below market value. Should be within 6 months.
I would spend the next 6 months doing the exact same thing. Shoot for at least a 60% return.
Real Estate Investor · Albuquerque, NM · Member since 2015 · 68 posts · 12 votes
10y
I'm in a similar boat. I think I've decided to do a mix of flipping ( to increase my till) and buy and hold to gradually build to about 50 properties / units that can cash flow at 500/ month or better.
Either way the core is still about finding some smoking deals.
Real Estate Investor · State College , PA · Member since 2009 · 594 posts · 173 votes
10y
the OP asked how to get the greatest return on his money in 1 year. I don't see how a rental could achieve this. it goes against the normal rate of returns for that strategy.
IMO by law of averages an individual has the greatest chance of getting the best discount on the court steps.
Doing the work themselves will minimize expenses. A contractor can take half your profit.
It may not fit the OPs risk level or skill set In addition he might be in a saturated area for flippers and courthouse buyers. However in general the approach provided should yield the biggest return in 1 year.
I have a questions that I am looking to get an answer to : how would you invest $200k cash in real estate in order to maximize return on investment. All input is welcome.
Thanks,
Hi Tony - My suggestion . . . since you don't have a timeline on ROI would be to diversify the investment into 3 strategies. Here's what I personally would do:
1. 30% or $60k in REITs. They have a rate of return much higher than a savings account, percentage depends on the trust, less risk than stocks, and no flipping or management involved.
2. 30% or $60k - Purchase a SFR or CONDO in Broward Cty FL to LEASE-OPTION to a tenant that wants to purchase YOUR property, not just rent it. They will pay you monthly cash flow. The option terms negotiable, a portion of the rent will go toward your tenants future down payment to purchase the property 3 - 8 years later. Tenant maintenance CAN be part of the deal.
3. 40% or $80k - Vacant Land Investment. It is a buy, hold, and WAIT strategy, but VERY lucrative. Investors scoop up & sell the land early, pre-development. The big developers might take a few years to several years to come back and purchase, but when they do . . . this is when you cash your check.
Consultant · Providence, RI · Member since 2015 · 117 posts · 37 votes
10y
Tony - one last point I'll add to my suggestion above. . . as it applies to me personally, I still owe $172,000 in outstanding student loan debt. So while I would still create the cash flow as above, much of my NOI would end up going to outstanding student loans that I have owed for almost 20 years. FUN!!
Note Investor · Austin, TX · Member since 2012 · 602 posts · 357 votes
10y
I'd purchase a pool of NPN"s and work them out to either become performing or sell them off as REO's. We picked up a pool of 17 assets worth $617K for $200K and we converted half of them into performing and the other half we sold off as REO's. Awesome returns!
If you aren't a fix and flipper, I wouldn't venture down that road because if you don't have the experience, things can get messy really fast. Apartments are great, IF, and I say IF, you can find one that makes sense.
Notes provide the best of both worlds without the headaches. You get the cashflow, appreciation, and real estate "itch" if you need it!