What would you do with $200k in cash?

50 Replies

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.

Thanks,

That question has an incalculable number of responses that are largely based off of your personal goals. 

You could BuyRehabRefinanceRepeat turning the same funds as many times are your heart and lender allow. 

You could use that as a down payment on an apartment complex. 

You could start flipping homes to increase your liquid cash on hand. 

You could become a full blow deal locating machine. 

Really you need to decide how much time and energy you want to devout. Your next questions is how fast do you want those results?

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

@Tony Kogan

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.

@Tony Kogan

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.  

@Tony Kogan

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. :)

@Robert LaBrie

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?

@Tony Kogan

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.

Originally posted by @Account Closed :

@Tony Kogan

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 

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.

@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.  

Originally posted by @Account Closed :

@Tony Kogan

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.

 Totally agree 1,000%!

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.

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.  

Originally posted by @Tony Kogan :

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.

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.

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!!