What would you do if you have 150k cash?

Question

If you have 150k cash in your bank account. Would you buy 1 house for a condo and get a positive cash flow or would you buy multiple duplexes or use it fix and flip houses and use bank financing? I know it depends on what your goals are and other factors. Your feedback is appreciated.

Michael Wagner · Answer

Personally, I am inclined to use that money to purchase a self storage facility....it goes without saying that I would not just buy any facility. I would need to find one that fit my buying criteria but from an investment standpoint, there is no better vehicle grow your money. Self storage rents at the same price as apartments 9per square foot) but the expenses run only 30-35% whereas MF expense ratios are 50% or more. Additionally, the legal system is set up to favor owners of storage facilities as opposed to being "tenant friendly" like it is in the world of habitational real estate. These, among other reasons, are why storage is my go to. As you said though, this is a very general question and depends on your goals!

Syed Khan · Answer

Thank you Mike and Angela! Trying to learn from all you amazing experienced investors.

Syed Khan · Answer

Brandon - sorry for so many questions buy why is investing in a condo not the best idea?

Syed Khan · Answer

Thank you everyone for your great input. Honestly, I have just started to educate myself on the real estate investing and this whole time I was thinking the only way to invest in real estate is either all cash or conventional mortgage till I started reading blogs here and took the free mini course. I do not have a set goal yet as I am just getting started.

Brandon - I was always told by my friends and family to buy a condo with whatever cash you have so you don't have to worry much about the property compared to single or multi family homes. I unfortunately did exactly what has been told and the condo fee keeps increasing every year and it is starting to worry me a little because of the monthly cash flow decrease. I mean I still own the condo and maybe once I educate myself, I can get rid of the condo and use the cash wisely.

Any suggestions on where tostart besides the blog posts and podcasts?

Mike Pena · Answer

In my market I could potential buy around $600k-$750k in real estate with $150k in cash. I (personally) would buy a multi-plex. or 2) Partner with someone working a larger deal. You could gain some significant experience by picking up a mentor/partner. Like you said, a lot of variables come in to play when deciding your own endeavor.

Angela Harding · Answer

Syed,

It depends on so many different factors. Do you have the ability to use good financing? Do you have other income coming in? The first thing I have to say is how I started. I turned one dollar into two dollars. It wasn't with real estate at first, it was with a small cleaning business I started. Same philosophy though. What I do now with real estate is take $30,000 and turn it into $50,000 buy buying and selling. Then I do it again. Every two properties I buy and sell creates cash for me to buy and hold one for cash flow. My strategy is cash flow. I personally don't like to finance any houses but I'm in area where I can buy so low compared to many. If I had to buy in a higher priced area I would do the same thing except use my "earned" funds for a down payment so I could acquire more and set them up to be paid off within 10 years with my cash flow. So back to the beginning, it depends on what other factors are in play, how much houses cost in your market, what the return on the investment is, what the cash flow is and also how much experience you have.

I hope that gets you thinking a bit and heading in the right direction.

Angela

Brandon Sturgill · Answer

@Syed Khan Never buy a condo, please- ever. The reality of being an investor is that we have to be good at leveraging other people's money- private or institutional lenders. You have to look at your interest and needs here...quite frankly rehabbing is silly- IRS doesn't look to favorably on it at any scale. Leverage the cash by safely purchasing the multifamily property/properties that will provide a return you are comfortable receiving at a risk level you can stomach.

Tough question- you may also consider the FHA program: https://www.biggerpockets.com/renewsblog/2012/11/08/fha-loan-multi-family-investment-strategy/

Syed Khan · Answer

I just read the post and realized that it probably does not make sense.

What I mean to ask is how would you invest 150k cash depending on your goals?

What would you do if you have 150k cash?

What would you do if you have 150k cash?

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