What would you do with $25k?

Question

At present I own one rental property in Florida that cash-flows about $450/month.  I recently flipped a property in North Carolina that netted me about $25k.  I'll be moving to Philadelphia in three months and would like to increase my efforts at building wealth through real estate.  In any case, I intend to complete 100% of required repairs myself minus roofing, carpeting, windows, and siding...I have experience with just about everything else.  I'm comfortable with flipping properties and BRRRing properties, although I've never wholesaled a property.  In the past I financed all repair expenses on zero-interest rate credit cards, it worked well, and I intend to use that technique in the future.  My questions to the group are as follows:

-If you had $25,000 to distribute with the intention of aggressive capital growth, what strategy would you use? Flipping?  Holding?  A combination of both?

-Would you initially focus your efforts on one property or seek out multiples?

-What strategy would you use to best leverage the $25,000 on hand? A single down-payment on the first flip?  Multiple down-payments with a HML? Would you seek a HML with the intent to refinance or begin with a conventional loan?

The intended areas are Kensington, Brewerytown, or Port Richmond, although Germantown is on the table as well.  I know there's no right answer but I'm interested in hearing some opinions!

Thanks,

Matt

Account Closed · Answer

Matt, you have value as a partner for a couple reasons, you hav a little bit of experiance already but your handyman skills are valuable. Nowadays a lot of cross add up from labor so if you can bend that cost to your favor by dong most of the work yourself and acting as project manager for the work your not to familiar with but still know enough not to get ripped off from shotty workers or contractors wannabes, there are some really good contractors out there but they also cost , you get what you pay for most of the time. But if you know enough to supervise say a few roofers or window installers which is not hard once you do a few .. As for roofs , I'd say leave it to the guys who can handle the heat and the back braking work. If it was me, and I do know how to do most everything also except major electrical and stuff like granite shaping. I would try to focus on Fix and Flips, then after you build your investment egg then go for multi units to hold. JVing with someone can be great for both people. But if that's not your bag of tea then look into a reputable hard money or private money loans for your flip, most require or like you to have skin n the game but keep $5k aside for emergency funds. Never know. I wish you were interested in doing something in Central Florida area because sounds like your a lot like I am..

I wish you the best and God Speed,

Michael Short

Disclaimer : I am not a financial advisor or an attorney and only offer my opinions so I am to be held no way in any way liable for any advice that my be followed.

Matt Hummer · Answer

Thanks everyone for the great responses!  The feedback is much appreciated.

Karen Johnson · Answer

@Timothy Maloney -  I'll have to keep you in mind for the future.

@Matt Hummer - We're starting out in that area with a similar amount ($20K). We were thinking about doing a buy and hold, but on further consideration have opted to do a few JV flips to build up our resources. We close on the purchase of our first flip property on Friday and begin the rehab shortly thereafter. We partnered with someone who is providing the bulk of the funds and someone who is an experienced contractor and flipper. You actually bring more to the table in that you have some experience to leverage, whereas we mostly have money and a willingness to learn. I think it's a great way to get started. I'd love to be doing more, but this way we get some experience, earn some more money for future investing, and hopefully minimize our exposure at the same time. Best wishes, whichever way you decide to go.

Igor Messano · Answer

@Matt Hummer initially I would say that either a flip or BRRR would be the way to go, with flip being better in terms of quick build up of capital. 25K I believe would be enough of personal capital to flip a house in that area of you financed the rest. The one problem I see with your plans is doing the work yourself with HML. Hard money is expensive and flipping an entire house in those areas can be very involved and take a very long time if you are doing most of the work yourself. The longer you hold for a flip the more you'll pay to the HML and it will make it very difficult to be profitable in flips. If you can get other type of cheaper financing it would be best.

Account Closed · Answer

I would definitely put it into direct marketing in a wholesale campaign for quick profits. I would not use any of my own money for investing. Build up your cash with cash.