Best advice for investing 100K for income

7 Replies

I live in south Florida and am going to be selling a property I own and will walk away with approx 100k

What do you guys think my best bet is in how to spend that money for maximum income return. I am currently a landlord and have many years of experience  by not selling a couple of properties I have as I moved on so I am comfortable managing tenants. Should I finance or pay cash for properties ? Multi or SF?  Thanks in advance 

It all depends on what your goals are. If it were me I would use that to fund a rehab or two and then build more capital, repeat over and over, and then start putting the new capital into rentals paying cash on SFH to reduce debt stress.

Or find a good multi with all the units in one place and cash flows decent that I could use the 100k as down payment and make sure I have another 20k in reserves or 80k down and 20k in reserves. That would be more risky IMO since the units may need more work and upfront cash but if it cash flows well like it is then you can do upgrades as you go and increase income over time.

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There's no simple solution here, and what works for others here may not be the best fit for you. With that said, I do a lot of investing in the 90-120k range in Broward/Dade/WPB counties in South Florida, and (personally) find the best return in condos with HOA fees >$300/m.

Unless you come across a diamond in the rough or are willing to take on extensive rehab, you will be priced out of multifamily, and depending on the the areas you are considering, priced out of SFRs as well (assuming you are paying cash). You can still find a solid 7-12% with a cash purchase of a condo. Of course, you should know what you are buying: rental restrictions, HOA financial health, upcoming/outstanding assessments, etc.

If you are willing to buy something distressed and can renovate affordably, you can squeeze out a higher return in our market. I know a lot of people here don't like condos, but from my own experience, all of the distressed REO condos I've purchased in the tri-county area over the past 3 years are performing at 10-14% conservatively. I also believe that however frustrating SoFla HOA bureaucracy can be, that in most instances, it is well worth the peace-of-mind of not having to concern yourself with exterior maintenance and allows for a more hands-off approach if you intend to self-manage. I know there are many experienced investors here that would vehemently steer you away from condos, but they offer a very feasible solution if you intend to purchase with cash and are on a smaller budget.

I'm sure many here would disagree and would tell you to use your cash to secure a loan toward a multifamily, but it really depends on what your goals/expectations are. Cap rates are not fantastic for MLS multifamily in our area on average, although that doesn't mean you cannot find a deal if you know where to look. Many of the multifamily that I have seen with competitive returns around here tend to strictly require cash.

Best of luck.

I'd second @Michael J. first option and add an alternative route you could use to speed up the capital building side of it.  

Do you have the ability (time and experience wise) to take on multiple projects? Maybe not purchase simultaneously because deals are not that easy to come by but staggered as opportunities present themselves. You could use that 100k in pieces to put down payments on hard/private money loans for individual rehab projects. This would allow you to take on more projects and increase the liquidity of that 100k. You would have to buy with deep enough margins to support the holding costs, need solid deal sourceS, and be able to handle multiple projects. All not easy tasks but it can be done.

Thanks for the input. I actually like condo's and I'm not afraid of HOA's. I own a condo that I have had for 30 yrs in Miami and have it rented out now. I like that condos are a smaller investment. The hard money thing sounds good but I wouldn't want to get stuck owning with someone else's crappy deal

Hello @Elan A.,

Good advice on the rehabs of Condos; I will have to keep this information in mind the next time we do an assessment.

Thanks for providing #s of potential cash flow.