I'm wondering what some of you seasoned investors would do in this current market if you were to start with 100k in cash.

I'm relatively new at real estate investing, and I'm leaning towards investing in rental properties.

Invest out of state. Buy turn keys or BRRR project (which depends on if I have a full time job or not). Then wait and take the cash flow and put it back into those projects.

Originally posted by @Antoine Martel :

Invest out of state. Buy turn keys or BRRR project (which depends on if I have a full time job or not). Then wait and take the cash flow and put it back into those projects.

 Wouldn't be all that glorious... let's just ignore closing costs, but you're likely looking at 1%  rent and it'd  be about 500k worth of stuff so what like 5k mo in rents, probably like 1500 mo cash flow.

find a few other people with 100K and go straight to syndication.

SFH is great to learn on, but more difficult to scale

Originally posted by @Matt K. :

Originally posted by @Antoine Martel:

Invest out of state. Buy turn keys or BRRR project (which depends on if I have a full time job or not). Then wait and take the cash flow and put it back into those projects.

 Wouldn't be all that glorious... let's just ignore closing costs, but you're likely looking at 1%  rent and it'd  be about 500k worth of stuff so what like 5k mo in rents, probably like 1500 mo cash flow.

 Yeah and then you pay them off over the next 5-10 years and how your cash flow is $3k/mo.

Originally posted by @Alexander Felice :

find a few other people with 100K and go straight to syndication.

SFH is great to learn on, but more difficult to scale

 I like this. 

Originally posted by @Antoine Martel :

Originally posted by @Matt Katsaris:

Originally posted by @Antoine Martel:

Invest out of state. Buy turn keys or BRRR project (which depends on if I have a full time job or not). Then wait and take the cash flow and put it back into those projects.

 Wouldn't be all that glorious... let's just ignore closing costs, but you're likely looking at 1%  rent and it'd  be about 500k worth of stuff so what like 5k mo in rents, probably like 1500 mo cash flow.

 Yeah and then you pay them off over the next 5-10 years and how your cash flow is $3k/mo.

 please show me that math, because this is on a 30 yr note. 

Originally posted by @Matt K. :

Originally posted by @Antoine Martel:

Originally posted by @Matt Katsaris:

Originally posted by @Antoine Martel:

Invest out of state. Buy turn keys or BRRR project (which depends on if I have a full time job or not). Then wait and take the cash flow and put it back into those projects.

 Wouldn't be all that glorious... let's just ignore closing costs, but you're likely looking at 1%  rent and it'd  be about 500k worth of stuff so what like 5k mo in rents, probably like 1500 mo cash flow.

 Yeah and then you pay them off over the next 5-10 years and how your cash flow is $3k/mo.

 please show me that math, because this is on a 30 yr note. 

 Put all the cash flow back into the mortgages to pay them off quickly.

@Alex Moon

@Matt K.

Here's the backwards math of earning 15% ROI/Cash over Cash. Cash flow per month would be about $1600 monthly, or $19.2k annual. The PI is about $1800, 30yr @5%, taxes about 1% of sales price 500-550k, or 5k-5.5k annual, insurance about 2400 annual, HOA about 1200 month/14k annual, repairs/vacancy 5% of rents. Rents 5600 month (700 month per unit).

Purchasing two (2) 4plex, multi-family, conventional loan with 25% down, fico 740 minimum. Sales price $220-240k.

Pros.

1. positive cash flow

2. no state tax

3. appreciation of 8-10% per year based on historical

4. X factor - NFL team moving in 2020.

Cons.

1. BCD neighborhoods, but manageable.

The above factors are actual based upon my actual owning (2) 4plexs with the above parameters. You can probably guess the city.

Terry

Originally posted by @Antoine Martel :

Originally posted by @Matt Katsaris:

Originally posted by @Antoine Martel:

Originally posted by @Matt Katsaris:

Originally posted by @Antoine Martel:

Invest out of state. Buy turn keys or BRRR project (which depends on if I have a full time job or not). Then wait and take the cash flow and put it back into those projects.

 Wouldn't be all that glorious... let's just ignore closing costs, but you're likely looking at 1%  rent and it'd  be about 500k worth of stuff so what like 5k mo in rents, probably like 1500 mo cash flow.

 Yeah and then you pay them off over the next 5-10 years and how your cash flow is $3k/mo.

 please show me that math, because this is on a 30 yr note. 

 Put all the cash flow back into the mortgages to pay them off quickly.

 Again, show the math....

Originally posted by @Terry Lao :

@Alex Moon

@Matt Katsaris

Here's the backwards math of earning 15% ROI/Cash over Cash. Cash flow per month would be about $1600 monthly, or $19.2k annual. The PI is about $1800, 30yr @5%, taxes about 1% of sales price 500-550k, or 5k-5.5k annual, insurance about 2400 annual, HOA about 1200 month/14k annual, repairs/vacancy 5% of rents. Rents 5600 month (700 month per unit).

Purchasing two (2) 4plex, multi-family, conventional loan with 25% down, fico 740 minimum. Sales price $220-240k.

Pros.

1. positive cash flow

2. no state tax

3. appreciation of 8-10% per year based on historical

4. X factor - NFL team moving in 2020.

Cons.

1. BCD neighborhoods, but manageable.

The above factors are actual based upon my actual owning (2) 4plexs with the above parameters. You can probably guess the city.

Terry

 According to @antonie you can just roll your cash flow and have this paid off 5-10 yrs..

@Matt K.

Maybe do 15 year loan, and pay another $400 per month. However, leverage, cash flow is about accumulating and purchasing more property. It is about using other people's money to create wealth.

The cost opportunity of paying off mortgage is the opportunity to owner another 4plex. If you own 2 4plex, create additional cash flow, increase equity, and gain appreciation.

What do you think about the math?

Terry

I'm not saying to do that, I was simply pointing out to him that 100k doesn't get you all that much in terms of cash flow, let alone putting it into those properties. If you going the BRRR route like he mentioned you're only going to make little off each property and to make the example easy we just took it all the way up to 500k.

I mean this isn't the "best" investment... but it's realistic to what's in some markets. 
100k house
20k down (we'll ignore closing costs)

You're at 783 mo with the following assumptions: 80k loan, 5% interest, 1% tax, 800 insurance 15 yr note. Put it on a 30 yr and it's 528.

Now let's pretend we've got amazing renters... and got lucky on the rent. 1100/mo. 

Prop mgmt (because we are OOS)  cuts a deal: 100% 1st month, 9% monthly. That takes us to 917 mo.

That's 134 dollars before we take out anything else on the 15 yr note and 389 on 30 yr.

This is before we take anything out to build up our reserves....once you do that what do you have left to toss extra onto the mortgage? 

Don't get me wrong, you're building that networth up but it's not like your cashflow is going to be rolling in helping you get more property. The chances of NOTHING going wrong, no one leaving, not having to spend money on something isn't realistic. HIGHLY unlikely you're going to get 389 (x5) saved up for an entire year to pick up another property or toss all of it down on the mortgage. Maybe if you had MFH... but SFH that's a stretch.

Leverage is great and all if you have the funds to support it... or the equity to pull from. I'd hate to have multiple properties that are older and have higher turnover.... and be banking on few hundred a mo from them. One repair could wipe you out.

@Matt K.

@Alex Moon

My numbers are based up (2) fourplexs, or (8) units, at sales price of $230-240k. You will never get these types of returns or cashflows from a SFR. Only way is multi-units.

The beauty of 4plex is the same conventional qualifying as a house, and you can use the current lease agreements to help qualify for loan. In my situation, the cash flow as so good, that my debt ratios went down about 2%. Try doing this while you own/live in house with mortgage and buying another. 

Due to Nevada have no state tax, will save another 10%, and with depreciation and mileage expense, will take it into about $500 a month negative, which you offset against your W2 income. How is this for a tax shelter with positive cashflow and appreciation of 8-10% a year. You can verify the median price of home, $260k, for August, and the year over year appreciation of 10%. 

Throw into the mix of the Raiders moving to Vegas in 2020, and building $1.9B stadium, you got construction jobs for next 2-3 years.

Terry

Originally posted by @Matt K. :

Originally posted by @Terry Lao:

@Alex Moon

@Matt Katsaris

Here's the backwards math of earning 15% ROI/Cash over Cash. Cash flow per month would be about $1600 monthly, or $19.2k annual. The PI is about $1800, 30yr @5%, taxes about 1% of sales price 500-550k, or 5k-5.5k annual, insurance about 2400 annual, HOA about 1200 month/14k annual, repairs/vacancy 5% of rents. Rents 5600 month (700 month per unit).

Purchasing two (2) 4plex, multi-family, conventional loan with 25% down, fico 740 minimum. Sales price $220-240k.

Pros.

1. positive cash flow

2. no state tax

3. appreciation of 8-10% per year based on historical

4. X factor - NFL team moving in 2020.

Cons.

1. BCD neighborhoods, but manageable.

The above factors are actual based upon my actual owning (2) 4plexs with the above parameters. You can probably guess the city.

Terry

 According to @antonie you can just roll your cash flow and have this paid off 5-10 yrs..

 Yes. You can. 

Originally posted by @Terry Lao :

@Matt Katsaris

@Alex Moon

My numbers are based up (2) fourplexs, or (8) units, at sales price of $230-240k. You will never get these types of returns or cashflows from a SFR. Only way is multi-units.

The beauty of 4plex is the same conventional qualifying as a house, and you can use the current lease agreements to help qualify for loan. In my situation, the cash flow as so good, that my debt ratios went down about 2%. Try doing this while you own/live in house with mortgage and buying another. 

Due to Nevada have no state tax, will save another 10%, and with depreciation and mileage expense, will take it into about $500 a month negative, which you offset against your W2 income. How is this for a tax shelter with positive cashflow and appreciation of 8-10% a year. You can verify the median price of home, $260k, for August, and the year over year appreciation of 10%. 

Throw into the mix of the Raiders moving to Vegas in 2020, and building $1.9B stadium, you got construction jobs for next 2-3 years.

Terry

You can def hit those numbers with SFH.... and depending on your exit strategy you could keep maintenance/capex to a min.

You're at what like 60k unit, 700 in rents. How's that different that say 120k house, 1400 rent which is doable. You're paying HOA though and you don't have that in a SFH...

Buy Multi-family through syndication with that money and others. 

I'm a new jack but if I had $100k I would find a market where I can buy a multi  with the most units I can get with value add potential to be able to cash out some of that down payment.

I agree with MF
$100k will purchase $400k min property... but remember we are using OPM, so it'll probably get you much more.
Cash flow should be more than enough. Refi in3-5 yrs and scale up.

Originally posted by @Terry Lao :

@Matt K.

@Alex Moon

My numbers are based up (2) fourplexs, or (8) units, at sales price of $230-240k. You will never get these types of returns or cashflows from a SFR. Only way is multi-units.

The beauty of 4plex is the same conventional qualifying as a house, and you can use the current lease agreements to help qualify for loan. In my situation, the cash flow as so good, that my debt ratios went down about 2%. Try doing this while you own/live in house with mortgage and buying another. 

Due to Nevada have no state tax, will save another 10%, and with depreciation and mileage expense, will take it into about $500 a month negative, which you offset against your W2 income. How is this for a tax shelter with positive cashflow and appreciation of 8-10% a year. You can verify the median price of home, $260k, for August, and the year over year appreciation of 10%. 

Throw into the mix of the Raiders moving to Vegas in 2020, and building $1.9B stadium, you got construction jobs for next 2-3 years.

Terry

 Terry, are you a CA resident?  I thought you'd still have to pay CA state tax if you reside in California.  May not matter as the property may be reported at a loss for some time but I just wanted to be clear on the state tax liability for out of state rentals if you're a CA resident.

@Joe J.

I report rental income (loss) on CA tax return. I'm referring to no state tax for Nevada.

Terry