$100k Cash to Begin Real Estate Investing

Irvine, CA · Member since 2016 · 27 posts · 3 votes

I have saved up a solid nest egg of cash that I am looking to get invested into real estate due to the many benefits that Real Estate provides like depreciation for taxes, mortgage pay down with cash flow, etc. I am not experienced with Real Estate and am not sure if I want to be landlord. I know there are other methods out there like Fundrise, but I wanted to ask the BP community what the most turnkey, least hands off real estate investing methods there are out there that typically provide the best returns and all of the benefits of real estate investing. Thanks everyone ahead of time!

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Ian IppolitoBusiness Member

Investor · Tampa, FL · Member since 2015 · 1k+ posts · 1k+ votes

@Nick McCandless, I invest in single-family rentals that I own, as well as Crowdfunding/syndication deals like Fundrise. In my opinion, there is no perfect investment and they all have their pros and cons.

It sounds like you are wanting to be as passive as possible. If so, crowdfunding/syndication is the most passive way to invest.

This isn’t for everyone, because you have to feel comfortable vetting sponsors and handing over complete control. But if you are OK with that, then you can enjoy certain advantages, such is much better diversification across properties, geography, etc. You can also invest in a lot more expensive properties then you would have been able to afford on your own, as well as many more different types of properties (for example, you are not going to be able to purchase much commercial real estate with 100 K direct). You also can invest in debt in addition to equity, etc. which gives you a lot more options.

The other downside with crowdfunding/syndications is that you do have to pay a fee to the sponsor. On the other hand, that fee does get you professional acquisition and management with someone that probably has a lot more experience than you have. If you are a newbie, then that can avoid a lot of expensive mistakes.

The Real Estate Crowdfunding Review

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Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
8y
Well, you kind of just described....turnkeys. But I know you've looked into those in the past. If those aren't the fit, what other kinds of things do you have in mind? I don't know of a more passive option in terms of holding real property.
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Chris Youssi
Rental Property Investor · Caledonia, IL · Member since 2015 · 290 posts · 213 votes
8y
SFH ( single family homes ) hands down without question . A few points to prove up my point:
Faster appreciation
More stable tenant
Much easier to rent
Stronger cash flow
Tenants most times handle small repairs
No lawn or snow maintenance
Easier to unload
Been doing this for 35+ years done multi duplex SFH and there is no comparison in my experience. 100k is a great start - off topic / look for somewhere outside of largecities where trends are starting to avoid overpaying. My thoughts
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Nick McCandless
OP
Irvine, CA · Member since 2016 · 27 posts · 3 votes
8y
What do you guys think about Fundrise? They are completely hands off which would be nice. What benefits do I lose out on with Fundrise over doing let's say Turnkey?
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Larry Fried
Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
8y
Well Fundrise is a syndication and that is one way to go. I personally haven't invested with them, but I don't like their fees and their lack of transparency. I like to know what I am buying into, and their funds don't allow for that. You might be different. In any case, I suggest not putting your whole amount into one basket - diversify to reduce risk, and maybe across different methods of investing. Here is a BP article I wrote on Three Key Routes for Passive Real Estate Investing
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Lane Kawaoka
Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
8y
Nick McCandless i would not involved with syndications until you have a rental or two under your belt of the experience of telling a deal from just a shinny PDF. Plus if you go in 50k in a couple deals, depending on you income level you will out of funds. I started with out of state sfhs until I had ten then I switched over.
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Mitch Provost
The Woodlands, TX · Member since 2017 · 45 posts · 31 votes
8y
@Nick McCandless, Fundrise is a great alternative if you are not an accredited investor and want the most passive investment available. Remember that this is a fund (portfolio of properties) which means that your investment is in a pool of real estate, similar to a REIT, and your returns are a balance of all properties in the portfolio. Returns will be much lower than other alternatives, but purely passive and likely less risk than the stock market. Even if you have property managers, etc. to manage directly owned SFHs, you still have areas that can cause you headaches. Some don't consider this truly passive.
if you are an accredited investor, you have many other options to choose from for passive investing, including crowdfunding and direct investments in multifamily apartments. These investments are typically direct into the property, meaning that your name is on the LLC that owns the property and you realize all the benefits as a direct real estate owner (tax benefits, much higher returns, etc.). They are also completely passive because your are a limited partner in the deal while the general partners do all the work.
Either way you go, you want to understand the risks associated with each as you make your decisions. The key to managing risk is knowledge so do your homework and keep asking questions on BP. We are all here to help and share.
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Ian IppolitoBusiness Member
Investor · Tampa, FL · Member since 2015 · 1k+ posts · 1k+ votes
8y
@Nick McCandless, I invest in single-family rentals that I own, as well as Crowdfunding/syndication deals like Fundrise. In my opinion, there is no perfect investment and they all have their pros and cons.
It sounds like you are wanting to be as passive as possible. If so, crowdfunding/syndication is the most passive way to invest.
This isn’t for everyone, because you have to feel comfortable vetting sponsors and handing over complete control. But if you are OK with that, then you can enjoy certain advantages, such is much better diversification across properties, geography, etc. You can also invest in a lot more expensive properties then you would have been able to afford on your own, as well as many more different types of properties (for example, you are not going to be able to purchase much commercial real estate with 100 K direct). You also can invest in debt in addition to equity, etc. which gives you a lot more options.
The other downside with crowdfunding/syndications is that you do have to pay a fee to the sponsor. On the other hand, that fee does get you professional acquisition and management with someone that probably has a lot more experience than you have. If you are a newbie, then that can avoid a lot of expensive mistakes.
The Real Estate Crowdfunding Review
View Page
2 Reply
James MasottiPro Member
Rental Property Investor · Washington Township, NJ · Member since 2015 · 1k+ posts · 976 votes
8y
Originally posted by @Nick McCandless:

I have saved up a solid nest egg of cash that I am looking to get invested into real estate due to the many benefits that Real Estate provides like depreciation for taxes, mortgage pay down with cash flow, etc. I am not experienced with Real Estate and am not sure if I want to be landlord. I know there are other methods out there like Fundrise, but I wanted to ask the BP community what the most turnkey, least hands off real estate investing methods there are out there that typically provide the best returns and all of the benefits of real estate investing. Thanks everyone ahead of time!
I strongly suggest you pick up @Dave Van Horn's new book Real Estate Note Investing. He details his journey from working in his own painting business...aka having a job in real estate...through owning rental properties...to eventually being a note investor (about as passive as you can be outside of syndication). Read the book and you wont be disappointed about what you learn. At worst it will arm you with additional questions and insights about what sort of investing sounds interesting or not for you.
Podcast Guest on Show #312
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Alina Trigub
Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
8y
@Nick McCandless You've received a ton of feedback here. Keep in mind everyone is going to "promote" what they know and believe in. In order for you to make an informed decision, you've got to educate yourself. While from my personal experience the things you're looking for which include but not limited to: "depreciation, cash flow, passive investment", are all part of syndications, I'm sure this isn't the only option. So read up on syndications, note investing, turnkeys, crowdfunding, whatever else interests you. Talk to people that use one strategy or the other. And then based on the feedback, create a list of "pros and cons" for YOU! Then go through a process of elimination to decide what's left. This should guide you in the right direction.
If you have any additional questions for me, feel free to PM.
Best!
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Scott KronePro Member
Investor · Northbrook, IL · Member since 2017 · 352 posts · 295 votes
8y
I think the answer to your question begins with your definition of "best returns". It would seem you first need to determine in your own my what are your investment goals which respect to ROI, risk, time, deprecation, etc. Once you have goals for your investment, the best one would be the investment that fulfills the most objectives of our goal.
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