What's the best way to turn 100K into the highest cash flow?

5 Replies

I'm looking to sell a condo I own in Southern California.  I bought it for 285K and I should be able to sell is for at least $330K.  There is a principle of 217K on the loan.  After all is said and done, I should be able to get about 100K from the sale.  

I want to do a 1031 exchange to avoid taxes.

I'd like to purchase/finance as many small SFH rentals ($50K range) in the midwest as possible. If I could put down payments of $10 - $15K on 6-8 homes, that would be ideal.

With a 1031 Exchange, I know there are time constraints of 45 days and 180 days.  I also understand that I may only be able to acquire 3 properties in the exchange.

Also, getting in a position where I could finance that many at once poses a challenge.  Would I have to get some kind of portfolio loan?

Any advice would be appreciated.

@Matthew Hsieh

Hi Matthew 

Do you live in the condo now? Or is it considered a primary residence in anyway? Bc you can make under 250k as an individual. 

If not, I would ask yourself what kind of investor you want to be, (active, passive etc) and where exactly in the Midwest you would want to invest and the people out there you want to start networking with / building a team. 

There are people that often times offer portfolios of multiple sfh.  I’m no pro on 1031, but to my knowledge you can spread it multiple properties. 

Someone sent me something In Texas recently for that same concept, but it’s definitely more than 100k

I do not live in the condo now. It's a rental property. I'm a passive investor with three SFH's in Wisconsin, being managed well.

I will look at getting a portfolio loan and purchase multiple properties that way.

Thanks!

The tough part is the 1031. to buy great deal it take time waiting in the wings to strike. as far as financing I would work on relationships with small banks in the markets you want to invest in, probably on the commercial side of things, many wont like that you live out of the state you want to own in. so you will need to knock on a lot of doors.  Speaking for myself, I could do way better just taking the cash, paying the tax and buying great deals over time, than having to jump through the 1031 hoops, figure out the difference of paying the tax vs cost to defer, you may be surprised how much the 1031 will cost if you are buying several properties. also dont know how Cali works, but the tax rate may be lower depending how long you have owned/lived in the condo, and how you file taxes for it.  

@Matthew Hsieh I second Scott about the 1031 issue. Works better with larger $ amounts. Speaking of which, be sure you understand what you buy when you target $50k homes. There is a reason they sell for $50k - they are cheap, but not a good value. Capex will more than eat up cash flow. Ask the people who are trying to sell their $50k house portfolio.