Should i buy Multiple properties or one big property?

5 Replies

Hello BP family, 

This is my first post on BP and first i want to say I am very thankful for the insight i get from this community everyday.

So the question i have is, i was recently approved to receive up to 2.4 million for the purchase of Real Estate properties. Now my question is would it be best to spread this across a wide portfolio or would it be better to put it in one or two large investments?

I live in NY,NY so the other question is should i leave my market and go to another or should i just grab a place in NYC since I am able to at this point.

Thank you again,

Wish everyone great success

Sean. 

If I were you I would invest out of state for cash flow. You would never have to work again.

You could look for large multifamily properties to purchase but the market is so hot for them right now that it could take a long time to buy one of them.

There is a huge opportunity right now in the 1-4 unit space because there are so many properties available. 

Out of state you could buy rental properties for $70,000 each, and each property will make $250/mo in net cash flow. You can buy 10 of those properties for $700,000 and make cash flow of $2,500/mo. 

And that is just by using 1/3rd of your pre-approval amount! 

The answer lies (or should lie) in the numbers. What kind of returns can you get on the different scenarios? 

You're most likely going to find next to nothing for returns on NYC properties. I would look at some there, look at some out-of-state, and then in both locations look at both commercial larger buildings and smaller residential buildings. Then see what options offer you what and go from there.

@Sean Harry

If you are approved for an amount that large, I imagine that you could even invest locally in NYC. My suggestion would be to begin networking with other local area investors. There is a great deal of money to be made in a market like NYC due to price appreciation.

The strategy that I would use would be to buy multifamily properties in "up and coming" areas that may gentrify in the next 10 years. The area would still be rough around the edges so prices will be less expensive and you may even see cash flow. The property itself should be a fixer upper where you can build equity.

@Sean Harry Congrats on deciding to post on BP. My suggestion is: in the future to refrain from stating the specific amount of funds you will have access to - to protect yourself and your family. In terms of what you can do - a lot depends on your level of expertise in one area or the other, also on whether you want to be active or not. If you're not an expert in any of the RE niches, I'd say you should educate yourself first. If you want to be passive in RE, then start with NNN leases or (if you have some money to invest) syndications. But again - education is the key PRIOR to starting to implement any strategy. And then, you'd also want to stay diversified. So don't pull all money into a single investment, put into several.

If you need further clarification, feel free to PM me.

Best of luck!