What would you do with $100K cash??

Question

Good Morning Bigger Pockets,

I just wanted to start a fun discussion and see what everyone would do if they had $100k cash. I'm not implying that I have $100K, but just wanted to see how seasoned investors and new real estate investors think alike and differently. It could be a beneficial learning experience for everyone to make their money grow!

Wishing everyone a prosperous real estate experience!!

Mark Fries · Answer

@John Hamilton

I wouldn't do anything with it.

Brian Garrett · Answer

There are countless threads like this already.

Mark Gee · Answer

Good morning @John Hamilton. I'd want to my $100k to grow into $300k and set that as my goal within 24-36 months. Put it in my journal and see that goal every morning. I'd be inclined to do it as quickly and safely as possible. For me, that would mean value add rentals. So for easy math I'd purchase and control 2 properties with about 40-45k invested in each. The remainder (along with some credit cards or other private money if needed) would be used for a very timely rehab and rent. I would make sure I had a few hours a day to keep both projects moving along and contractors on pace. Bonus if its a contractor I've worked with in the past and know how they operate. I would do very little manual labor myself and just focus on the project management. These value add deals would mostly involve cleaning, painting, repairing a few leaks, new appliances and carpet. Nothing major. Possibly a couple new windows. They would be in good areas where homes are selling in less than 90 days.

The rents would bring in >12% return. After 1 year, I would 1031 exchange those properties for another set of similar, more expensive value add rentals. The money is really made upfront, so the discount to ARV should be substantial with more than 1 comp to back it up. I like at least a 30% discount (including rehab costs). Use the BP calculators to discern what makes sense and not lose sight of holding costs. Be conservative and find winners by running as many properties through your filter as possible.

John Hamilton · Answer

@Mark Gee @Joseph Firmin

@Henry Lazerow

Thank you guys for you knowledgeable and productive input.

It seems as our views are all similar in a way. I love the value added model and the ability to do that in commercial real estate/large multi-family. There are so many ways to be profitable and successful, there is no one way that is the right way.

I think I would look into the large multifamily complex that is mismanaged and needed work. I would follow the simple principles of streamlining systems, reducing overhead costs, raise rents and improve units as they come available. Force appreciation in a commercial property is a beautiful thing.

Ola Dantis · Answer

Especially the 100k amount has been discussed 100 times 😃😃😃

Henry Lazerow · Answer

Agree with Mark above ^. Focus on value add 2-4 units. But deals that just need basic cosmetics. These tend to be the easiest and least risky. The value add is what creates the equity and really makes your net worth grow. The cashflow is a nice side piece but doesn't get you rich by itself and 100k invested cash flowing really isn't much income.

Rather then 1031 though I would just hold them. Either pull cash out with a HELOC to do more deals or refinance when the time comes. This is what most of my clients do.

Joseph Firmin · Answer

Fun! Monopoly $$! Our favorite past time. This really depends on goals... For me, given I want to replace my W2 income with passive investments, I'd look to invest $100K in a general partnership to purchase a large apartment complex. #multifamily

What would you do with $100K cash??

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