100K in cash to start investing

Buying & Selling Real Estate
5yFollow

100K in cash to start investing

Moaaz Malik
Bay Area · Member since 2021 · 38 posts · 29 votes

I have 100K in cash saved to start investing in real estate. I currently live in California and that isnt enough funds to start with the BRRRR method by buying property here. What's the best approach that I can take? I've started reading and learning about investing and won't just jump into something but is out of state investing my best option?

16Reply
124 views

Most Popular Reply

Eddie Shumulinskiy
Rental Property Investor · Lehigh Valley (Allentown Bethlehem, Easton...etc.) · Member since 2020 · 9 posts · 15 votes
5y

@Max Gradowitz @Moaaz Malik you can invest in a high cost area like CA. The best option in my opinion is HOUSE HACKING! You can put down %3.5 for an FHA loan. If you have $100k you can even buy a 4 unit for $2,000,000 with putting down $70,000 as the minimum of %3.5, the remains $30k you can use for closing costs and some minimal repairs or just as a nice cushion.

15Reply
See this reply in the discussion

58 Replies

Jump to latestLatest
  • Carlos H DeOliveira
    RI · Member since 2019 · 64 posts · 48 votes
    5y

    You can start small in a market that has a low cost to entry like Ohio, Arkansas, Alabama or Indiana. You can find properties for less than 130k in these states. If you use leverage you should be able to get 3-4 properties, these markets have high cashflow and low appreciation.

    11Reply
  • Moaaz Malik
    OP
    Bay Area · Member since 2021 · 38 posts · 29 votes
    5y

    @Carlos H DeOliveira got it. A little nervous about investing out of state as I’m just beginning but seems like the best value and opportunity

    2Reply
  • Max Gradowitz
    Bakersfield, CA · Member since 2016 · 378 posts · 307 votes
    5y

    If you are looking to stay within CA, you have two options: Pay cash for a very small house in a rural area of the state (I'd recommend rural parts of the San Joaquin Valley) which will be difficult, but not impossible, to do. Or use the funds you saved up for a down payment on a conventional loan and use that on a 1-4 unit property, which would be a lot easier to do. I'd still recommend the San Joaquin Valley part of the state, as Northern and Southern CA has become too expensive to make financial sense.

    3Reply
  • Eddie Shumulinskiy
    Rental Property Investor · Lehigh Valley (Allentown Bethlehem, Easton...etc.) · Member since 2020 · 9 posts · 15 votes
    5y

    @Max Gradowitz @Moaaz Malik you can invest in a high cost area like CA. The best option in my opinion is HOUSE HACKING! You can put down %3.5 for an FHA loan. If you have $100k you can even buy a 4 unit for $2,000,000 with putting down $70,000 as the minimum of %3.5, the remains $30k you can use for closing costs and some minimal repairs or just as a nice cushion.

    15Reply
  • Kayla Givens
    Lender · Denver, CO · Member since 2021 · 243 posts · 253 votes
    5y

    Hey, @Moaaz Malik ! Congrats on saving up a good amount of capital and getting ready to take the leap into real estate investing!

    I agree with @Eddie Shumulinskiy - House Hackin is a GREAT way to get started in high priced markets. If you can get into a $2mil property and have it cash flow NOW, imagine what it will be worth 10 years from now! House hacking is also a great way to get started in real estate and get familiar with investing/property management.

    Best of luck to you!

    4Reply
  • Dan Portka
    Real Estate Agent · San Pedro, CA · Member since 2019 · 253 posts · 128 votes
    5y

    @Moaaz Malik agree with others here. If you’re open to house hacking (being a landlord and having neighbors as tenants) than that’s likely the best way to go. 100k can get you a nice duplex while you can continue to save to add an adu and add additional rental income. Just make sure if you run the numbers so the property will cash flow when you move out!

    Otherwise 100k is more than enough to get started with OOS BRRRRs. I’ve been doing it for a couple years now and am started to build a nice little portfolio of SFHs

    2Reply
  • Moaaz Malik
    OP
    Bay Area · Member since 2021 · 38 posts · 29 votes
    5y

    Hey @Dan Portka I'm thinking that OOS BRRRR is the best strategy for me in my current situation. I have to live in the Bay Area for my work so moving out right now to a new place would be a little difficult. Finding a team I trust OOS seems a little challenging. Do you think the best bet would be to get in contact with a realtor OOS and let them know of my plans? I'm targeting Columbus Ohio.

    1Reply
  • Stephen Brown
    Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
    5y

    I'd definitely say house hacking is your best bet, but if you go the OOS route then I'd be sure to check out the midwest for cash flow small multifamily properties. Also find a real estate agent who invests him or herself and has a team to support you with.

    4Reply
  • Max Gradowitz
    Bakersfield, CA · Member since 2016 · 378 posts · 307 votes
    5y

    To those screaming about house hacking a 2 million dollar property with a 3.5% down FHA loan, I strongly disagree in this circumstance. First, you would have to have the income to qualify for over $12,000 a month mortgage payments. Even if you have that, low down FHA loans require PMI (and I think taxes) to be added to the mortgage payments, which really adds up a lot on that expensive of a property. Even on a 4 unit property (best scenario in terms of the most amount of units you can get with FHA), to make any profit, you are looking at renting each unit at well over $4k at the very least to make any profit at all (that is not including paying your share of your own unit btw). If the normal market rental value of a single unit is well over $4k a month in your area, then sure, it might make sense. I highly doubt any such scenario exists. And yes, appreciation is a factor in the long term, but in this scenario you'd likely be hemorrhaging a LOT of money each month while banking everything on that appreciation. Not a smart decision in my opinion when you really break down the financials.

    I'm not saying house hacking ISN'T a good idea in general, I know people it has worked for in inexpensive markets, but there's a little more to putting that plan into effect and it making good financial sense than merely having a large down payment available.

    For comparison, in a small town in central CA, a small house as a rental property that you won't occupy yourself with 20% down loan for $150k will need only $30k down and will have mortgage payments around $700. Then you can rent it out for $1k. With your savings, you could buy three houses like that, totaling a little over $2k a month, bringing in around $3k a month. And appreciation on the overall value for the future. 

    11Reply
  • James Duke
    Developer · Aventura, FL · Member since 2016 · 2 posts · 2 votes
    5y

    @Carlos H DeOliveira thanks Carlos. I was contemplating the same question. I live in Miami and land is so expensive and for someone with little money this is so discouraging. So, I've decided to take my money and invest in Alabama. This will help me to raise the capital needed to invest in Miami... So thank you for confirming what what I was doubting

    1Reply
  • Kyle Tom
    Property Manager · Columbus, OH · Member since 2021 · 66 posts · 121 votes
    5y
    Originally posted by @Moaaz Malik:

    Hey @Dan Portka I'm thinking that OOS BRRRR is the best strategy for me in my current situation. I have to live in the Bay Area for my work so moving out right now to a new place would be a little difficult. Finding a team I trust OOS seems a little challenging. Do you think the best bet would be to get in contact with a realtor OOS and let them know of my plans? I'm targeting Columbus Ohio.


     Hey @Moaaz Malik, I know you want to find a team that you can trust before investing OOS but having invested out of state in Ohio living in California at the time, I would recommend you find team members along the way. A lot of new investors run the risk of analysis paralysis and think that you need everyone lined up from an agent to a contractor, to an insurance broker. I saw you mention you are targeting Columbus Ohio. The next step would be learning how to analyze a deal. After that, it would be finding an agent or team of agents to find deals for you.

    Do you already know how to analyze a deal? I'm not sure where you are in your real estate journey yet!

    5Reply
  • Moaaz Malik
    OP
    Bay Area · Member since 2021 · 38 posts · 29 votes
    5y

    @Kyle Tom Hey Tom so just starting. I’ve used the calculator on Bigger pockets to analyze deals but that’s it.

    0Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    5y
    Originally posted by @Moaaz Malik:

    Hey @Dan Portka I'm thinking that OOS BRRRR is the best strategy for me in my current situation. I have to live in the Bay Area for my work so moving out right now to a new place would be a little difficult. Finding a team I trust OOS seems a little challenging. Do you think the best bet would be to get in contact with a realtor OOS and let them know of my plans? I'm targeting Columbus Ohio.

    Yes, building your core 4 is crucial. Your Realtor should be able to help you get started with this.

    I invest locally in Columbus, Ohio

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
    3Reply
    • Pablo PereyraBusiness Member
      Real Estate Broker · Memphis, TN · Member since 2014 · 30 posts · 22 votes
      5y
      Originally posted by @Remington Lyman:
      Originally posted by @Moaaz Malik:

      Hey @Dan Portka I'm thinking that OOS BRRRR is the best strategy for me in my current situation. I have to live in the Bay Area for my work so moving out right now to a new place would be a little difficult. Finding a team I trust OOS seems a little challenging. Do you think the best bet would be to get in contact with a realtor OOS and let them know of my plans? I'm targeting Columbus Ohio.

      Yes, building your core 4 is crucial. Your Realtor should be able to help you get started with this.

      I invest locally in Columbus, Ohio

      Memphis TN gives a great ROI to its OOS investors. You should look into that market as well.

      Catalyst Funding
      WebsiteView Page
      901 REALTORS
      View Page
      0Reply
  • Steven Foster Wilson
    Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
    5y
    Originally posted by @Moaaz Malik:

    I have 100K in cash saved to start investing in real estate. I currently live in California and that isnt enough funds to start with the BRRRR method by buying property here. What's the best approach that I can take? I've started reading and learning about investing and won't just jump into something but is out of state investing my best option?

    I have alot of investors from California invest here in Columbus, mainly because its affordable, cash flow is there, and appreciation is nuts, all great things for BRRRs. My first BRRRRR was $300k, put $50k into it, refinanced and got $90k back. Now im working on refiing it agin to get another $50k and it cash flows $1800/month.

    Second BRRRRR cost $160k, put $55k into it, refinanced and gave me just under $200k back and cash flows $2000/month. Alot of potential with $100k!

    8Reply
  • Brandon GoldsmithBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2020 · 1k+ posts · 1k+ votes
    5y

    House hacking would be the most ideal situation, but not sure if it would be possible to do so where you live or if the numbers make sense at all. OOS investing would be the next best choice. I would recommend looking at some markets in the midwest. There are plenty of markets in Ohio where depending on your criteria I am sure you could find a good market. @Moaaz Malik

    [email protected]614-963-3340
    1Reply
  • Moaaz Malik
    OP
    Bay Area · Member since 2021 · 38 posts · 29 votes
    5y

    @Steven Wilson so for the brrrr to work is it ok to not purchase the property upfront with 100% equity? I noticed you said your first property was 300K but you only put 50K into it. It was my understanding that you buy the whole property and then refinance it, but based on what you said it doesn’t seem like you did that.

    1Reply
  • Dan Portka
    Real Estate Agent · San Pedro, CA · Member since 2019 · 253 posts · 128 votes
    5y

    @Moaaz Malik yes speak with a few realtors and property managers. get referrals from them. get referrals from other investors from Columbus. try facebook groups too. networking is the best way to find people you can trust.

    1Reply
  • Dan Portka
    Real Estate Agent · San Pedro, CA · Member since 2019 · 253 posts · 128 votes
    5y

    @Max Gradowitz your example 1K rent - $700 mortage payment... leaving you w/ $300 / month at the end of the day. What about your other costs - property management ($100), repairs/capex ($150+), vacancy ($50)? Are you even cash flowing at the end of the day? Why invest in CA from long distance when you can go OOS where its more landlord friendly and get better price to rent ratios? Seems like you're only banking on appreciation.

    While i agree house hacking in a HCOL area isn't always the best way to go, it is for many people. Rent vs buy analysis typically favors house hackers even in socal even when considering PMI (and your returns are usually higher paying PMI w/ 3.5% down as opposed to non PMI 20%!). If you can buy a duplex for $850K and pull in 2K / month in rent or buy a similar SFH for $700K without any rental income, you don't even really need to run the numbers to understand which scenario is better. When comparing HH vs renting, you need to dive a bit more into the numbers but i'm finding plenty of deals where your house hack "rent equivalent" is cheaper than what you'd pay if you were renting. The power from house hacking comes from being able to SAVE MORE MONEY monthly than you would be otherwise. Then you can put that savings to use and invest in whatever or wherever your heart desires. back to my original point - to house hack you need to be willing to put in a little bit more work (being a landlord/property manager) and deal with living next to your tenants, but the returns are worth it.

    0Reply
  • Moaaz Malik
    OP
    Bay Area · Member since 2021 · 38 posts · 29 votes
    5y

    @Dan Portka thanks super helpful. I’ve reached out to some in Columbus Ohio and they’re sending me some properties! Would love to find property in California that’s nearby but starting in Columbus might not be a bad idea.

    1Reply
  • Jim PfeiferBusiness Member
    Investor · Dublin, OH · Member since 2014 · 241 posts · 495 votes
    5y

    With $100,000 you could invest in four different passive syndications. You could diversify by market, asset class and sponsor. Your returns might be lower than a perfect BRRR - but in my experience, those BRRR's sometimes don't work out exactly as you hope they might. If you want to be more passive - especially if you are looking at investing in markets outside of your area, syndications might be worth a look!

    4Reply
  • Steven Goldman
    Lender · PA · Member since 2019 · 533 posts · 461 votes
    5y

    Ohio is a really good choice. The real estate is still relatively reasonably priced.  Columbus is more expensive than some of the other areas. Akron, Dayton, Canton all have opportunities. You can get bank funding for turn key at around 4 percent or fix and flip bridge money 8.99 or greater for one year. You should hook up with a agent who works the investment space and before you sign an agreement of sale you should already have your financing strategy in place.  I have a subdivision in Bellefontaine Ohio and other commercial projects in Lima and Marietta. Feel free to reach out to me and good luck!

    2Reply
  • Erik B.
    CA · Member since 2019 · 54 posts · 17 votes
    5y

    @Moaaz Malik I'm in the same position as you.  I'm down in the South Bay looking to rent out my condo and get into a 4 unit via house hacking.  Investing out of state also seems very intriguing as well.  Seems like there are a lot better opportunities in other states like the others have mentioned.    

    2Reply
  • Aaron Gaffney
    Investor · Santa Barbara, CA · Member since 2016 · 75 posts · 35 votes
    5y

    @Moaaz Malik Hey there! I am also in California, on a central coast and right now it makes way more sense to invest in the Midwest. If you want to take that money, roll some of it into rentals and some into flips, you can start to multiply it really fast! I sent you a connection request, let’s chat more.

    0Reply
  • Aaron Gaffney
    Investor · Santa Barbara, CA · Member since 2016 · 75 posts · 35 votes
    5y

    @Carlos H DeOliveira Exactly, this is where I am doing all my investing is the estate you list it! And Florida and Texas. A little bit in Maryland!

    0Reply
  • Aaron Gaffney
    Investor · Santa Barbara, CA · Member since 2016 · 75 posts · 35 votes
    5y

    @Stephen Brown 

    Would love to connect with you! I’m sending connection request to several of you on this thread, as I love the Ohio markets and I am investing regularly there. Also, the non-coastal California markets, although it’s not a landlord friendly state people still gotta rent here!

    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free