This or that? Need help with options

12 Replies

Hello BP fam! 

Would love to pick your amazing minds on where to put my money.

a bit of a backstory: I make good money at a job I can tolerate. So I’m not looking to retire next year. But, I do want to get my rental income as close to my expenses as possible so if I wanted to say, take a 3 week vacation, I won’t feel it financially in my bills (I work commission, no PTO) at the end of the year I’ll have around $80K to put towards something.

now, my two options:

A) I put all of the money toward a new construction house. Based on the numbers, I'll have anywhere from $30K-$60K of built in equity just from the price of the house ($30K off the bat for sure, but I could see it rise to $60K since the house is in a very high appreciating market). This would take around 10 months to complete, however, and then I can cash out refi my money back and possibly do it again. The downside I see here is I don't see my money for 10 months and I would have to pay the note out of pocket until the house is complete. I can afford that. And the COC% before refi is around 9%.

B) I use the money I have to buy 3 "smaller" properties in the Midwest. The COC% would be better prior to refi, but I wouldn't be able to pull my money out for a while until equity is built or what have you. It would bring me closer to the goal of not needing to worry about bills now, but I question the long term plan of it.

Bonus option C, something else that I’m unaware of.


thank you guys so much for your time and advice!

Hello @Dominick Galinis , Great question!

It looks like option (A) would be your best-case senario. You might want to dive deeper into this first to see how you would make it work. Did you already speak with your lender?

With regards to (B) I'm always amazed when people from Florida consider investing in another state. Almost all of my clients are out-of-state investors looking to get out of their markets to buy in Florida. lol. The midwest can look great on paper. Things to look for are potential higher maintenance costs and less long-term appreation. Of course, these are general statements. But I hear the same two complaints. - Let me know if you have additional questions!

Originally posted by @Dominick Galinis :

Hello BP fam! 

Would love to pick your amazing minds on where to put my money.

a bit of a backstory: I make good money at a job I can tolerate. So I’m not looking to retire next year. But, I do want to get my rental income as close to my expenses as possible so if I wanted to say, take a 3 week vacation, I won’t feel it financially in my bills (I work commission, no PTO) at the end of the year I’ll have around $80K to put towards something.

now, my two options:

A) I put all of the money toward a new construction house. Based on the numbers, I'll have anywhere from $30K-$60K of built in equity just from the price of the house ($30K off the bat for sure, but I could see it rise to $60K since the house is in a very high appreciating market). This would take around 10 months to complete, however, and then I can cash out refi my money back and possibly do it again. The downside I see here is I don't see my money for 10 months and I would have to pay the note out of pocket until the house is complete. I can afford that. And the COC% before refi is around 9%.

B) I use the money I have to buy 3 "smaller" properties in the Midwest. The COC% would be better prior to refi, but I wouldn't be able to pull my money out for a while until equity is built or what have you. It would bring me closer to the goal of not needing to worry about bills now, but I question the long term plan of it.

Bonus option C, something else that I’m unaware of.


thank you guys so much for your time and advice!

 I would buy 3 smaller properties in Columbus, Ohio

@Dominick Galinis there is no rationalizing building when you can buy existing inventory...if you're not an architect or have a tight connection with a custom home builder this will take twice as long as you think with cost overruns you never predicted...how are you predicting you'll be in an instant equity position? I've personally never seen a good builder take 10-months to build anything...that is forever...if that is your timeline, you will also have materials price fluctuations...almost guaranteed. And what happens if the market takes a turn and you're under water by the time the build is done...

Buying in the Midwest is a better option 100%...

Best of luck

@Dominick Galinis again I agree with @Brandon Sturgill . I don't see how you know you'll be in an instant equity position, this seems too good to be true and speculative. Remember, "you make your money when you buy." I'd go with 3 well chosen houses in a stable Ohio market any day. Admit though I have a bias towards what I know and am comfortable with, so if you're confident in strategy 1, best of luck. 

Buy three properties for sure. New construction is quite delayed with zoning etc. You can have those 3 rehabs completed in 10 months. 

Permits are much easier when you take out and replace. I did this on a double and walked out with an approved permit same day. I'm now doing a 2 story addition on a SFH and it's a ton of back and forth with the city. Let alone the 10 weeks it takes for architectural drawings.

Columbus OH is a great place to look! 

Originally posted by @Dominick Galinis :

Hey @Marc Rice thank you for your response. I am curious, why do you say new construction is risky? Not Saying you’re wrong, but just a newbie trying to learn lol

Imagine trying to build everything in a house from scratch and doing so in the right order on budget and on time your first time....when you haven't even replaced a wax seal yet on a toilet. It won't go well...

@Dominick Galinis reiterating what's already been said above, investing in Ohio is the better option. Building something from scratch has way more moving parts and variables not to mention the timeline difference. Columbus, OH was among the top 20 fastest-growing metros in the last decade so in addition to easy cash flow, you can count on solid appreciation in the future as well. 

Good luck!

@Marc Rice , @Dominick Galinis , @Remington Lyman , @Brandon Sturgill , @Noah Chappell & @Austin Steed are all correct. You should not buy land, then try to work with a custom builder to build a new home for you. Going this route will require you to get a construction loan and take on the financial risk. There is also no need to customize the home as you are building to rent to a tenant not build your dream home. 

When we talk about buying a build to rent property in Florida, we are referring to purchasing a property from a spec builder who is building several properties at scale. This means that you are not buying land, selecting the builder or financing the construction. You would be purchasing a completed property that is being designed as an investment product. 

The midwest certainly has a lot of opportunities and you should definitely learn more about those opportunities. But you have the advantage of living in a state that other out-of-state investors are trying to get into. Plenty of nearby opportunities in Jacksonville, Palm Coast, Ocala, Port Charlotte, Cape Coral and many more. 

@Dominick Galinis, I think you are going to do great either way. - Let me know if I can provide further assistance. Enjoy!

@Brandon Sturgill Yes, Single-family (3/2 & 4/2's) and Mutifamilies (2-4 units). According to a recent USA today article we need to have 5.24 million more homes to meet current demand. Long term, the demographic growth (demand) and the lack of supply in these markets has many investors very optimistic. The key with these new builds is identifying areas that are rapidly expanding but still affordable to build. A good area should provide both cash flow and appreciation. 

Great website btw. Love the graphics. https://investhypothetical.com...

USA Today Article: https://www.usatoday.com/story...