Where to invest 100k?

20 Replies

Hi everyone- first post here.

My wife and I recently did a cash-out refi on our home in Los Angeles and are sitting on a decent chunk of money with the goal of investing in some property. 

We initially were purchasing a condo in Hypoluxo FL (close to family who are RE agents, contractors, etc) but seem to be falling out of escrow due to appraisal issues.

We have some familiarity with markets in central WI (I'm from WI and the company I work for is there), Asheville NC (family), Nashville TN and the West Palm Beach area of FL (fam live there). We're trying to figure out where to invest and what to invest in. We're ok to make longer term investments but ideally cashflowing a small amount now. Not afraid of rehab work. 

Multi-family? Commercial? What do you guys think and what other info might you need to help provide advice?

What are your goals? What I see many investors do is take the 100K and BRRR. Most likely you'd have to look outside of LA but the Midwest(Like TN) or Sunbelt area would be ideal. STR are wonderful too especially in markets likes FL. Biggest thing is to establish a team and start.

Originally posted by @Caleb Brown :

What are your goals? What I see many investors do is take the 100K and BRRR. Most likely you'd have to look outside of LA but the Midwest(Like TN) or Sunbelt area would be ideal. STR are wonderful too especially in markets likes FL. Biggest thing is to establish a team and start.

Goals are to own 10-20 LTR investment properties that give us some freedom to travel and do whatever we'd like. We have a team in place and ready to make things happen. STR are an option, just a bit of a pain with the on-site management.

@AJ Anderson the midwest is a great place to invest. I invest in Columbus, OH and have had a lot of success with cashflow here. 100k in cash goes a long way in this market, especially if you are looking to BRRRR. Columbus was the 6th hottest market over the summer and last month we saw the highest increase in rent prices ever.

Finding a team of a Real Estate agent/broker, lender, property manager, and contractor is the best way to get started.

@AJ Anderson there are lots of great options and even more bad ones. Be careful of cheap property they can be trouble there is money to be made there but the risk is high and the cashflow often goes into maintenance. We reached financial independence with way less than ten properties with a few STR's. If you can do 10% down Vacation property loans the returns are crazy good. We manage for people with that much leverage that still makes great CoC passively. Plus the return from just break even pay down and super low appreciation of 2% over 30 years is around a 2,000% return. AKA 50K to 1million. In my opinion House hack and vacation rental house hacks are the two best non real estate business (brrrr, flips, wholesale. Ect are business often very skill and work intensive business's not passive investing.) returns on investment out there.

The great thing about Real Estate Investing is that its not a "One Size Fits All" situation. What is best for you and your family is likely different from what I need and want or someone else does. I think its very important to keep Timeline in mind when making real estate decisions. 

Earlier in my career, most of the acquisitions we made decisions mainly based on present day cashflow. Years later, we realized we were shortsighted and that are largest successes were the result of some properties enjoying far greater appreciation and rent increases than others. 

Monthly cashflow is very nice( and fun) but I personally try to avoid it being the main factor in deciding on a property. I am more likely to "overpay" 10% on a property if I LOVE the future potential of the building/area, rather than get an "incredible deal" on a property where the income or value is less likely to increase. 

Best of luck! I am an agent in the Tampa Bay Area. I deal mainly in MFH, though I am interested in STR as well. Reach out if you have questions about my market specifically.

Awesome thanks everyone. I'm definitely not blinded by cashflow.. happy to pay more when needed for the long-term investment. 

I think the most difficult part of all of this yet the most exciting part is that it's a "choose your own adventure" type of thing..

Hey AJ, I love the dilemma and frequently visit this decision in my own life. Here's a few thoughts I hope prove useful to you:

1. If you're goal is cashflow (try to leave W2 work, retire early, etc.) then I recommend a short term rental.  They cashflow better and give you a fun place to visit when you want.  You can also potentially qualify for a 10% down second-home mortgage.  That definitely beats the 20-25% that currently is required on most rentals

2. If you want instant equity (quicker build net worth) then I recommend buying local fixer-upper and managing a rehab. This will also help you get some of your investment back immediately unlike buying a turn-key STR

3. I own a few turnkey rentals (traditional) in the mid-west and the lack of appreciation and lower cashflow (due to the PM managing all repairs at a premium) has steered me away from buying more. I love the high cashflow of my STR and I love getting the big paycheck at the sale of a flip or cash-out of a BRRRR.

Hope these thoughts help!

Originally posted by @Brad Jacobson :

Hey AJ, I love the dilemma and frequently visit this decision in my own life. Here's a few thoughts I hope prove useful to you:

1. If you're goal is cashflow (try to leave W2 work, retire early, etc.) then I recommend a short term rental.  They cashflow better and give you a fun place to visit when you want.  You can also potentially qualify for a 10% down second-home mortgage.  That definitely beats the 20-25% that currently is required on most rentals

2. If you want instant equity (quicker build net worth) then I recommend buying local fixer-upper and managing a rehab. This will also help you get some of your investment back immediately unlike buying a turn-key STR

3. I own a few turnkey rentals (traditional) in the mid-west and the lack of appreciation and lower cashflow (due to the PM managing all repairs at a premium) has steered me away from buying more. I love the high cashflow of my STR and I love getting the big paycheck at the sale of a flip or cash-out of a BRRRR.

Hope these thoughts help!

Thanks Brad. Seems I am seeing a lot of love for STR.. Aren't property management companies crushing your margins? For example, we looked at some opportunities out here in Big Bear etc and the companies took 25-35% of profit.

Interesting perspective from everyone here. Appreciate it. 

@AJ Anderson

What are your investment goals and investment horizon? How much time and effort do you have allocated?

Everybody loves BRRRRs, including me, but in the current market they are very hard to find. Will require a lot of time and effort.

The forums are generating a lot of buzz around STRs. Browsing Airbnb casually, I have noticed rates being much higher than before. I think it's mostly attributed to post lockdown demand. Not sure how long it will sustain for. (Personally bought ABNB stock to indirectly benefit from STRs without the work)

I like and own long term MFHs. Annual leases gives me less stress over vacancies and turnover costs. I typically target 10% COC. Do you plan to invest in state or out of state. Happy to share tips on locations I like.

Originally posted by @Jeff He :

@AJ Anderson

What are your investment goals and investment horizon? How much time and effort do you have allocated?

Everybody loves BRRRRs, including me, but in the current market they are very hard to find. Will require a lot of time and effort.

The forums are generating a lot of buzz around STRs. Browsing Airbnb casually, I have noticed rates being much higher than before. I think it's mostly attributed to post lockdown demand. Not sure how long it will sustain for. (Personally bought ABNB stock to indirectly benefit from STRs without the work)

I like and own long term MFHs. Annual leases gives me less stress over vacancies and turnover costs. I typically target 10% COC. Do you plan to invest in state or out of state. Happy to share tips on locations I like.

Hi Jeff- thanks for the message. I am inclined to want LTR in either SFH or MFH. I work a ton so don't have a ton of time to allocate to finding things. I will invest anywhere - just need to understand the market and feel good about it. I list a few markets in my original post!

@AJ Anderson

I've heard good things about NC and Nashville. I've also seen a lot of people really like Indiana.

Personally, I've invested in Ohio and Maryland for the cash flow. More appreciation than I anticipated (I think it's an overall market phenomena and not a regional catalyst).

How are you currently looking for properties? I like working backwards and figuring out market rents first. I use Zillow and pretend to be a renter and figure out what's the minimum rent I have to pay to not be homeless. Then I look at housing prices to get a sense of what's the minimum amount I need to pay to obtain said rents. ~Rough ratios allow you to compare zip codes and regions fairly quickly before you get into more property specific due diligence (taxes, insurance, utilities, etc)

Hi @AJ Anderson . If Asheville is still a consideration, we have some of the best appreciation trends you can find, and there seems to be no end in sight for such. It's tough to get an offer accepted of course, but less so if you'll consider a property that's banged up. Personally, I favor the STR route due to the extra cashflow, but it's easier when you're local and can self manage. You can do really well on LTR here as well.

Originally posted by @Mitch Davidson :

Hi @AJ Anderson. If Asheville is still a consideration, we have some of the best appreciation trends you can find, and there seems to be no end in sight for such. It's tough to get an offer accepted of course, but less so if you'll consider a property that's banged up. Personally, I favor the STR route due to the extra cashflow, but it's easier when you're local and can self manage. You can do really well on LTR here as well.

 pre-approved and shopping (remotely) in Asheville as we speak! If you know of any screamers, send em my way!

@AJ Anderson congrats on doing refi! I recommend buying a 4plex with it. You can find some in TX, AZ, and some other states for around $500k just be patient. It took me 4 month to locate a property and i jumped on it in 2 days. We recently refi'd and house hacked putting that cash in for the downpayment. The rent of the 3 units pays for the mortgage allowing us to live free. Should we decide to move out we'll have about $800-$1000 cash flow after we rent the 4th unit. It costed us about $250 a month on the refi. It was worth it for us and i would do it again in the future if i could.

Get some positive cash flow but great growth projections over the next 5-10 years in Central FL.  There's only two Disney theme parks in the US.  Amazon loves building 1 Million sq ft warehouses down here.  Some nice sandy beaches. Sure, people hate humidity during the summer and the occasional sinkhole that swallows entire parking lots, but it's pretty nice other than that.

@AJ Anderson It all starts with goals and expectations. You have already established a goal of real estate investing which is one of the best things you could've done. If you are looking for short term fix and flips/Airbnb's I would suggest Columbus, Nashville, Charlotte, etc. These are all markets that have a broad market for real estate (depending on what your going for). If you are looking for long term as well, then buying and holding in areas such as Upper Arlington, Whitehall, or Dublin are all great decisions. Again, it depends on what your exit strategy is. If your based around 100k, then in Columbus for good ROI you could Rehab around 2-3 houses depending on financing. Feel free to reach out to me for any further questions. Happy investing!