Real Estate Investor · SF bay area, CA · Member since 2010 · 16 posts · 1 vote
My parents and my in-laws recently gave us $150k each. We don't really need their money so now we have $300k extra in cash. I'm thinking of investing for cash flow to supplement their monthly income. I plan to take a long term hold approach and use the equity paid over time for kids college funds 10-15 years later. Is this a reasonable thinking?
We live in SF bay area where housing are super expensive and cash flow positive is very difficult to achieve. I'm looking into investing in apartment complex or multi-family units in other states. Which area is currently giving good cash flow? I'm looking at Atlanta but also thinking about Dallas etc, just because I heard more about these areas. Other suggestions?
Will it be better to operate two properties with $150k down payment for each or pool the capital together for $300k down payment? Two smaller properties can somewhat mitigate the risk but on the other hand a larger property may provide better economy of scale. I'd really appreciate if you could share your wisdom.
We have very good credit but I guess commercial loans are more based on property financial than owner's credit (unlike for our primary residence). We will need to hire professional property management since we are currently busy with our own careers and kids. But we are very interested in getting into RE investing and are willing to take the time and learn.
I'm hoping $1500/month income for each $150k. That means 12% cash on cash return. Is this doable in CRE?
Investor · Cincinnati, OH · Member since 2010 · 1k+ posts · 928 votes
13y
Options:
Invest in a multifamily syndicate with an experienced manager running it, with a strong track record of success (10-20% targeted annual return, depending on class of property and area). I would not purchase an apartment project from across the country, with you having no experience, that is just a recipe for disaster.
Invest in a hard money lending company (9-10%)
Make direct loans to an experienced rehabber on BP (9-11% + 1-2 pts)
Invest on profit-sharing basis with a rehabber (15-20% w/ a bit more risk)
Invest in a successful note workout fund such as PPR, which recently offered 12% to accredited investors.
A NNN commercial investment, found through a seasoned commercial broker (9-10%)
Purchase turnkey investment homes from a very reputable provider such as Memphis Invest in a good market such as Dallas or Houston, using low-rate conventional loans for some extra leverage (12-18%).
Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
13y
A 12% Cash on Cash return is very doable, and supports your stated goal well. Both are achievable.
Commercial loans first look to the property to qualify, then look at the borrowers credit and resources. A typical multifamily loan will need 20% down, and you will need to leave yourself some cash reserves for contingencies.
As far as location, each market has its own characteristics, not to mention good and bad neighborhoods within the individual market. Right now there seems to be a lot of talk about Texas and Atlanta, but there are a lot of good markets in between, and around the country.
Another factor to consider. With a larger property, you may be able to afford an on-site manager, where two smaller properties may not. My first apartment investment was a 23 unit property. I think an on-site manager would help with the "little things" that happen with a property, that tenants don't see or think are important. (like overflowing gutters)
As you stated, you need to take the time to learn and understand how to analyze and potential real estate investment.
Real Estate Consultant · Camarillo, CA · Member since 2010 · 2k+ posts · 1k+ votes
13y
Let me start by welcoming a fellow Californian to a great site for education.
I want to jump to your point about busy schedules with family and careers. Real Estate investing can be very lucrative over the long haul, but it takes time. If you are tight on time then looking into actively investing may not be the best avenue for you. There are other ways to invest in CRE while taking on a more passive role.
From your description, that you would like to fund the kids college fund, I am not sure why cash flow is a high priority. But let’s take cash flow. There are many hard money lenders that can offer you the returns you are looking for. There are other ways that you can be a private lender with other people handling your funds
Buying notes is another avenue you could pursue, but again I would recommend being more of a passive investor and let your money grow.
Neither of these other methods builds equity, so the third area, would be to work with someone that has more time to do the work and run the deal. Before we make a MF purchase we may look at over 100 non deals. We spend 100s of hours checking out numbers, properties and markets before we acquire a property. There are many companies like ours that use a private placement to raise funds and there are REITs that are sold on the exchanges.
I certainly don’t want to discourage you from investing, but you have young children and careers and you will be torn. I know I could not have done what I am doing now while my children were young.
My last point is this. When we are looking for distressed or value add properties, my ears always perk up when I find that property was owned by Californian doctor or professional that bought the property, but was more of an absentee owner. We can usually get these at a deep discounts.
If you don’t have the time, become a passive investor. Do your due diligence on the person or company that will be doing the hands on work and you enjoy the benefits. Be careful about telling people how much money you have to invest. Get to know them first and do your due diligence.
Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
13y
Why are you talking about loans with that kind of money? I've got 8 units that I would gladly sell to you for 150K. Think out-side the California-box. Property values are MUCH lower in other parts of the country. And even lower still if you get out of the bigger cities. How about mid-size Southern towns/cities like Murfreesboro, TN, Huntsville, AL, Lexington, KY, Greenville/Spartanburg, SC?
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
13y
Most of my Doctor clients prefer triple net leasing for hands off and no management.
The multifamily will give you more yield but even with management in place you still have to oversee the books every few weeks. They have to know you are still watching them to keep them honest and make sure they are performing to their full potential.
The benefit to a larger complex is you can have a full time PM and a maintenance person on staff. You can also control the whole look and feel of the development.
You can get 80% ltv in some cases but the loan rate is about 75 basis points higher which affects the spread between the purchase cap and the fixed debt going in. Banks are doing 75%ltv and you can get a seller to hold a second at 10 to 15%. This allows for a higher cltv with less percentage down and getting the first at a better interest rate and also improves cash on cash return.
Not every seller will do this however but this is a structure many of my buyers favor.
I do have many clients from California, Phoenix, New York, Texas, overseas etc. that just cannot get yield that they want locally. In many of those markets people have spec plays banking on the back end and getting the tax write down.
You can go for 50 or 60% occupancy type value add buildings but I would not recommend that for your situation. Turning something around no matter what anyone says isn't easy and it requires a lot of time and cash. A seller looking to retire selling at a good cap with a property that Is fully performing with good tenants can help safeguard your investment and be more hands off.
It's the same as buying a floundering business with high risk to turn around versus getting a well performing business at a great price. Even though you have cash the banks will still account for reserves and want to look at your tax returns.
The key question is do you want to partner with anyone else on a property?? If you do not have strong tax returns and other income coming in you might need to. I have some clients who are looking for partners and others who are not.
Investor · Cincinnati, OH · Member since 2010 · 1k+ posts · 928 votes
13y
Options:
Invest in a multifamily syndicate with an experienced manager running it, with a strong track record of success (10-20% targeted annual return, depending on class of property and area). I would not purchase an apartment project from across the country, with you having no experience, that is just a recipe for disaster.
Invest in a hard money lending company (9-10%)
Make direct loans to an experienced rehabber on BP (9-11% + 1-2 pts)
Invest on profit-sharing basis with a rehabber (15-20% w/ a bit more risk)
Invest in a successful note workout fund such as PPR, which recently offered 12% to accredited investors.
A NNN commercial investment, found through a seasoned commercial broker (9-10%)
Purchase turnkey investment homes from a very reputable provider such as Memphis Invest in a good market such as Dallas or Houston, using low-rate conventional loans for some extra leverage (12-18%).
Real Estate Investor · SF bay area, CA · Member since 2010 · 16 posts · 1 vote
13y
Thank you so much for all the replies! Greatly appreciated! Thanks for the suggestion of getting a bigger property to afford PM. Excellent point!
Very happy to know that 12% cash-on-cash is doable with multiple approaches. I'm wondering why anyone would keep money in stock market?!
Feedback for some of the questions:
Jeff: I'm looking for monthly cash flow because I want my parents/in-laws to see a steady income stream so that they could be more relaxed in their retirement life and don't have to be too frugal with themselves. Basically, my goal is to supply my parents/in-laws with some cash each month and 10-15 years later get more than $300k back ($600k possible?) for college. I'm not trying to maximize one or the other but want a balanced both. Is getting both 12% cash flow and accumulating equity from rental payments reasonably achievable on the same property? Or are they somewhat mutually exclusive?
Bryan: I'm looking to use $300k as the down payment and apply a loan because I thought we could leverage our good credit as an intangible asset and buy into bigger properties for better return? Of course, this could be a naive thought. Would love to hear pro/cons for getting a loan vs. full cash investment. We have steady income in our day jobs and have savings in equity markets so we could tolerate a little bit of risk with loans, I thought.
David: thank you so much for a crispy clear list of options and their corresponding yields! I will look more into the first and the last bullet points (multifamily syndicate and Memphis Invest) since my 12% annual return goal seems to be more comfortably achievable in these two approaches.
Thanks again for all your help and now off to more study!
Investor · Memphis, TN · Member since 2013 · 171 posts · 49 votes
13y
@Bay H. I am a wholesaler in Memphis, with 150-300 you can purchase several properties properties in Memphis. I am working with a Chinese investor who purchased 7 properties 2 years ago in Memphis all for 137k, nows he looking to sell for double that price, And reinvest in apartments. I say 5 of 7 of his properties are duplexes an he purchased them with the tenants already in place.. Check memphis, Indy, Dallas Or Houston put those are the hot markets right now..
Also why put 300k down when you can own the properties free and clear, Cash is King!
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
13y
@Account Closed What I am more impressed by is that you are a bird dog investor with no real company or turn key system and your working with a Chinese investor!!! How did that happen!!!
Investor · Memphis, TN · Member since 2013 · 171 posts · 49 votes
13y
@Curt Davis networking my friend.. A big title doesn't mean much curt, you don't need a system or a company to meet investors or flip a property.. Actual I came to my Chinese investors via email wishing he wanted to sell a property that looked vacant in a area one of my local investors were looking to purchase in. And actual bird dogging is something I cut myself of very early, I figured why settle for a lower profit when I am doing the exact samething as a wholesaler
Real Estate Consultant · Camarillo, CA · Member since 2010 · 2k+ posts · 1k+ votes
13y
If 300k is all of your available funds, no way would I recommend you put it all on a down on a property. You wouldn't be able to as there are inspection, appraisal, loan and other fees. Lenders may require capex reserves and you will need ultility deposits, funding operating account, insurance, etc.
Another option is to diversify over several of the options mentioned by David. No need to put all the eggs in one basket.
I have a friend that was chasing the deals as an active investor until her husband struck it rich in the import business. Now she is one of my passive investors and spends her time finding and evaluating other deals to invest in. Not a bad way to go.
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
13y
@Account Closed I think thats great. I am only amazed as most foreign buyers either come to us from an affiliate or hey find turn key companies so if you found a client through marketing that is great.
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
13y
That's awesome you have the extra cash! For markets, Atlanta is still cash flowing for sure. Inventory is harder, but very doable. Dallas is a great market but the cash flow will be a little lower. Houston is also good. Any of the TX states will have a little harder time because of high property taxes but they are still good deals. The highest cash flows I know of are in Chicago but not everyone is okay with Chicago. Indy is still good for cash flow.
Depends on the property, but I think you are a lot better off for returns buying two at $150k each.
Real Estate Investor · SF bay area, CA · Member since 2010 · 16 posts · 1 vote
13y
Ali, thanks so much for sharing your experience and knowledge! Really appreciate you compare these popular cities on their cash flow potential in general.
I will start with Atlanta. I like this city. It is a good point about the higher property tax rate in Texas. It really eats into cash flow.
For a newbie to start, is it usually recommended to find an investment company in Atlanta area? Who is good? Do I sign an agreement upfront and pay a fee for them to pass deals to me to evaluate? Or, should I start with MLS/Redfin/Loopnet and contact the seller agent to get more detailed?
Investor · San Francisco, CA · Member since 2010 · 910 posts · 889 votes
13y
Hi Bay Home,
Like yourself, I live in San Francisco and cash flow is hard to find around here. I started investing in Phoenix three years ago and now have moved on to Houston. Here are my two cents that you can take with a grain of sand with regards to investing out of state!
It's great that you want to now start in Atlanta. No need to sign any contracts just yet and no need to pay anyone upfront to find a deal. You will pay when you have a great deal under contract! First, you have to figure out where in Atlanta you want to invest it. It is a large sprawling area with good areas and bad areas. To figure out where I have done the following in no particular order.
1. Talk to property management firms and ask them where are the hot rental areas, what renters want in a house in terms of bedrooms, baths, garages, etc and good school districts.
2. Talk to real estate agents that own rental property what areas they like.
3. Talk to wholesalers and ask what their investors like.
4. Search the internet. I like the city-data.com forums as there are locals who invest and many people ask where to invest as well.
5. Talk to people on BiggerPockets that invest in the Atlanta area of course!
6. I like to invest in good school districts so figuring them out is a top priority using the city-data forum and Trulia.
7. Read about the local real estate news.
Then, once a few areas have been picked, I have done the following:
1. Sign up with every single wholesaler in the area I can find.
2. Research turnkey operators and review their numbers and try to beat them with wholesaler or MLS deals.
3. Create searches on Redfin with daily updates in the areas you want to invest in. If Redfin is not available, find an agent that can help you create the search and have those listings mailed to you.
4. Talk to agents and find the most investor friendly agent. (This is really hard) You will need them to make lots of offers, pull rental and sales comps, and drive to properties to help you take tons of pictures and give you an honest assessment of what needs to be repaired to make it rent ready.
5. Sign up with the local REI's to get their newsletters and member emails.
It's a lot of due diligence before even setting foot in a property, but it will help you better focus what you want to buy in terms of an area and price. After all this due diligence, I now know what renters want, what school districts are good, which part of cities have lots of evictions, and ballpark estimate of what a property in a certain location should rent for.
Just remember, its very easy to buy a house. Knowing what to buy is the hard part! If you want to get the best return on your money while sleeping soundly at night, take the time to do your due diligence. Good luck!
Apopka, FL · Member since 2012 · 207 posts · 120 votes
13y
Be careful guy.
Yes it is possible to make 12% on the money. It's also possible to lose a large chunk of it swimming in waters you don't fully understand. Remember the risk free rate right now is about 2%. Which means you have to take lots of risk to principal to hit 12%.
When you start talking about using the proceeds for parents to live on and to pay for your kid's college -- this ain't risk money. This is quite literally widow's and orphan's funds. Do consider whether commercial real estate in a far off city has the best risk profile for such money.
But real estate gives investors the fever. Caution be damned, the deal must be done.
Atlanta is a great market to invest in. The metro area has great areas to invest in that offer favorable cap rate (8% to 10%+) and good growth potential.
Atlanta is expected to add 2 million people by 2030, and is ranked as one of the top rental markets in the U.S.
Not necessarily true. I get this form our investor clients often. If you based your decision solely on the property taxes as a percentage of the property value in Texas, you may never invest there. That is myopic in my opinion because there are tremendous deals in Texas markets like Dallas, Houston, San Antonio, etc.
You need to look at the forest (income and expenses), not just the tree (property taxes) to get a complete and holistic picture of the property's financial performance.
You should work with an "investment company" or investment provider that understands the various Atlanta area markets so they can help guide you in selecting the best areas that meet your investment goals. A good provider will also be able to help you find or recommend good turn key properties that will make the process as simple as possible as a self-proclaimed "newbie".
NEVER! There is no need to sign anything upfront, nor should you ever pay a fee to view and review investment properties. Why? I know of one company out there that does just that, but I don't understand the logic. It has been my belief that the investor should get all the information possible in order for them to do their due diligence and make an informed and logical decision.
Depending on what you're looking for, the MLS may not be your best source. You will find some deals, or deals-in-the-making with some negotiation, but expect to find properties that will require work (from light cosmetic to full rehabs).
Real Estate Investor · SF bay area, CA · Member since 2010 · 16 posts · 1 vote
13y
Thanks @Johnson H. for the step by step instruction (hello, my neighbor!) and thank you @Marco Santarelli for the inputs! Yes, should focus on the forest, not the trees!
After reading many forums and discussions, I now have a much better idea on how feasible $1500 monthly positive cash flow on $150k capital is. (This goal itself is somewhat arbitrary because no one in the family will have to count on this cash flow for living but I have to start somewhere and limiting my parameters.)
12% cash-on-cash looks like obtainable, especially factor in the financing. Assuming a property with 8% cap rate, 70% loan at 7% interest, the cash-on-cash return would be
With this calculation, I did not include principle paydown because it is amortization schedule dependent. So actual monthly cash flow would be lower but still well above 12%.
Now my questions are:
1) I noticed many posts mentioning 5 yr balloon with 20-25 amortization. Is 20 - 30 year loan not common for commercial loans? I'm only looking for general / common practice. I read that sometimes if you have good relationship with a local bank, you can get sth exceptional. But those are special cases.
2) Will bank give me loan for commercial property if I have never own or manged one?
3) @Johnson H., you mentioned signing up for all the wholesalers, turnkey providers, investment providers etc. I'm a little bit concerned whether that would be considered as unethical or offensive (of course, unethical is too strong a word here - but you get what I mean), just like when you buy a house, the buyer agent does not want you to work with other buyer agents. What is the norm? Is it usual or unusual that you sign up with one trustworthy person (maybe find on BP based on people's feedback?) and they go out to find you a property that meets your needs? Or is it just everybody talking to everybody? Some providers require signing an NDA so sounds like exclusive kinda of deals.
4) In each area, say Atlanta, Texas, Memphis etc. there are many companies/websites showing investment properties with excellent investor testimonies. Things all sounded easy, investors are all taken good care of by these investment firms/providers, rents just rolling in. Of course, reality must be not as rosy, especially for out-of-state people. How do I know which provider to work with? I read some give compensation if the investment went sour,... Is this the ideal type of providers to pursue because they are very confident with their deals or is this a talking point bait?
5) @Joel Owens , thanks for listing a number of scenarios. This suggestion would fit us better - "A seller looking to retire selling at a good cap with a property that Is fully performing with good tenants can help safeguard your investment and be more hands off." I understand and accept that the return may not be as high as turn-around deals. What implication is it to have a partner? We have W2 and other capital for reserve but we are lack of availability in terms of time or "mind". Does this situation dictates a partner? Or will work with the investment provider and a good property manager good enough to cover this case? We have no problem overseeing the books (and want to) but cannot fly out frequently to deal with tenant/management issues.
6) @Michael B. mentioned risk free return is 2%. Thanks for the reminder! I am very keen to understand what the main risks are for the scenarios mentioned, ie. good tenants + good management in place + good rental market. How realistic does such combination exist in one single property for 8%-10% cap rate? in what price range? Or is this very rare? Is it more obtainable in multi-unit / commercial investing comparing to buying a SFH at an expensive area ($150k down payment)? I'd like to minimize the number of transactions and closing cost overhead.
7) @David Beard You mentioned "I would not purchase an apartment project from across the country, with you having no experience, that is just a recipe for disaster." em.. a little bit discouraging... but can be very true, really. The key question is what I can do to mitigate the risks? Reading books, knowing the jargon, picking a good areas etc. can all be helpful but they cannot make up for the lack of real experience. Many people do start with SFH. Are there success stories for multi-units investments as the starting point?
BTW, I could not find Syndication forum on the forum front page. (I wiped my eyes many times... ) Is it only open to higher membership levels (if there is such a thing)?
Thanks so much everyone for all the suggestions and bearing with my naive questions. I'm learning everyday.
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
13y
@Account ClosedBay Home,
Not everything goes as planned. Yes on all of our websites we will have great testimonials and the Roses are going to smell great. No one is going to promote anything else. On the flip side, investors at times do have bad experiences, homes will at times go vacant within 2 months and homes at times will take longer to rent then usual. Its all part of it and there is no one who is perfect or doesn't have any problems. I just lost a sale Friday which would have been a nice profit b/c it took longer to get a renter, and then when we got one they decided to not move in b/c their old landlord offered to lower their rent and refund their lost deposit if they would stay with them. This was no ones fault in our company just bad luck and my clients now have a bad taste in their mouth and backed out of the deal. Now I have no sale and the home is still vacant!!!
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
13y
@Bay H. - Nice post so far. I think you've read enough at this point to know that your goals are practical and obtainable. I wanted to respond to a couple of things. 1. I wrote a blog for BP last week about building a real estate business and viewing what your competition does as an educational tool. Same goes when deciding where to buy. There is nothing unethical about signing up to lean about investment companies in other parts of the country and either getting their material, their list of properties or both. I would imagine that you could run the gamut and get all kinds of different responses from different companies, but it will definitely help you to determine the type of company and/or person you want to do business with when buying away from home. I would think it is a very important step in your learning process.
On the management comments, I both agree and disagree with what some investors say about Memphis and property management in general. I read a lot about how bad the renters are or how hard it is to find good tenants in Memphis and for properties to perform. I absolutely agree that management is the most important factor in the success of a properties performance AFTER renovation. If a property is renovated properly to minimize deferred maintenance, then good, quality property management becomes the next most important factor. The fact is, regardless of where you invest, if you manage the property your self or hire a management company, bad things can happen. Doesn't mean they will, just that they can.
An investors job when hiring a management company is to hire a good one. Hire a company that at least appears to enjoy managing property. It is not a fun business, but if you like doing it and enjoy the challenges, then it can be done very well. Believe it or not, even in Memphis, there are companies that actually like management. There are companies who have average occupancies over 2 years and whose rents exceed what online sources say local rents average. There are also companies who excel at getting tenants to sign lease extensions rather than move out. As amusing as it is to me to write...there are actually management companies here in Memphis whose tenants like them! If you do explore Memphis as an investment opportunity, I think you may be surprised by what you find in management companies - there are some good ones in the mix.
So I don't believe Memphis property management is harder than other ares. We are managing properties in both Memphis and Dallas and neither is easier nor harder. Both cities have the same challenges and they both have good and bad renters. The same challenges will exist for any investor in any market when choosing a good management company. My only advice is that when interviewing management companies, if the company talks poorly about tenants or about management, then they may be doing it simply as a service and an income stream. IMO, that is not a company an investor wants managing a property from a long distance.
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
13y
First let me say that you have many options to deploy capital.
I have some clients who want to partner and others that do not. Flying out every time a problem exist is not feasible. That is why a local partner is good sometimes.
Many are talking about houses and hot markets versus commercial.
Yes houses are cheaper and you can buy in various areas but they also come with a host of other issues. The biggest problem I see with houses is some investors buying into a market because it is HOT, HOT, HOT.
Areas that are booming too much can have a mini bubble. People are willing to take reduced returns or hardly any cash flow ON THE EXPECTATION that the market will blow up like crazy and you will have huge returns on the back end.
I hate to say it but that Is not investing but pure speculation. You might gain huge or you might lose your shirt but you are taking a gamble and not buying right when you purchase. If you are someone with millions of dollars and can take a small percentage of your portfolio say 200k and make a few spec plays then if they go south a little and you take a loss no harm no foul as your other investments can pull you back up and over from where you started at. If the 200k represents a big chunk of your worth then using that all for spec plays is a horrible decision in my book.
Wherever you buy or what type of asset type the numbers have to work going in and not if this and this happens then I have made a great buy etc.
First let me say that you have many options to deploy capital.
I have some clients who want to partner and others that do not. Flying out every time a problem exist is not feasible. That is why a local partner is good sometimes.
Many are talking about houses and hot markets versus commercial.
Yes houses are cheaper and you can buy in various areas but they also come with a host of other issues. The biggest problem I see with houses is some investors buying into a market because it is HOT, HOT, HOT.
Areas that are booming too much can have a mini bubble. People are willing to take reduced returns or hardly any cash flow ON THE EXPECTATION that the market will blow up like crazy and you will have huge returns on the back end.
I hate to say it but that Is not investing but pure speculation. You might gain huge or you might lose your shirt but you are taking a gamble and not buying right when you purchase. If you are someone with millions of dollars and can take a small percentage of your portfolio say 200k and make a few spec plays then if they go south a little and you take a loss no harm no foul as your other investments can pull you back up and over from where you started at. If the 200k represents a big chunk of your worth then using that all for spec plays is a horrible decision in my book.
Wherever you buy or what type of asset type the numbers have to work going in and not if this and this happens then I have made a great buy etc.
Really good points Joel. I am not well versed on commercial and still defer to you on the ins and outs of how commercial works. But I think your point is spot on as far as markets and marketing hype is concerned. There is nothing wrong with taking a solid return on SFH even if there are options with higher rates of return on paper. But consciously saying I am going to take a low rate of return believing that the property I am buying or the city I am buying will go up in value is not a smart investment strategy.
I have not seen that per se in this forum, but the conversation has tilted as it usually does on this site to strategies that are more prevalent like SFH investing.
No matter what the strategy is, it is always smart for investors with this kind of money to exercise patience, educate themselves on opportunities and invest in the way that they are most comfortable - IMO. Cities and opportunities be damned - make sure it fits your needs and personality.
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
13y
That's so true Chris. There are investments out there that fit everyone and they are not all the same.
When a potential investor contacts me or you or anyone else they have questions. Some decide to move forward with what we might specialize in and others say " Thanks for taking the time to explain how this type of investment works with me and the pro's and con's but I have decided to do something else" (pay down existing debt on other properties, buy notes, be a lender themselves, do flips, buy house rentals, etc.)
OR
They say what you specialize in sounds great once explained to them and you move forward together. Helping people is what it is really all about. For any asset type we can all list positives and negatives. To some investors the negatives of a specific asset class will be huge and they will pass and to others they say that is no big deal to me I still want to do this.
