With 1.5million in cash, what portfolio should I have?

Westlake Village, CA · Member since 2013 · 11 posts · 1 vote

First I want to thank this BP for providing me a lot of info on REI !
I invested some properties overseas. It brought me tremendous return ,about 5 times appreciation. I am liquidating all of them. It wil be about 1.5 million. I am planning bringing here and investing in my area.I've done a lot of search but i am frustrated what portfolio I should have, especially MF vs. SFR. I am temped to buy short sale , REO, trustee's sales SFH with low prices for long term renting. I like hands on management. It will be easier for me. Besides, it seems SFH are better deals in this time market. Any opinion will be appreciated.

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Joel OwensBusiness Member

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Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes

13y

Do you have a regular job or do you want to do real estate full time??

What you invest in depends on how aggressive you want to get with the money and returns wanted.

Multifamily vacant, semi-performing, or fully performing. SFR's in California in many areas you are buying appreciation only and very little cash flow.

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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
13y
Do you have a regular job or do you want to do real estate full time??

What you invest in depends on how aggressive you want to get with the money and returns wanted.

Multifamily vacant, semi-performing, or fully performing. SFR's in California in many areas you are buying appreciation only and very little cash flow.
Podcast Guest on Show #47
NNN Invest53 Reviews
Website View Page
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Charles Anderson
Residential Real Estate Agent · Clermont, FL · Member since 2011 · 11 posts · 4 votes
13y
I think you may want to look at some Self Storage properties. Just be very careful....
1 Reply
Joseph M.
Flipper/Rehabber · Los Angeles, CA · Member since 2009 · 1k+ posts · 732 votes
13y
Mei Liu, congrats on your success. Would you be willing to share more info regarding your overseas investments? What country( or countries) were these in? Did you purchase w/ financing or cash. 500% return is pretty amazing. Over how many years was this?

I agree that single families are priced well in many areas but as Joel mentioned there aren't many areas that cash flow. Also in Southern California it looks like REOs have dried up..it used to be you could find tons of fixer REOs , but now it doesn't seem like you can find many anymore.

I don't feel investing for appreciation is the best idea if a property doesn't cash flow.

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Mei Liu
OP
Westlake Village, CA · Member since 2013 · 11 posts · 1 vote
13y
Thanks Joel! I don't have a regular job & I love to do RE full time. I like to be little conservative. I checked some MF in LA and I feel like i have no control at all except passing onto property management. Most of the MF area are running down. And the cap return is 5% and the cash return is not lot higher than SFH. I talked with one of my friends in MF business. He really discouraged me to jump in MF.He thinks the prices are so high now, it doesn't have much cash flow. Besides there are lots of regulations and high utility on landlords. With SFH, i want to purchase the low price range like 350K, the tenants stay longer and I can do some rehab for improvement. It's easier for exit too. If the cash flow with MF is lot more, I would consider MF. Like SFH with 350k , the rent would be $2200/month, with MF, one unit is $1200 for 140k. The turnover is lot faster than SFH, and lots of vacancy. Maybe I didn't do enough research about MF. But I will check more.

Charles, I never thought about the self storage. I will look it into later.

Joseph: All the properties are in China. The reasons for huge appreciation are due to several factors. The exchange rate is a big one . 7 years ago was $1=8 Chinese yuan. Now 6 yuan = $1. Of course China is booming and a developing country. There is more room to grow. The last factor is big inflation. But now I feel like it's reaching the peak. That's why I am selling all of them.
I bought all with cash about 6-13 years ago.
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Jeff Greenberg
Real Estate Consultant · Camarillo, CA · Member since 2010 · 2k+ posts · 1k+ votes
13y
Mei Liu Congratulations on your investments. It seems that we are neighbors as I am in Agoura Hills just down the block.

The old cliché "cash is king" is very true in Real Estate. There are many things that you can do involving RE, but it depends on what returns you are looking for and how hands on you wish to be. You stated that you do not have a job. Will you be living off of the returns of your investment? Have you looked at the cashflow that you will require?

Hands on management is fine if that is of interest, but when it takes away doing things that will make you more money, such as finding more deals, then it is not such a good use of your time.

You can make some great returns 10-12% loaning your money to Hard money lenders and have them loan out money to flippers and rehabbers. They get to do all of the heavy lifting and you get good returns.

Southern California MF is down from where it was in 2005, but you are still looking at 5 or 6 Caps. We buy out of state and don't start looking at them if they are at least an 8 Cap at asking price with value adds.

MF is not something you should enter into without education and experience. You can make a lot of money and lose it just as fast. There is another discussion on BP where the MF vs SFH debate is being discussed. You may want to look at it.

Appreciation is not the name of the game right now, If you get it great, but don't count on it. Forced appreciation is another thing and MF does give you more options to force appreciation.

Jeff
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Mei Liu
OP
Westlake Village, CA · Member since 2013 · 11 posts · 1 vote
13y
Hello Jeff! We are not only neighbors, but also I just met you at Ventura REI club. I want to thank you for bringing me to BP! And thank you for the meeting and your insightful post !
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Xing Zhu
Durham, NC · Member since 2012 · 498 posts · 48 votes
13y
Because of all the legal issues here, the management is really not as easy as in China. When I talked to people in rental business in Beijing, I heard about a lot late payment problems, but no eviction problems, no vacancy problems, and more importantly, no big legal claim problems. Years ago, A Chinese real estate investor in California lost more than 10 M in a fire lawsuit. The insurance company refused to pay for all the liability as they argued the fire escape was improper.
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Mei Liu
OP
Westlake Village, CA · Member since 2013 · 11 posts · 1 vote
13y
That's true. Doing business here requires a lot of knowledge, understanding all the regulations and legal issues. But the cons are return on rental market in China is really low. Plus can't use leverage. The pro is paying minimum tax.
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Karen MargraveBusiness Member
Moderator
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
13y
Mei Liu Welcome to BP! Sounds like you were very successful in China. There was a thread the other day about different types of investments, I am posting the link for you. https://www.biggerpockets.com/forums/12/topics/80218

There's a lot of information on here, and a lot of knowledgable people, just dig in, and don't be afraid to ask questions. Have fun!
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Mei Liu
OP
Westlake Village, CA · Member since 2013 · 11 posts · 1 vote
13y
Thank you so much Karen for the info and encouragement ! That's right ! There are unlimited resources here ! I'll check the link.
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Joseph M.
Flipper/Rehabber · Los Angeles, CA · Member since 2009 · 1k+ posts · 732 votes
13y
Interesting perspective .. I'm guessing no other country is a sue happy and litigious as the USA.

Interesting about the exchange rate . I could also see how values must have gone up a lot since china is developing so fast.

I'm wonder if having a management company could protect an investor versus self managing . I'm guessing any wrongdoing will would be blamed on an owner though.

Jeff suggestion of getting involved on the lending side sounds like a good one, and less headaches.

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Xing Zhu
Durham, NC · Member since 2012 · 498 posts · 48 votes
13y
The capitalism is at full throttle in China right now. There is no tax on capital gain!

IMO, the real estate prices in major cities such as Beijing and Shanghai will go up further.
1 Reply
Mei Liu
OP
Westlake Village, CA · Member since 2013 · 11 posts · 1 vote
13y
??? Zhu Xing Any insight on investing here vs leaving in China?
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Mei Liu
OP
Westlake Village, CA · Member since 2013 · 11 posts · 1 vote
13y
??? I mean Ni Hao!
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Xing Zhu
Durham, NC · Member since 2012 · 498 posts · 48 votes
13y
Originally posted by Mei Liu:
??? I mean Ni Hao!

-----------------------------------------------------------
Ni Hao.

China offers more investment opportunities but has too many environmental issues.

The housing crash here certainly brought about huge opportunities for investors not just from US but also from all over the world.
http://trends.truliablog.com/vis/global-pursuits/

The best time to get in was 2010 and 1011. But now is still pretty good. I think the appreciation will continue.
1 Reply
Mei Liu
OP
Westlake Village, CA · Member since 2013 · 11 posts · 1 vote
13y
Xie Xie Xing Zhu !
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Xing Zhu
Durham, NC · Member since 2012 · 498 posts · 48 votes
13y
Good luck in investing, Liu Mei.
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Franklin Wu
Involved In Real Estate · Shenzhen, Guangdong · Member since 2014 · 8 posts · 0 votes
11y
500% is normal. My first property was purchased in Shenzhen for 400USD/sqm, and now it worths 5000USD/sqm. 1100% growth over 15yrs! But the return on investment for rental has just gone up 300-500% compared with it's capital growth.
In China there aren't much regulation in rental. you can cut your tenant's water and electric when they are late on payment and you can change the lock and throw tenants personal item on the street when you decide to evict your tenant!
Landlord has all the power in the world!
And most important, Chinese people love to OWN property, renting feels poor and you get bossed around by your landlord all the time, and landlord never wants to spend a dime on upkeep of the property.
Many friends of mine including Chinese and British ppl warned me about entering the US market because Americans love to SUE and the tenants rights are protected etc.. But all I see is a more fair play situation, when there are rules, follow them and you can WIN, in china, if you follow the rules, you are a loser for sure.
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