Investment options with capital but no job?
Rental Property Investor · Member since 2018 · 15 posts · 2 votes
Hey everybody I find myself in a unique situation.
I have been recovering from a back injury for over a year now. In that time I received a financial windfall. Prior to this I spent years researching real estate and I have found lately that I would like to invest in multifamily 5+ units as the loan terms would be based off the buildings performance.
Are there other real estate options for me out there as I do not have a 9-5 at the moment but I want to get started investing asap.
My credit is in good shape and I don't have any debt.
Hey @Gilbert Vigil, welcome to BP!
You've possibly earned yourself a degree by now if you've been studying RE for years, now it's time to put that knowledge to work! Two classes of properties when it comes to multi-family, residential (1-4 units), and commerical (5+ units).
You can do some searches on BP and spend many more hours reading about the pro's and con's of each according to the person writing the post/article/blog but for you're case it sounds like commercial might be very in line with your needs/goals at the moment!
So yes, commercial is based wholly off of the income of the property and not your personal credit or assets. The biggest catch to commercial is that you need more % down (which may or may not be a problem depending on location and size of property), and loan terms. At best you'll find most banks will require 30% down, you might get lucky with a local community bank and see 25% but it's rare. Loan terms are the sticky one, you're not going to find those long-term fixed rate loans residential enjoy. That said, with where the economy might go right now, just make sure you are getting AT LEAST a 5 year term, if you can find it 7 - 10 with little or no prepayment penalty would be ideal, just so you can ride out any storm that may come in the next few years.
Many industry experts are expecting apartments to weather the next recession well, but you need to do your research and see if you agree, and act accordingly.
Sorry, got on a soapbox there, as for other options you might consider you can always look into passively investing via a joint venture or syndication with somebody like myself, or crowd-funding is a great option too, something like fundrise.com or groundfloor.com, again, do your research.
Best speed to your recovery...
Hey @Gilbert Vigil, welcome to BP!
You've possibly earned yourself a degree by now if you've been studying RE for years, now it's time to put that knowledge to work! Two classes of properties when it comes to multi-family, residential (1-4 units), and commerical (5+ units).
You can do some searches on BP and spend many more hours reading about the pro's and con's of each according to the person writing the post/article/blog but for you're case it sounds like commercial might be very in line with your needs/goals at the moment!
So yes, commercial is based wholly off of the income of the property and not your personal credit or assets. The biggest catch to commercial is that you need more % down (which may or may not be a problem depending on location and size of property), and loan terms. At best you'll find most banks will require 30% down, you might get lucky with a local community bank and see 25% but it's rare. Loan terms are the sticky one, you're not going to find those long-term fixed rate loans residential enjoy. That said, with where the economy might go right now, just make sure you are getting AT LEAST a 5 year term, if you can find it 7 - 10 with little or no prepayment penalty would be ideal, just so you can ride out any storm that may come in the next few years.
Many industry experts are expecting apartments to weather the next recession well, but you need to do your research and see if you agree, and act accordingly.
Sorry, got on a soapbox there, as for other options you might consider you can always look into passively investing via a joint venture or syndication with somebody like myself, or crowd-funding is a great option too, something like fundrise.com or groundfloor.com, again, do your research.
Best speed to your recovery...
@Gilbert Vigil - You could bring capital to a deal and get a higher percentage of the ownership. There are many people who have deals, but no money. Since larger deals typically are a team sport, the combined liquidity, net worth and credit is what gets a deal done.
For instance, I partnered in a small syndication by fronting most of the earnest money and prepaid closing costs. For that I received a portion of the general partnership.
@Gilbert Vigil you could look into portion of investing which not require you taking a loan from the bank. Few that comes to mind right away:
- HML
- crowdfunding
- joining syndication
- partnering with someone who is looking to invest long term but does not have money for down payment.
There are probably more, but each one requires you to understand type of investment you are going into. Please take some time to educate yourself on that.
@Gilbert Vigil
It looks like you have yourself a golden opportunity as well as a potentially dangerous situation. How much research have you done? Do you know what your overall investment goal is? Is it wealth preservation, cash flow, capital appreciation etc.?
There are plenty of opportunities out there to be had, but you have to figure out what your best approach will be. Your investment decision should also be based off of how much of a windfall you have found yourself with. Not that you need to disclose this, but having found yourself with tens of thousands vs hundreds of thousands vs a few million will drastically dictate how you will move forward. Real estate is only one avenue to consider. That being said your financial success with any investment you make will be determined by your ability to mitigate risks. I would seriously consider a diversified play, don't put all that you have in one investment.
A cash flow producing asset is going to be your best given that you dont currently have anything coming in. You need something that will allow you to subsist while your money is growing.
Also be very VERY careful about who you trust your investment with. There are a lot of hungry wannabe real estate moguls out there that will do all they can to "sell" you their deal. This is where all of your valuable research will be necessary. Know enough to protect yourself.
Good luck and let me know if theres anything I can help you with.
I would first determine what your real estate investing goals are. Rank your priorities....cash flow, capital preservation, tax-advantages, appreciation, etc. Once you are clear on what you are looking for, then find like-minded people to network with, and find people who are successfully investing with the same priorities. Get to know them and learn from them, and share your knowledge with them as well. Then you can invest in their deals or partner with them on new deals. The key is to work with people whose priorities align with yours.
These are many good responses. I myself am looking for rehabbers in the Charleston area because I have some capital. You could quite easily use your capital in such a way and no one cares if you have a job or not. Jobs are really only useful when you as a syndicator or a general partner or a sponsor or whatever are trying to convince a bank of your suitability to be that lead. Along with credit. But that is about the only limitation. I myself have had loan limitations when I had a carryforward loss on my tax return, and I myself haven't had a "job" for quite some time. I'd say you are 10% hindered by not having a job, and 90% free to find opportunities.
A lot of good responses here. I'd go in this order:
1) decide what your long term RE goals are.
2) determine how much time you can/want spend on RE iv nesting.
3) research various RE strategies to decide what fits into #1 & #2 above and pick One!
4) educate yourself on such strategy and take action.
5) once #4 is working for you, add another RE strategy and repeat #4.