how would you invest 300-400k ?

Multi-Family and Apartment Investing
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how would you invest 300-400k ?

Kevin Zhang
San Francisco, CA · Member since 2018 · 62 posts · 20 votes

How are you? just a quick thought on how and where to find good cash flow such as multi-family unit ? which market? 

If you have 300-400k cash from your home equity loan, how would you invest this money? buy many single family house? BRRR? turnkey? or just all cash on multi family/apartment? I've look locally in Sacramento but then it doesn't really cash flow well. The only rental I have is a contract to purchase a turnkey single family house all cash.

I've been juggling to find what the best way to build a portfolio. so any suggestions on which market to invest and how would you invest this money.

Thanks.

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Frank Wong
Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
7y

It's nice to get ideas about what to possibly do with $300-400k the problem is that any idea I share is useless to you.  If you don't have the same skill set, game plan, and execution it won't work.   There are some amazing ideas I see and not so great but it all comes down to execution. With that amount of money, I wouldn't be investing it at all until I was in a position not to ask for advice on a public forum.  That's just me. Focus on your own game plan and take everything with a grain of salt.

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  • Account Closed
    Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
    7y
    Originally posted by @Kevin Zhang:

    How are you? just a quick thought on how and where to find good cash flow such as multi-family unit ? which market? 

    If you have 300-400k cash from your home equity loan, how would you invest this money? buy many single family house? BRRR? turnkey? or just all cash on multi family/apartment? I've look locally in Sacramento but then it doesn't really cash flow well. The only rental I have is a contract to purchase a turnkey single family house all cash.

    I've been juggling to find what the best way to build a portfolio. so any suggestions on which market to invest and how would you invest this money.

    Thanks.

    You ask. I answer. It sure wouldn't be in California. I'd pick Arizona.

    Average Turnkey Cash Flow Per Door In Phoenix Metro Area No Bank Needed

    https://www.biggerpockets.com/forums/600/topics/584916-average-cash-flow-per-door-in-phoenix-metro-area

    1Reply
  • Greg Scully
    Rental Property Investor · Johnson City TN · Member since 2016 · 386 posts · 271 votes
    7y

    @Kevin Zhang - Depends on your personal goals.  If you want to be passive, you could easily spread that over 6-8 syndicated deals in multiple strong markets.  If you want to be more active then you may be able to offer your capital to a more experienced investor for a part of the general partnership.

    3Reply
  • Greg Dickerson
    Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
    7y

    I would use the cash  to flip properties and double it a couple of times over the next couple years. You can easily turn that into a couple million flipping houses or commercial.

    Keep looking for multi family properties while you flip and once you have more cash you can strike on a much bigger better deal.

    1Reply
  • Alina Trigub
    Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
    7y

    @Kevin Zhang

    The answer is really... it depends! 

    You didn't mentioned what your  RE experience is. Depending on that you'd determine as to whether continue with the current strategy or start fresh. 

    If you're at the beginning of your RE journey, then 

    1) determine how much time you can/want to devote to your RE venture.

    Here're a few articles to help you decide on that:

    https://www.biggerpockets.com/member-blogs/10850/8...

    https://www.biggerpockets.com/member-blogs/10850/7...

    2) then within the area you selected in #1, pick a niche that you believe will work best for you and personally determined to make it a success. 

    From my prospective, economy of scale plays a huge role in my decision making and hence I chose commercial real estate (for example, multifamily versus single family). But everyone is different. So determine it for yourself.

    Here's more on my thinking:

    https://www.biggerpockets.com/member-blogs/10850/8...

    3) educate yourself and take action!

    1Reply
  • Michael DangPro Member
    Rental Property Investor · Houston, TX · Member since 2015 · 454 posts · 273 votes
    7y

    It does depend as @Alina Trigub mentioned.  However, there are other cash flow investments besides multifamily in real estate or outside of real estate.  e.g. Life settlements, oil\gas, energy\power, etc. etc.  Just need to educate yourself on them.

    0Reply
  • Luka Milicevic
    Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
    7y

    Pay off my house and get a first position HELOC on it.

    I'd then use the rest of the money to buy rental properties with about 40-50% down at the very least 1% rule. This will give me about 6-8 properties leveraged at 50%. 

    1Reply
  • Steve Kontos
    Investor · Great Neck, NY · Member since 2016 · 679 posts · 467 votes
    7y

    @Kevin Zhang

    It depends on what your personal goals are.  One thing I can re-assure you is NOT to buy anything in all cash.  You need to find a way to maximize those dollars not have them tied up in just one investment.  You live in one of the most expensive cities in the country (much like myself) so I recommend investing out of state.  I have been investing out of state for 12 years now and I can tell you first hand that your dollars can go a lot further in terms of buying power and rate of return.  Best of luck!

    2Reply
  • Frank Wong
    Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
    7y

    It's nice to get ideas about what to possibly do with $300-400k the problem is that any idea I share is useless to you.  If you don't have the same skill set, game plan, and execution it won't work.   There are some amazing ideas I see and not so great but it all comes down to execution. With that amount of money, I wouldn't be investing it at all until I was in a position not to ask for advice on a public forum.  That's just me. Focus on your own game plan and take everything with a grain of salt.

    11Reply
  • Daniel Kong
    Rental Property Investor · Honolulu, HI · Member since 2018 · 335 posts · 251 votes
    7y

    Vegas. Bet on black. 

    4Reply
  • Jonathan Oh
    Investor · Las Vegas, NV · Member since 2019 · 499 posts · 259 votes
    7y

    @Kevin Zhang

    I wouldn't go all in into a particular investment. Doesn't sound like you are a full-time investor, so putting 300-400k all into BRRRs will create a TON of work and risk for you. I personally would diversify - turnkeys, syndications, and other asset classes as well. But take all our comments with a grain of salt. We all have our own goals and ideas, but you need to come up with your own.

    3Reply
  • Kevin Zhang
    OP
    San Francisco, CA · Member since 2018 · 62 posts · 20 votes
    7y
    Originally posted by @Steve Kontos:

    @Kevin Zhang

    It depends on what your personal goals are.  One thing I can re-assure you is NOT to buy anything in all cash.  You need to find a way to maximize those dollars not have them tied up in just one investment.  You live in one of the most expensive cities in the country (much like myself) so I recommend investing out of state.  I have been investing out of state for 12 years now and I can tell you first hand that your dollars can go a lot further in terms of buying power and rate of return.  Best of luck!

     Hey Steve 

    Thanks for the advice. I was planning to do an all cash on turnkey property but in the back of my minds I paying way to much.  

    0Reply
  • Kevin Zhang
    OP
    San Francisco, CA · Member since 2018 · 62 posts · 20 votes
    7y
    Originally posted by @Jonathan Oh:

    @Kevin Zhang

    I wouldn't go all in into a particular investment. Doesn't sound like you are a full-time investor, so putting 300-400k all into BRRRs will create a TON of work and risk for you. I personally would diversify - turnkeys, syndications, and other asset classes as well. But take all our comments with a grain of salt. We all have our own goals and ideas, but you need to come up with your own.

     Hey Johnathan,

    Good point yeah, that also why I plan to do turnkey as my first out of state investment for experience.  Then  jump into multi families 

    0Reply
  • James Murphey
    Waipahu, HI · Member since 2018 · 121 posts · 81 votes
    7y

    I agree with @Greg Scully it depends on what your goals are.  If you want to go into the deep end of multifamily investing Brian Murray has a great book Crushing It in Apartments and Commercial Real Estate: How a Small Investor Can Make It Big.  I really enjoyed it.  He talks about bootstraping your investments, and the pros of not having partners on deals.  It would be a good place to start if you want to Crush It!

    0Reply
  • Alan Grobmeier
    Rental Property Investor · Phoenix, AZ · Member since 2013 · 919 posts · 911 votes
    7y

    I'd buy a life estate or invest in a hedge fund that does life estates.  10%+ easily, recession proof.  PPL are always dying, even in a recession.  ;-)

    0Reply
  • Teresa Buchanan
    Redwood City, CA · Member since 2016 · 40 posts · 11 votes
    7y

    Hi Kevin, 

    Based on what you’ve said (and not said) I’ll assume you don’t want to be super hands on.

     Buying a property is lot of up front work (due diligence) even if it’s turn key. You still need to research the market and everything that goes with that, run numbers, find financing (unless you pay cash, something I personally wouldn’t do). But you will also find that you will be competing against other investors for the same property. I’m making this sound like a daunting task but it is the path I took at the start and I don’t regret it. It was just a lot of work. 

    I also really like syndications and I am active in many of them. They are easy to get into and if the sponsor is good it’s a great way to get really good returns. 

    I think I don’t live far from you. I’m happy to meet for coffee of jump on a call with you if you’d like to talk things out. 

    Best to you, 

    Teresa 

    1Reply
  • Jason Graves
    Rental Property Investor · San Diego, CA · Member since 2018 · 242 posts · 234 votes
    7y

    @Kevin Zhang

    KS Mo for CashFlow

    I would also consider Phoenix

    I sent to a pm

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Alan Grobmeier:

    I'd buy a life estate or invest in a hedge fund that does life estates.  10%+ easily, recession proof.  PPL are always dying, even in a recession.  ;-)

     funny you mention that.. I wonder were one goes to find life estates.

    I did one 8 years ago..  it was a foreclosure rescue of a 75 year old lady in poor health.. she wanted to live her life out in the home.

    I paid it off 80k and gave her a life estate.. she lived for 6 years.. by the time I took back over the house was beyond salvage I demod it subdivided it and am building 3 500k specs on it.. so my return on investment will be  well it will be more than 10% per annum by a long margin.. but I am thinkin I am in the business so I can find these kind of situations.. but how does a passive investor find them ?

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    1Reply
  • Kevin Zhang
    OP
    San Francisco, CA · Member since 2018 · 62 posts · 20 votes
    7y
    Originally posted by @Teresa Buchanan:

    Hi Kevin, 

    Based on what you’ve said (and not said) I’ll assume you don’t want to be super hands on.

     Buying a property is lot of up front work (due diligence) even if it’s turn key. You still need to research the market and everything that goes with that, run numbers, find financing (unless you pay cash, something I personally wouldn’t do). But you will also find that you will be competing against other investors for the same property. I’m making this sound like a daunting task but it is the path I took at the start and I don’t regret it. It was just a lot of work. 

    I also really like syndications and I am active in many of them. They are easy to get into and if the sponsor is good it’s a great way to get really good returns. 

    I think I don’t live far from you. I’m happy to meet for coffee of jump on a call with you if you’d like to talk things out. 

    Best to you, 

    Teresa 

     Hey Teresa 

    Thanks for the advice!!  I love to meet up and chat. Let me pm you 

    0Reply
  • Rob Massopust
    Real Estate Broker · Santa Ana CA [South Coast Metro] · Member since 2016 · 459 posts · 202 votes
    7y

    So you are looking to 2 things 

    1. Get cash flow 

    2. Build equity to buy more units or to buy and build portfolio with current funds.

    Like everyone says - it depends on your goals, ability, time and objectives. 

    Cash flow you can go to midwest and buy a decent multifamily and it cash flows, not much appreciation but safe.

    Buy something in emerging markets[Phoenix, Texas, Florida, Idaho, Santa Ana, Victorville], fix up, rent out, refi and get some cash flow and build equity, hold 2 years and do a 1031, repeat,  that is the best way to do both!

    Stockton might not be the worst place but need to look more west like the east bay - Oakley, Brentwood, Pittsburg etc - Jobs and growth have shot up but over the next 15-20 years its going to double

    0Reply
  • Rob Massopust
    Real Estate Broker · Santa Ana CA [South Coast Metro] · Member since 2016 · 459 posts · 202 votes
    7y
    Originally posted by @Kevin Zhang:
    Originally posted by @Steve Kontos:

    @Kevin Zhang

    It depends on what your personal goals are.  One thing I can re-assure you is NOT to buy anything in all cash.  You need to find a way to maximize those dollars not have them tied up in just one investment.  You live in one of the most expensive cities in the country (much like myself) so I recommend investing out of state.  I have been investing out of state for 12 years now and I can tell you first hand that your dollars can go a lot further in terms of buying power and rate of return.  Best of luck!

     Hey Steve 

    Thanks for the advice. I was planning to do an all cash on turnkey property but in the back of my minds I paying way to much.  

    All cash on a turnkey is hard to make sense unless you have a decent return/cash flow. You can refinance after a few months and pull those funds back out to give you a better ROI. But if you are trying to grow equity you have to find something under market and fix up. Look for cosmetic fixers and if you are not flipping it you can outbid the flippers and still get a decent deal. You will have same costs and hassles to fix but you are keeping long term or semi long term and you get forced appreciation and annual appreciation [most likely], rents and tax free if you 1031 after 2+ years!

    If  you are looking for longer hold times look for what is called "opportunity zones". 

    0Reply
  • Alan Grobmeier
    Rental Property Investor · Phoenix, AZ · Member since 2013 · 919 posts · 911 votes
    7y

    @Jay Hinrichs, the easiest way is to go w a hedge fund.  The minus is most are 250k buy in & 2 year commitment.  The returns are usually north of 10% & recession proof.

    I did some research.  If interested, pm me.  

    0Reply
  • Laurence Meth
    Investor · Cedar Hills, UT · Member since 2017 · 6 posts · 0 votes
    7y

    @Steve Kontos what markets are you investing in today? I'm just getting started in apartments and I'm curious as too where and why people invest. What types of research and information are you using to determine which markets are best?

    0Reply
  • Maurice J.
    Investor · Otsego, MN · Member since 2014 · 45 posts · 29 votes
    7y

    @Kevin Zhang

    Brrrrrr. Don’t make the mistake I did and have all your money in one deal. Use the resources of hard money or a bank and put a little money into each deal. Quickest way to wealth !

    4Reply
  • Jeff Goodale
    Rental Property Investor · FL · Member since 2019 · 26 posts · 17 votes
    7y

    Would certainly recommend not tying all the money up in only one or two investments. You want to spread out over a few projects and when you can invest in different markets. I think it is good idea but if for nothing else at least it will give you piece of mind that you don’t have everything in one place/deal. Look for deals that are a value so that you can refi in order to get some of the money back out to move to next deal.

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Alan Grobmeier:

    @Jay Hinrichs, the easiest way is to go w a hedge fund.  The minus is most are 250k buy in & 2 year commitment.  The returns are usually north of 10% & recession proof.

    I did some research.  If interested, pm me.  

     are they secured by reverse mortgages ?  

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