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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  • Chris Rassam
    Real Estate Agent · Manhattan, NY · Member since 2017 · 15 posts · 2 votes
    7y

    Hey guys - I like this thread.  Can anyone recommend a good way to get into syndication deals?  Thanks in advance.

    Chris

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

    @Jay Hinrichs, nope.  They are life insurance policies that are ‘traded’ due to the subject having a terminal situation.  Usually less than 3 years.

    0Reply
  • Taylor L.
    Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
    7y

    @Chris Rassam build relationships with syndicators, ask to be on their investor list to receive investment opportunities, evaluate the deals, and invest in the ones you like and with the sponsorship teams you like the most. 

    If you're accredited you'll have a lot more opportunities open to you.

    2Reply
  • Andrew Cornstubble
    Rental Property Investor · Sedan, KS · Member since 2016 · 125 posts · 92 votes
    7y

    @Kevin Zhang Buy a case of beer and drive up the road 2 miles.  I'd Knock on a rich friend's door and call my bosses.  I'd give them a 30 day notice since they have been good to me and potentially become business partners in the furture when he opens the door.  I'd hand my buddy the 300-400k cash call our attorneys over to have drinks and loan him the money at 1% less than the lowest current loans they have.

    With the interest i will build cabins with a view to rent/sell, help my other friend get his fantastic new business venture up and profiting.

    Any spare time and money I have will be spent doing deals and working on pet projects.  I like to tinker and I'd like to bring some jobs to my small town along with the housing.

    If I could talk my wife into it I'd get an FHA loan and build a big quadplex or something. 3.5% down? Sign me up.

    Basically the same things i am already working on, just faster.

    0Reply
  • Michael Evans
    General Contractor · Palm Desert, CA · Member since 2016 · 197 posts · 79 votes
    7y

    First educate yourself by reading everything you can about Real Estate, go to conferences and meet ups, listen to podcasts. Knowledge is power!

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Alan Grobmeier:

    @Jay Hinrichs, nope.  They are life insurance policies that are ‘traded’ due to the subject having a terminal situation.  Usually less than 3 years.

    familiar with life settlements.. those are not life estates as it relates to a deed in real estate..  

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  • Chris Rassam
    Real Estate Agent · Manhattan, NY · Member since 2017 · 15 posts · 2 votes
    7y

    @Taylor L. thank you

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

    @Jay Hinrichs, wrong terminology.  Sorry.  Was using the term the company used.  I think.  Lol

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

    @Jay Hinrichs, wrong terminology.  Sorry.  Was using the term the company used.  I think.  Lol

     yes a life estate is a type of vesting..  like a timber deed or leasehold  etc etc.. that's what I was thinking you were talking about

    so was wondering were a hedge fund would go find a bunch of these to package.. I mean I have done a total of one in 4 decades and seen a handful in my real estate career.. so that's what through me.

    I have sat through presentation on life settlements.. was actually sitting next to Bruce Norris  ( he had given a talk) and we listened to the life settlement guy and kind of looked at each other and said well this is a little morbid.. :)  there is a ton of fraud in that industry so do be careful.

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

    @Jay Hinrichs, like you said, ‘morbid’.  My wife didn’t like the ‘model’ & requested I not do it.  It was one of the few reasons I didn’t do it.

    There are enough other ways to invest in stuff and be able to know your family supports you.  ;-)

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

     Hey rob

    Good point and I’m going to talk to them about maybe 50% down or something instead.. doesn’t make sense for all cash for sure 

    0Reply
  • Michael Bishop
    United States · Member since 2015 · 401 posts · 394 votes
    7y

    @Jay Hinrichs after reading your comments I'm very curious.. can you explain what a life estate is / how it works? Never heard of it

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

    @Jay Hinrichs after reading your comments I'm very curious.. can you explain what a life estate is / how it works? Never heard of it

    its a form of ownership rights.

    you buy a property from someone and you deed them a life estate.. they live there for the rest of their life once they pass they no longer have the right to the property and you then take over possession.. 

    it is common for those getting on in years  and their heirs don't want them to have to move and it generally means no payments maybe only utls..  this is how I did one in Oregon.  bought the property and at somewhat of a discount.. gave the old owner a life estate. owner lived another 6 years  passed away.. once that happened I split the lot demo the house and have 3 new builds going now. 

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  • Michael Bishop
    United States · Member since 2015 · 401 posts · 394 votes
    7y
    Originally posted by @Jay Hinrichs:
    Originally posted by @Michael Bishop:

    @Jay Hinrichs after reading your comments I'm very curious.. can you explain what a life estate is / how it works? Never heard of it

    its a form of ownership rights.

    you buy a property from someone and you deed them a life estate.. they live there for the rest of their life once they pass they no longer have the right to the property and you then take over possession.. 

    it is common for those getting on in years  and their heirs don't want them to have to move and it generally means no payments maybe only utls..  this is how I did one in Oregon.  bought the property and at somewhat of a discount.. gave the old owner a life estate. owner lived another 6 years  passed away.. once that happened I split the lot demo the house and have 3 new builds going now. 

    Thanks for the explanation! So the benefit to the investor (aside from being a good person and helping out the elderly!) is a discounted property? I'm all for being nice and helping folks out, but without the discount it seems like the investor would take a loss on this no? 

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

    @Jay Hinrichs after reading your comments I'm very curious.. can you explain what a life estate is / how it works? Never heard of it

    its a form of ownership rights.

    you buy a property from someone and you deed them a life estate.. they live there for the rest of their life once they pass they no longer have the right to the property and you then take over possession.. 

    it is common for those getting on in years  and their heirs don't want them to have to move and it generally means no payments maybe only utls..  this is how I did one in Oregon.  bought the property and at somewhat of a discount.. gave the old owner a life estate. owner lived another 6 years  passed away.. once that happened I split the lot demo the house and have 3 new builds going now. 

    Thanks for the explanation! So the benefit to the investor (aside from being a good person and helping out the elderly!) is a discounted property? I'm all for being nice and helping folks out, but without the discount it seems like the investor would take a loss on this no? 

    typically we see this in the development game not in the SFR or small multi rental game .. I was bidding on one here in Portland were we could build 45 homes.. and it had to be a life estate but we lock in todays price.. and of course we actually have appreciation in our market I know that can be a foreign concept in other markets.. and it depends on how much liquidity you have and what your balance sheet looks like.. I Have long term options of a number of properties.. Its just part of how we do development.. you cant take the cash flow game and make any sense of these types of transactions .. apples to oranges as it were.

    for instance I have a 117 acre parcel optioned at 50k an acre.. when it ripens will will be worth over 600k an acre.. and we have 1.5 mil in cash in it so far.. is that a great use for 1.5 mil don't know.. but on top of the delta on the dirt we then build homes for another 5 to 7 years and there is another 50 million in it.. so who knows.. these are small partnerships I put together with those that don't need cash flow and want small investments that have 10X returns over time totally passive..  Not really anything 90% of the CASH flow is the only thing BP members would do.   I have another 40 acres optioned 160 plus lots and I only have 100k into it controlling a 4 mil property to buy and 8 million value when ready for build out.. so that's a pretty sweet use of 100k.. 100K tieing up lots are worth 140k each so basically right now 100k controlling a 20 mil at lot value and another 10 mil in build profit..  again is it a good use of cash if you have it yes if that's all you have or most of your cash then probably not. Keep in mind we could lose our money or some of it.. but land in our area which is controlled by urban growth boundries and is within 11 miles of the tech center and the 117 acres is in the tech center.. risk while there are computed going into it..  the 117 acres 100 % of the payments we make on the option is a credit towards the purchase price there is no interest.. so to me that's a pretty sweet deal.

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

    @Laurence Meth

    I stick to mainly landlord friendly states.  From there I look at deals followed by the areas they are in.  I use the internet to research each area and if I like what I see, I begin making some phone calls.  

    0Reply
  • Bob Prisco
    Specialist · Cleveland, OH · Member since 2018 · 1k+ posts · 666 votes
    7y

    find a real estate market that provides you with double digit net Rates , start buying. Refinance buy more rinse and repeat and good luck 

    0Reply
  • Michael Bishop
    United States · Member since 2015 · 401 posts · 394 votes
    7y

    @Jay Hinrichs appreciate you taking the time to explain this! Always learning new things from your insights.

    0Reply
  • John FortesPro Member
    Multi-Family Syndicator · Abington, MA · Member since 2017 · 603 posts · 347 votes
    7y

    Hello @Kevin Zhang, there are many ways to skin a cat. I provide many examples in this blog post if you have the time to read it. Hope it helps. 

    https://www.biggerpockets.com/member-blogs/11280/77940-you-have-a-money-problem

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