Real Estate Broker 路 Salt Lake City & Oklahoma City 路 Member since 2018 路 3k+ posts 路 2k+ votes
7y
I would find a partner with $100k to invest and take down a C+ or B- multifamily property with as many units as I possibly could and split the equity and cashflow 50/50. If you could bring in a third partner with a high net worth (if needed), then you could possibly take down a multifamily project valued around $1.00M, add $250K in value and then refinance out with a loan intended for small balance multifamily projects (like a Freddie Mac Small Balance Loan).
That'd be the most killer situation I can think of with $100k cashola.
Real Estate Broker 路 Salt Lake City & Oklahoma City 路 Member since 2018 路 3k+ posts 路 2k+ votes
7y
I would find a partner with $100k to invest and take down a C+ or B- multifamily property with as many units as I possibly could and split the equity and cashflow 50/50. If you could bring in a third partner with a high net worth (if needed), then you could possibly take down a multifamily project valued around $1.00M, add $250K in value and then refinance out with a loan intended for small balance multifamily projects (like a Freddie Mac Small Balance Loan).
That'd be the most killer situation I can think of with $100k cashola.
Rental Property Investor 路 Edmond, OK 路 Member since 2017 路 1k+ posts 路 1k+ votes
7y
It depends. :) There are so many options, it just depends on what your goals are.
Using some of that as a down payment for a multifamily property to house hack would be excellent (and hopefully you would still have some left over to pick up a few more properties). Also, if you can easily qualify for a mortgage, then I would look into buying properties on 30 year conventional mortgages (or owner finance if you can!) that cashflow well.
If your market makes sense to BRRRR, that could be another good option.
Rental Property Investor 路 Indianapolis, IN 路 Member since 2016 路 559 posts 路 463 votes
7y
Eric, it depends on each person. For those with more capital than time, it's best to partner with someone who has the track record and expertise do find the deals for you.
Investor 路 Fort Collins, CO 路 Member since 2018 路 165 posts 路 127 votes
7y
Questions to make sure I do not give you my subjective opinion, but an educated answer...
1) do you want to be active or passive long term?
2) What is your end goal of real estate, why are you into real estate?
3) Are you comfortable investing out of state?
4) Are you ok having that capital locked up for 3-7 years?
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my subjective thought...
Me personally. Find a syndication partner like @Will Fraser said with those terms he listed. I would want someone who has experience through the last recession.
Looks like you wanted to know what each of us would do. I think most posters thought you were asking what YOU should do. Not sure which it is, but I'll tell you what I would do
Get very specific
#1 Buy Bitcoin
#2 Find distressed multi family with cosmetic requirements. Fix, rent, keep the LTV or initial investment to ARV low. Would be a very specific property given the market and what timing appears at the moment.
#3 Find a REIT that has been around for at least 15 years, research their performance 2009 - 2013
$10,000 / month (after taxes, I assume?) means $120,000 income per year. At that income level, figure you will probably be somewhere in the 10-23% tax bracket, depending on how much you are earning from tax-favored/tax exempt assets, how much depreciation you have, and about two dozen other factors that would take too long to go into here. Let's just say you'll probably need around $150,000 / yearly income to get an after-tax income of somewhere in the ballpark of that level of income.
In raw terms, you need your $100,000 start up capital to grow to somewhere around $1.1 to 1.4 million in a decade, without risking it on crazy ideas or long-shot type investment that could possibly lose it all.
My suggestion for that kind of growth would be high value add projects like purchasing distressed commercial real estate (multi-unit residential) in a high growth market with some cash partners, rehabbing and increasing rents substantially, then exiting within 2-3 years of stabilizing the project and moving on to the next. One-at-a-time flips are going to take too much time finding and closing deals. 3 good sized turn around/value adds ought to be enough, I think.
The only other thing i can think of would be note investing in a self-directed, inherited Roth IRA. Why a ROTH? Growth and distributions are tax free, so you'd only need to generate about $1.0 - $1.1 million to throw off enough cash to attain $10K month income. Why self-directed? Because no typical IRA custodian will allow you to flip notes. Why inherited? Because if you inherit an IRA (even a Roth) and hold it for 5 years or more, you can make withdrawals at any point thereafter tax and penalty free, regardless of age. Yes, even the earnings! Why notes vs. flips or rentals? Too much risk of running up against self-dealing laws that are strictly prohibited and heavily penalized with the intense day-to-day management of home rehab and flip projects, whereas with notes you're simply buying and selling paper just like you would stocks or mutual funds.
That's going be tough to do. Not saying it's impossible, but you're going to work HARD for the next 10 years and develop a fairly specialized skill set. You're basically going to be doing work that is paid on par of a high-level executive in a mid-sized company or a medical specialist like an open-heart surgeon. Expectations & performance levels will be likewise intensive. Good luck and best wishes!
P.S. One last thought...you said the reason for doing all this is you don't want to worry about money. I've met people who make $1 million per year who still worry about money. $10,000 / month is not a magic number where all worries disappear. What I think is more important is to have a good balance of life expectations and goals that conform to the level of income you have, no matter what that income is. I've met very content, joyful people who never made more than $50,000 / year. They have a sense of balance and purpose that transcends their bank account. I think before you spend the next decade working your tail off, you might give more consideration to precisely what you'll do with all the time and extra mental capacity you'll have by not worrying about money. That should also help you plan out your projects, because it would be ironic and somewhat silly to spend the next 10 years freaking out wondering if your next move was going to bankrupt you.
1) Rehab a multi family apartment building in the Midwest (6-12 units)
2) Refi apartment building and use cash flow to live off
3) Use cash to flip houses for the next 5-10 years
4) Use profit proceeds to purchase 4+ bed houses in Las Vegas and rent by the room
The only course correction I would consider is if there is some sort of major downturn and home buyers aren't able to purchase houses, then I'd either flip houses buying and selling on seller financing terms or switch over to rehabbing only small apartment buildings.
Great input, I agree with you on people having 1 million and still worry about money. I want to live a normal life, nothing too crazy, just having extra cashflow monthly would be very helpful, plus still working... I have multiple rental properties at the moment but trying to figure out if going with something bigger as my next move would be better in regards to creating better cashflow.
Investor 路 FL 路 Member since 2017 路 247 posts 路 245 votes
7y
Good question! What I would do (and did do recently) is divide the 100k into two or three different multifamily syndication offerings for diversified passive income. Assuming you meet the minimum investment and accredited requirements for each offering (if applicable). Best of luck!
Specialist 路 Earth 2.0 路 Member since 2019 路 598 posts 路 271 votes
7y
I would do your homework and see your time availability. Do you have the time to handle a deal if not look to invest with someone in some deals. See what type of deals you want to do Multifamily or retail or office. Consume a lot of data and speak to a lot of folks before making a decision.