200k of capital to invest in rentals!

[Kanstas Sell]

Hello I am currently looking for some help! I currently sold my home and have 200k in the bank and picked up my life and moved to the west coast of Florida. What is the best way to buy real estate with that much money? Do I do multiple single family homes or one big commercial property? Thank you!

[Joe Villeneuve]

Split it up. Take part of it, like $120k, and invest it as a DP on a commercial property. Then take the rest, and invest it as a DP on one or more SFH

[Paul De Luca]

@Kanstas Sell

I'm not familiar with your market but the best way to maximize your capital is to use as much OPM (other peoples money) as possible. House hacking is a great strategy for that since you can put down 0-10% down depending on which low down payment loans (VA, FHA, USDA, Home Possible, etc) you qualify for. Going bigger faster, buying commercial as opposed to residential, is more appealing to scale faster and get more doors however you're going to be limited by how much cash you have. A typical commercial down payment is 25-30% of the purchase price so if we back into that with $200k at 30% down that's a $666k purchase price which would deplete all your cash in one swoop. Like I said I don't know your market and the prices there but here in Chicago $666k for a commercial multi-family property (5 units+) is on the lower end of the price spectrum depending on where you're looking.

So besides house hacking, what could you do? You could try the BRRRR method & use hard money financing which is usually a 10-15% down payment. You could also use conventional financing to pick up inexpensive properties & fix up a little to rent.

[Chris Winslow]

@Kanstas Sell - I think it would depend on your experience level and what you ultimately want to get into but it would be awesome to get a house hack or live in flip going first with a small portion of that to get into something for a low down payment and get your feet wet.

Then I'd look into something that needs a light rehab that you could buy at a discount and force some appreciation by fixing it up and then refinance as much money as possible back out. That could work with single or multi units but depends on price point and work needed. Good luck!

[Steve Vaughan]

If I had capital but nowhere to live I'd buy a househack at a good deal.

Or rentals at a good deal. 

Either way, buy a good deal.  Value and equity capture at the buy never seems to be talked about. 

[Jay Hinrichs]

Quote from @Steve Vaughan:

If I had capital but nowhere to live I'd buy a househack at a good deal.

Or rentals at a good deal. 

Either way, buy a good deal.  Value and equity capture at the buy never seems to be talked about. 

yet that is where the money is made its made on the front end then through hard work then the smarts to invest in a growing area and you get the real wealth builder market appreciation.

[Patrick Drury]

@Kanstas Sell
You should buy an owner-occupant duplex in Florida with low money down. Live on one side and rent the other side out to cover the mortgage and pick up another rental if there is enough capital left over. Not sure about that specific market. 

[Michael K.]

Quote from @Kanstas Sell:

Hello I am currently looking for some help! I currently sold my home and have 200k in the bank and picked up my life and moved to the west coast of Florida. What is the best way to buy real estate with that much money? Do I do multiple single family homes or one big commercial property? Thank you!

The type of financing you can get will depend upon what your income and liabilities look like. You still need somewhere to live, and I'm guessing you don't want to live in a van, so maybe a multi-unit is the best idea. If there are none in your area then look for townhomes or single families. I would suggest residential unless you have some other interest or knowledge about commercial (maybe you have a business of your own?). As a beginner, I think it's easier to understand the fundamentals of residential property than commercial property. House-hacking or buying a fixer-upper would both be good options. 

[Edwin Epperson]

@Kanstas Sell, Have you ever considered becoming the bank and lending your money out?  Your investment is still secured to the underlying real estate (actually your more secured lending than you are borrowing) as well you get to shift the risks and liability to someone else (ie the borrower) while still collecting passive income.  Just a thought, and I teach investors how to do this all the time, been doing it since 2014.

[Colton Hahn]

Depends what your goals are.

Is your goal to actively manage a property and generate cash flow? Then look at a property with 2-10 units that you can make work in your area. 

Is your goal to passively invest, then look at sponsors with a proven track record and a plan that aligns with what you are going for.

[Ricardo Hidalgo]

Quote from @Kanstas Sell:

Hello I am currently looking for some help! I currently sold my home and have 200k in the bank and picked up my life and moved to the west coast of Florida. What is the best way to buy real estate with that much money? Do I do multiple single family homes or one big commercial property? Thank you!

 I would learn the market first to see if it supports a good margin for flips or if its more buy and hold. Once that is established calculator your cash on cash return to see if its worth holding long term. If the market is lacking inventory, building may be a good option for resale. 

[Nicholas Coulter]

Quote from @Kanstas Sell:

Hello I am currently looking for some help! I currently sold my home and have 200k in the bank and picked up my life and moved to the west coast of Florida. What is the best way to buy real estate with that much money? Do I do multiple single family homes or one big commercial property? Thank you!

I would say split it into 2 properties. You could do 2 larger multi family units and get a higher ROI!

[Crystal Smith]

Quote from @Kanstas Sell:

Hello I am currently looking for some help! I currently sold my home and have 200k in the bank and picked up my life and moved to the west coast of Florida. What is the best way to buy real estate with that much money? Do I do multiple single family homes or one big commercial property? Thank you!

 My recommendation for what to do w/ $200K in the bank- Leverage, Leverage, Leverage. $200K sounds like a lot but your objective should be to use the $200K to show potential lenders (Private, Hard money or a bank) that you are low risk and can put your skin  (Cash) in the game.  So get your lenders and/or business partners in place. 

Since you just moved to the west coast of Florida I also recommend finding real estate professionals (investors, realtors, attorneys, title companies,....) who know your market and build a network. Use the network to answer the question on what segment of real estate you should be focused on.  This is what I'd be focused on if moving to Cape Corral.

[Mike D'Arrigo]

@Kanstas Sell I think you need to run a few scenarios and see which way produces the most cash flow. I don't know what the typical numbers are in your market but I would start by analyzing how much cash flow I could generate from one multi family or several single families. I like @Joe Villeneuve's suggestion of splitting it up. I think you would probably maximize your cash flow if you bought say, one multi family with $100K and then a few SFR's with the remaining $100K.

[Jonathan Klemm]

Hey @Kanstas Sell - I like idea of partnering up with someone on a bigger multifamily property that has some value add work.  Come to Chicago and your dollar will go quite a big futher.

[Brad S.]

Please add more specifics for more specific helpful advice.
i.e. goals (short term/long term, capital accumulation, more immediate cashflow, etc), do you need to rely on rental income or is your current income stable, etc.

Otherwise, it's kinda like going to a personal trainer and saying "how do I get in shape", only for them to help you look like Arnold Schwarzenegger (30 yrs ago), when you really wanted to train to be a professional swimmer. ...muscle density sinks, by the way