How Would YOU Spend $100,000?

[Brandon Turner]

(This was a popular discussion on Facebook today, so I thought I'd ask it here. Thanks @Chris Feltus for the suggestion!)

You have $100,000 to invest in real estate with and you must choose one of the following. Do you:

A.) Use it as a down payment on a $500,000 small multifamily?

B.) Use it to pay all cash for a $100,000 rental home?

C.) Buy five rental houses with a $20,000 down payment on each?

(Bonus: If you want to explain why, feel free!)

[Jon Klaus]

This is a close call for me between A and C. I like A, because it is simply one property to buy and manage, and could have the potential of cash on cash returns in the 20's%.

Still, I'm going to choose C, because I'd likely attract higher quality tenants at higher rent, even though the net income might not be as high. However, the individual homes would be more liquid and offer more flexibility for selling or borrowing against down the line. I'd also think that they might have a better chance of appreciation than the small multi-family.