Advice on where to put cash, cash flow is priority!

General Real Estate Investing
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Advice on where to put cash, cash flow is priority!

Brittany Farrell
Member since 2023 · 12 posts · 8 votes

Hi! I am new here, but I'm in Property Management and have ventured into investing myself, and am looking for advice on how to best grow my passive income so I can stay home with my 6 month old baby for as long as possible. (I'm currently doing independent property management/consultation and work from home to fund this.) I have about $200 - $250k to put toward an investment, but I just don't know where to put it or what is best right now. The Tri-Plex I own is in Grand Junction, CO and I have a Property Management company managing it. It Nets aprox $800/month. My commercial building nets about $900/month, with a relative being the primary tenant. 

I don't think I will qualify on my own for traditional financing with my reduced income, and working for myself. I've never looked into hard money, and don't know that much about it. Should I try to save more cash, and try to buy something outright? If I do that in Grand Junction, I would probably only be netting $1,500ish/month. Or should I be trying to leverage? And if so, how and where? I need this money to grow. Right now it's in a high interest savings account with 4.3% interest so I'm making about $600/month just through that. 

I should also mention that we are currently living in California, but we do not own a home and I’m very uncertain if we will stay here. We have vaccine hesitances, and doubt we will be able to put our children in public school in the state. We’re open to Oregon, Idaho, Colorado and Montana. Buying a duplex to offset a our mortgage so we have a home base somewhere may be another possibility.

My baby needs me.. so I need this income! Any advice/input is warmly welcomed. Thank you so much :) 

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Eric Gerakos
Investor · Costa Mesa, CA · Member since 2016 · 1k+ posts · 1k+ votes
2y

My advice would be to buy some conservative LTV first trust deeds, currently paying 9%. That's what I'm doing with all the equity cash I cash out refied at 3.5% when rates were low. Your $250,000 at 9% that's $1,875.00 a month and totally passive.

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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    @Brittany Farrell

    these are fantastic goals!  unfortunately high rates have really hurt cash flow, so I don't have a great answer for you.  and i'd never tell someone I don't know where to move - but I do agree that house hacking is worth considering if you do move.

    I'll say something on hard money since you asked about that. it is meant to be short term - you buy with hard money, rehab and/or increase rents in order to increase the ARV, and then refinance. so, that is usually very hands-on and time-intensive.

    will be interesting to see what advice you get...

    1Reply
  • Don SpaffordPro Member
    Investor · Idaho Falls, ID · Member since 2016 · 935 posts · 629 votes
    2y

    @Brittany Farrell if you are an accredited investor, you can invest in a fund that is set to close at the end of this year. Huge depreciation available with it as well. Expecting 12-15% average cash on cash. Very hard to find other RE opportunities that pay that currently. This is specifically with RV Campground Resorts.

    If you decide to move to ID, there are some great house hacking opportunities now with some new construction triplexes. Happy to help you with that if you want to consider the Idaho Falls, ID area.

    3Reply
  • Julien J.
    Investor · CO · Member since 2016 · 757 posts · 1k+ votes
    2y

    @Brittany Farrell

    For short term cash flow, I'd recommend debt funds or syndications. In the REI game, unless you put in the time and effort to find unicorn deals, cash flow comes in year 3 to 5.

    3Reply
  • Eric Gerakos
    Investor · Costa Mesa, CA · Member since 2016 · 1k+ posts · 1k+ votes
    2y

    My advice would be to buy some conservative LTV first trust deeds, currently paying 9%. That's what I'm doing with all the equity cash I cash out refied at 3.5% when rates were low. Your $250,000 at 9% that's $1,875.00 a month and totally passive.

    4Reply
  • Brittany Farrell
    OP
    Member since 2023 · 12 posts · 8 votes
    2y

    Thank you, Eric. Any specifics you suggest? This is the first I’ve heard of this. 

    1Reply
  • G. Brian DavisPro Member
    Investor · Hatboro, PA · Member since 2016 · 3k+ posts · 867 votes
    2y

    Hi @Brittany Farrell, I would explore passive investing, given your goal of not working - active real estate investing is a lot of work! And you can earn returns just as high.

    A lot of the deals we've vetted and ultimately ended up fractionally investing in this year as an investment club have targeted pretty immediate cash flow. For example, we invested in a few deals with Rise48, which aims to start paying distributions in the first quarter of ownership. We invested in a deal with MAG Capital Partners slated to start paying distributions within a quarter or two, and one with Next Level Income, and one with Goodegg Investments.

    If you want high yield immediately, look at debt funds and notes. We invested in a note with Norada paying 15% interest. Groundfloor has a good note paying 10% interest right now. There's no equity upside in these, but you get the income right away, at a high yield.

    It helps if you have some fellow investors to go in on these with, so you can split the high minimum investments. Friends or family work, or you can join an investment club. Keep us posted!

    0Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    @G. Brian Davis

    @Eric Gerakos

    these seem like good strategies... for HNWIs and/or experienced investors.  OP said that the cash was "to put toward an investment" - so that likely means they have savings and other funds.  but i always get nervous when beginners get these recommendations.  they can lose principal.  you guys have way more experience and you can tell the good investments from the bad.

    1Reply
  • G. Brian DavisPro Member
    Investor · Hatboro, PA · Member since 2016 · 3k+ posts · 867 votes
    2y
    Quote from @Nicholas L.:

    @G. Brian Davis

    @Eric Gerakos

    these seem like good strategies... for HNWIs and/or experienced investors.  OP said that the cash was "to put toward an investment" - so that likely means they have savings and other funds.  but i always get nervous when beginners get these recommendations.  they can lose principal.  you guys have way more experience and you can tell the good investments from the bad.


    That's why we vet deals together as a club, and on a group call so that we all benefit from each other's knowledge. But you're right that investing by yourself takes more skill and knowledge. 

    2Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    2y

    I'm buying blue chip stocks (and some REITS) paying dividends of 7.25% ish.

    Not risk-free, but liquid and relatively stable with upside. 

    3Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    2y
    Quote from @Brittany Farrell:

    Hi! I am new here, but I'm in Property Management and have ventured into investing myself, and am looking for advice on how to best grow my passive income so I can stay home with my 6 month old baby for as long as possible. (I'm currently doing independent property management/consultation and work from home to fund this.) I have about $200 - $250k to put toward an investment, but I just don't know where to put it or what is best right now. The Tri-Plex I own is in Grand Junction, CO and I have a Property Management company managing it. It Nets aprox $800/month. My commercial building nets about $900/month, with a relative being the primary tenant. 

    I don't think I will qualify on my own for traditional financing with my reduced income, and working for myself. I've never looked into hard money, and don't know that much about it. Should I try to save more cash, and try to buy something outright? If I do that in Grand Junction, I would probably only be netting $1,500ish/month. Or should I be trying to leverage? And if so, how and where? I need this money to grow. Right now it's in a high interest savings account with 4.3% interest so I'm making about $600/month just through that. 

    I should also mention that we are currently living in California, but we do not own a home and I’m very uncertain if we will stay here. We have vaccine hesitances, and doubt we will be able to put our children in public school in the state. We’re open to Oregon, Idaho, Colorado and Montana. Buying a duplex to offset a our mortgage so we have a home base somewhere may be another possibility.

    My baby needs me.. so I need this income! Any advice/input is warmly welcomed. Thank you so much :) 

     I know dozens of investors that have and are still buying rentals in the Cleveland markets, with 10% or better net caps 

    All the best 

    1Reply
  • Ben Russell
    Member since 2023 · 50 posts · 41 votes
    2y

    Brittany,

    My wife owns a real estate company (KokopelliRealEstate.com) in Grand Junction and we often work with investors. 

    If there is anything we can help with, please reach out.

    Ben

    1Reply
  • Samuel DioufBusiness Member
    Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes
    2y

    Ohio is a highly cash-flowing state. If cash flow is what your looking for Cleveland is a good option.

    [email protected]614-662-1652
    Reafco - Samuel Diouf528 Reviews
    WebsiteView Page
    1Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    2y

    @Brittany Farrell

    I buy houses for 30k to 40k for cash that needs 20k or so in repairs that will rent for $1300 or more per month.

    You have to go and find these properties they won't be on MLS or Zillow.

    2Reply
  • Ian IppolitoBusiness Member
    Investor · Tampa, FL · Member since 2015 · 1k+ posts · 1k+ votes
    2y
    Quote from @Brittany Farrell:

    Hi! I am new here, but I'm in Property Management and have ventured into investing myself, and am looking for advice on how to best grow my passive income so I can stay home with my 6 month old baby for as long as possible. (I'm currently doing independent property management/consultation and work from home to fund this.) I have about $200 - $250k to put toward an investment, but I just don't know where to put it or what is best right now. The Tri-Plex I own is in Grand Junction, CO and I have a Property Management company managing it. It Nets aprox $800/month. My commercial building nets about $900/month, with a relative being the primary tenant. 

    I don't think I will qualify on my own for traditional financing with my reduced income, and working for myself. I've never looked into hard money, and don't know that much about it. Should I try to save more cash, and try to buy something outright? If I do that in Grand Junction, I would probably only be netting $1,500ish/month. Or should I be trying to leverage? And if so, how and where? I need this money to grow. Right now it's in a high interest savings account with 4.3% interest so I'm making about $600/month just through that. 

    I should also mention that we are currently living in California, but we do not own a home and I’m very uncertain if we will stay here. We have vaccine hesitances, and doubt we will be able to put our children in public school in the state. We’re open to Oregon, Idaho, Colorado and Montana. Buying a duplex to offset a our mortgage so we have a home base somewhere may be another possibility.

    My baby needs me.. so I need this income! Any advice/input is warmly welcomed. Thank you so much :) 


    Like you I invest in direct real estate (but via residential rentals). And I also have seven figures in syndications/crowdfunding (i.e. passive investments).

    There are many different passive investments available. And if you go to a website like CrowdStreet.com or 1031Crowdunfunding.com you will see many examples of these to get an idea. And then you can use this to work on your own, personal due diligence process for evaluating them.
    The Real Estate Crowdfunding Review
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    2Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    Seems like people are reading the title of the post and not the post itself.

    0Reply
  • Peter W.
    Member since 2020 · 351 posts · 329 votes
    2y

    First you should move from your savings account to treasury bills. That will generate an extra 1% (or 125/mo).

    You are making 2300/mo what number do you need to get to? I saw a flipper offering 16% on notes on Craigslist the other day which is probably about best you could get which would get you to ~3500/mo once you account for inefficiencies. I don’t know that business but just trying to set expectations.

    Ps you sound like my wife. Her babies need her too.

    1Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    2y

    If you need cash flow, buy high performance debt or Tbills. If you want long-term appreciation and yield, buy hard assets then equities. 

    1Reply
  • Leslie Pappas
    Professional · San Francisco, CA · Member since 2014 · 876 posts · 301 votes
    2y
    Quote from @Brittany Farrell:


    I should also mention that we are currently living in California, but we do not own a home and I’m very uncertain if we will stay here. We have vaccine hesitances, and doubt we will be able to put our children in public school in the state. We’re open to Oregon, Idaho, Colorado and Montana. Buying a duplex to offset a our mortgage so we have a home base somewhere may be another possibility.

    My baby needs me.. so I need this income! Any advice/input is warmly welcomed. Thank you so much :) 

    Hi Brittany, there plenty of other opportunities elsewhere, my clients are involved in institutional grade properties across the country. My recommendation is to choose cities in safe and economically diversified areas with above-average income and population growth. It can also be safer to diversify your investment properties across the country. There is still good money to be made in AZ, FL, GA, TX and other states, however, picking the right submarkets is key.

    A very good source of local analysis is rereport.com


    0Reply
  • Alecia LovelessPro Member
    Member since 2019 · 3k+ posts · 2k+ votes
    2y

    @Brittany Farrell Have you looked into DSCR loans which do not require you to have a W-2 income but go based on the income of the property?

    1Reply
  • Brittany Farrell
    OP
    Member since 2023 · 12 posts · 8 votes
    2y

    Thank you all for responding and your input. I really appreciate it. 

    @John Underwood

    Hey.. if you’re not finding these on Zillow, then where do you find them? I know Ohio prices are low, but where are you finding these deals? 

    1Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    2y
    Quote from @Brittany Farrell:

    Thank you all for responding and your input. I really appreciate it. 

    @John Underwood

    Hey.. if you’re not finding these on Zillow, then where do you find them? I know Ohio prices are low, but where are you finding these deals? 


     So many places. 

    Driving for dollars.

    Condemned houses 

    Probate

    Delinquent property tax 

    Etc.

    0Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    @John Underwood

    these are local deals you're finding because of your experience and network, yes?  I just want to point out that there's no Internet button for this type of deal =) 

    0Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    2y
    Quote from @Nicholas L.:

    @John Underwood

    these are local deals you're finding because of your experience and network, yes?  I just want to point out that there's no Internet button for this type of deal =) 


     Absolutely.  Many of the properties we find the owners would never search in the internet for someone to buy their house. They have problems and they have their head in the sand.

    We bought a house for 4k last week from 2 sisters that didn't know what to do and they thanked us for helping them with the situation. 

    0Reply
  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    2y

    @Brittany Farrell

    I would not pay cash for anything. The dumbest thing I've ever done with investing in RE was to pay cash for my first two rentals. I used to be a Dave Ramsey guy. lol. I would leverage your way to generational wealth with all that $ and put 20-30% down on cash flowing SFR. I'm investing in the Dallas area and Arkansas and still finding good cash flowing deals. I bought 7 SFR in 2023 so don't rule out buying now with high prices and interest rates. There are still deals out there. Keep looking and leverage your way to wealth. Let your money work for you. Don't ever pay cash for anything unless you're winding down and have achieved your final cash flow goal with RE. Good luck!

    0Reply
  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    2y

    If you are accredited, there are various debt funds around normally paying 8-10% as PE in the capital stack.  I think the real trick with those is, they will probably tell you that they pay monthly, but the plan can change where they just pay you later and catch you up.  Or they don't pay the whole 8%-10% monthly, but maybe 1/2 that depending on the property cash flow, and then catch you up at the end of their commitment to you.   Also your entire investment is at risk.

    You can probably call any of the companies @G. Brian Davis mentioned to see if they have debt funds or if they can point you to other friends that do.   As Brian mentioned, some may want $50,000-$100,000, but some might take less.

    As @Ian Ippolito mentioned you might look at the crowd funding sites to see if they have PE or debt funds deploying capital right now.  I would guess they might or also call any of the sponsors they've done deals for to see if they have opportunities.  Again most of these will probably be for accredited investors.

    2Reply
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