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

General Real Estate Investing
2yFollow

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 :) 

6Reply
104 views

Most Popular Reply

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
See this reply in the discussion

38 Replies

Jump to latestLatest
  • Michael Margarella
    Investor · New York City · Member since 2020 · 164 posts · 75 votes
    2y

    I agree with some of the other posters that investing in a syndication or fund could be a good fit given your situation.

    Pick solid operators and solid asset classes. We syndicate self-storage projects. Even if there is a crash, and people downsize, those people will have a need for self-storage, as evidenced by storage occupancy rates during past recessions.

    And during inflationary times, our rental rates increase. We're also able to evaluate our rates, and keep pace with inflation, on a monthly and quarterly basis because of shorter term leases.

    These syndication can provide an 8%+ cash-on-cash return - providing you monthly cash flow - and a 15-20% IRR over the length of the project. Feel free to reach out.

    1Reply
  • Evan Polaski
    Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
    2y

    @Brittany Farrell, the first thing is to realize that all investments have risk, and the cash flow is typically the first part of your return that is at risk.  You can "buy" cash flow by putting more money down on a rental, but what happens to your cashflow if/when the roof needs replaced sooner than you anticipate.  What happens to the cash flow when your tenant stops paying and it takes 6 months to evict.

    The same can happen in any syndication. Operators that had never missed a distribution have paused distributions due to floating rate loans/interest rate cap costs. But even those with fixed rate loans may hold back distributions because they need to hold asset longer than anticipated and went into amortization, or because they are holding 2-3 yrs longer than anticipated, they have more Capex items than budgeted.

    Within real estate, taking first mortgage positions will be more consistent (but still not 100% guaranteed) income.  If you are doing this through a debt fund, especially one that is offering returns higher than typical mortgage rates, I would be certain to understand who they are lending to and how they can create returns higher than typical mortgage rates: i.e. are they lending to operators that are already distressed or can't get traditional mortgages?  Do they have fund level debt ahead of you, to help boost the mortgage returns?

    1Reply
  • Anna StrausbaughBusiness Member
    Real Estate Agent · Boise, ID · Member since 2018 · 119 posts · 70 votes
    2y

    Hi @Brittany Farrell! I think your goals are awesome, I'm an agent in the Boise area and if you move here I'd be happy to help you find a great house hacking property. BUT in the mean time while you try to find more cash flow, which unfortunately Boise isn't a high cash flow market right now with interest rates the way they are, I'd recommend buying rentals in high cash flow markets like Cincinnati or Montgomery, Alabama. I actually have been looking at Montgomery for high cash flow properties and other clients of mine who have high appreciation properties here in Idaho are buying in Alabama to get more cash flow.  If you need some recommendations let me know and I can direct you to some people to talk to in those markets. Good luck!

    [email protected]208-890-5236
    2Reply
  • Ben Gammon
    Property Manager · cincinnati, OH · Member since 2015 · 78 posts · 20 votes
    2y

    Hello there! Welcome to the realm of real estate investing, and kudos on your involvement in property management, your personal rentals, and your construction company. It's great that you're exploring ways to expand your passive income to enjoy more time at home with your 6-month-old baby.



    You should explore the potential to leverage the equity in your current properties. With your Tri-Plex in Grand Junction and the commercial building, there may be opportunities to use these assets to secure financing for additional investments. This approach allows you to maximize returns without solely relying on personal income.

    While traditional financing might pose challenges, consider looking into hard money lending as a viable alternative. Research local hard money lenders in the areas you're interested in and familiarize yourself with their terms. Keep in mind that interest rates may be higher, but the flexibility and speed of obtaining funds can be advantageous.

    Given your goal of passive income, the buy-and-hold strategy is a strong option. With your current funds, explore purchasing additional rental properties. Research markets in Oregon, Idaho, Colorado, and Montana to identify areas with growth potential and reasonable property values.


      1Reply
    1. Mike Klarman
      Specialist · NJ · Member since 2022 · 1k+ posts · 653 votes
      2y

      Hi Brittany, for your holds you want them to be the 2 - 4 unit buildings.  You want more than one rent on a mortgage for max cashflow.  You also want to move toward cheaper markets where the 1% rule is still a viable rule.  Things can be very expensive out in Colorado.

      I sent you a PM that you may find interesting.

      1Reply
    2. Sam McCormackBusiness Member
      Real Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 833 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 :) 


      An area you may want to look at is Greater Cincinnati. Northern Ky and Cincinnati, that is. Both growing areas, both having strong rental markets, sports teams, colleges, STR locations, growing jobs, etc

      Let me know if you have any more questions or if there is anyway I can help

      [email protected]859-443-4952
      Sam McCormack Realtor
      View Page
      1Reply
    3. Bryan H.
      Member since 2021 · 54 posts · 26 votes
      2y
      Quote from @John Underwood:
      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. 

      So basically something only you can do in your very specific area with presumably  long term knowledge and contacts. I mean, this is great for you but not really transferable to most people in most places I would imagine. Certainly not where I live and so then impossible to do this in some other market as an outsider, no matter how much research one does…
      1Reply
    4. John UnderwoodPro Member
      Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
      2y
      Quote from @Bryan H.:
      Quote from @John Underwood:
      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. 

      So basically something only you can do in your very specific area with presumably  long term knowledge and contacts. I mean, this is great for you but not really transferable to most people in most places I would imagine. Certainly not where I live and so then impossible to do this in some other market as an outsider, no matter how much research one does…

       My partner lives in Miami and is finding them in my market. 

      These are all new contacts.

      So the answer is no to most of your assumptions. 

      So anyone could do what we are doing.

      0Reply
    5. David Avetisyan
      Rental Property Investor · Glendale, CA · Member since 2013 · 685 posts · 334 votes
      2y
      Quote from @John Underwood:

      @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.

      Mind sharing an address or two, I’m curious. TIA

      0Reply
    6. John UnderwoodPro Member
      Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
      2y
      Quote from @David Avetisyan:
      Quote from @John Underwood:

      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.

      Mind sharing an address or two, I’m curious. TIA


       I sent one in a Private message

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

      @Bryan H.

      @John Underwood

      you're both right.  I think what John and his partner are doing can be done by anyone.  Just not on day 1 of their investment journey =)

      1Reply
    Join the conversationCreate a free account to reply, vote on answers and follow this thread.
    Log InJoin for Free