Cash in hand...now what?

Question

I have a good amount of cash sitting from a cash out refi, and now I'm torn how to proceed. Currently I have 3 rental units, out of which #1 was successful rehab, #2 basic things, #3 turnkey .

Scenario A: Continue purchasing cash flowing properties with my partner financing conventional 75% until I dont have any more downpayment money. Problem with this is that deal are very very few.

Scenario B: Go solo and find a flip through a wholesaler, work with a hard money lender, and then cash out refinance, go to the next one. Risk is a lot more, but also reward...

Scenario C: Do the same as B but with my partner so we dont have to use any lenders and be more comfortable with time. My only complain is that my partner is very slow-busy-not motivated as much...

I have a day job, but have people and systems in place to handle the project comfortably 4 hours away...

Rich Vogel · Answer

Hi Pavlos,

I believe the first thing you need to do is make a decision on your partner.  I was in the same situation and I sat down with my partner and casually asked him what his goals are and what his expectations are with real estate in the next 5 years.  This gave me a good idea were he was after I measured his level of passion.  I then showed him what my business plan was and if he wants in I need him 100% in.  If not no hard feelings I am just trying to figure out were I am going and to make a plan. So I think you need to decide what your ultimate goal is.  I personally would try and get as many buy and holds as I could and keep on building my portfolio but that is just me.

Good Luck and keep us posted.

Gregory Emmer · Answer

A@Pavlos Kasselouris I think the first item you have to reconcile is whether or not your partner is dead weight...sorry to be so blunt.  This individual is clearly holding you back, to the point where you have to re-think your business mode.  At the end of the day, it's all about how much risk you want to take.  If you want to be more risk-adverse, then I would find another partner altogether.  There are plenty of cash-rich individuals out there clamoring to get into the real estate business, they just don't have the knowledge.  But you do.  Find these people online at BP, local investment club meetings, etc...That, or go off on your own which you said was an option....bias opinion upcoming: hard-money is not bad if you utilize it properly.  Staying in a hard money loan any longer than a year is not the intention of hard money.  However, if it ensures that you can close on a property, and that property, even with the higher holding costs, will be profitable in the long run, then it pays to go with Option B.  Only you will be able to do this financial analysis on a case-by-case basis.  One final thought-always cover your downside, and think worst-case.  As they say, the upside takes care of itself.  Good luck!

Pavlos Kasselouris · Answer

Hi Ashley,

End goal is retire as fast as possible with the rental income. But because when "man makes plans, God laughs" I cant say that I wont create a small business out of this. I have what it takes to go either path...real estate, property management, construction, flipping...

Ravi P. · Answer

you sound like you've had success real estate investment, so give yourself a hard money goal, and reinvest int yourself doing what you know. try a method you haven't done yet so that you gain valuable exposure to other real estate investment vehicles (storage units, commercial, specifically high end, or subsidized housing, etc.)

good luck!

Ashley St. Gelais · Answer

@Pavlos Kasselouris

What if you invest in the buy and hold properties as you find them and along the way flip/wholesale properties to build up your cash supply?  Then when you are tired of searching for flips then hopefully you'll have enough passive income from the rentals.

Kinda the best of both worlds.

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James Wise · Answer

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Roland Thomas · Answer

The first you did right off the top was not rush into something and spend your money. Take a deep breath and think. I have found there are multiple ways to create passive income in REI. Take some time to learn and discern which is the best approach for what you are trying to do long term. I invite you to connect.

Ashley St. Gelais · Answer

Hey @Pavlos Kasselouris

Great to meet you on here.

I think you've got to determine your end goal.

What is the lifestyle you are looking to obtain?  Positive cash flowing properties so that you can live where ever and leave your job?  Or are you looking to create a job for yourself finding, closing, renovating and reselling properties?

: )

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Cash in hand...now what?

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