Have $500k to start RE investing- wwyd?!

104 Replies

It’s fun to dream about situations like this, but I’m not dreaming... And I do NOT want to screw this opportunity up. Asking for real advice.

We sold our Denver home for $800k, a cash offer, we close in exactly one month. We are moving to GA or SC, as I've always wanted to live in the South, and I have family there. ("We" is my husband and I, btw.) I want to start investing in real estate immediately- we need passive income, as neither of us likes to work a typical 9-5. I am thinking that rentals (with great hired PM, of course) is the way to go. I'd like to buy several SFH's, or multi-fam/duplex/triplex etc., outright with cash, so the income is immediate and I can re-sell easily, etc. Is this a solid plan, or am I not thinking of something?! Is there another avenue I should be considering? You know how you can get in a mental rut and get tunnel vision, and overlook the extremely obvious right in front of you?? I do not want this to happen to me, and because I'm new to RE, and investing, I fear I could be missing out hugely.

If you were me, what would you do?

@Noelle Pritchard Barkley

BTW- I realize this post is crazy bold, and I’ll likely be dealing with tons of BS and vampires because of it. My eyes are open, and my guard is UP. However, I’m very curious to see the response overall. Call it an experiment in human nature, if you will.

Noelle,

If it were me in your situation, I would find someone you can build a relationship with or have one currently, who operates multifamily syndication's. Of course you would need to trust the operator and the deal as well, but the passive income and long term benefits show a tremendous upside and minimum risk from an investment standpoint. You can produce cash flow, gain equity and re invest it as you grow all while keeping your equity stake in the deals you are in on. All while relaxing from your home. The tax benefits are tremendous as well if done properly.

While i imagine many people will reach out to you seeking a relationship, be careful as many syndicator's/operators are claiming to produce returns that simply don't exist in  today's market. If you'd like i'd be glad to explain to you how this works!

Jason Rosenblum

@Jason Rosenblum

I joined a multifamily networking group this week. They spoke of syndications and appear to be knowledgeable. I too have cash to begin investing like the OP, and have been reading and going through the motions. Your comment here brings to a point that I have not considered yet, this group's reputation and possible underlying intent.

Could you maybe shed some light on the subject and maybe some things to look out for manipulation wise

Thanks!

@Noelle Pritchard Barkley congrats on the sale! Like others have said, the best way to mitigate your risk is to absorb as much information as possible, and then partnering with an expert in your niche. I too love the thrill of doing something new that has huge upside, but you don't want to lose all the capital you have. Keep learning from bigger pockets. Keep networking with sponsors who have a proven track record. And perhaps underwrite 10 deals a day for the next 10 days to get a feel for what a good deal looks like.

Congrats on the sale. I would check out Joe Fairless blogs, and digest a lot of information. Speak to a couple of Syndicators, and check our Crexi or Loopnet website for your own deals. 

@Noelle Pritchard Barkley . You don’t need a group or partner.. I’ll be upfront go to some Midwest state and buy already occupied fourplexes visit first of course you’re paying cash so you can close fast and probably get better deals than someone financing a property good luck.

well you have syndication advice 

you have mid west 4 plex advice.

but what I hear you saying is you want to live in SC or GA..  I am very bullish on Charleston SC.. I am building new construction there price points 400 to 2.5 million.. its an exicting city lots of culture without a lot of the negatives that some of the south can have.. 

I had a client of mine from SF who sold a property and I turned her on to Charleston she bought a LICENSED duplex and licensed I mean for Airbnb .. paid mid 800s for it.. and that property with leverage NETS her over 7k a month.. day in day out. so that's one thing to consider and without leverage probably closer to 10k a month or better.

Most on this site will tell you your nuts to pay cash.. that's not me.. I love free and clear real estate.  syndication is all cash of course.

the pro's are your investing with pro's and totally passive.  Choose WISELY of course like talked about above.

Negative is you have no control and its illiquid.   And I heard you say liquidity was important. 

So there are a few things.

Plus just starting a business you enjoy does not have to be real estate 800k can get you some pretty fantastic small business if you want to work them a little that will produce far more income than rental real estate.

This is one property I sold last January just to see what Charleston looks like 

7 New st. google it..  I built it and sold it. 

also another fun one to look at it 8  Woodal ct. same thing I built it and sold it.. 

two very different looks but super cool properties  Woodal is back on the market so you may see it listed again. 

I would move and live there way before most anything in the deep south..  If you have a choice

My advice would be to to spend that money SLOWLY. As they say in poker, it's better to fold a winning hand than to play a losing hand. This analogy could be a description of the deal you choose...or the industry you choose. REI should be run like a business, not a hobby. That doesn't mean it has to take a lot of time on a daily basis ONCE you get smart and are up and running but you do need to know the ins and outs of whatever niche you invest in. Take inventory of your investing objectives, risk tolerances, resources on hand (money, time, energy, stressthreshold, skill sets, knowledge, mentors, etc) and then explore how various invesent models fit.

@Noelle Pritchard Barkley

Step 1: use the BP search function to search the millions of threads that ask this exact same question

Step 2: Realize the BP search function isn’t the best so switch to google and repeat step 1.

Step 3: Realize this question is highly dependent on goals, risk tolerances etc

Step 4: Profit

I would take 25% and diversify into different areas to see what is a good fit. Turnkey rentals, Turnkey operators, Hard Money Lender, Partnering on local deals, etc. Then increase your investment into the areas that you enjoy and provide the best return. The argument would be that if you diversify then you will never get good at one thing and crush it. My argument would be if you invest 100% in something and it doesn't work out or you don't enjoy it then you are stuck.

Scott Rogers 

@Noelle Pritchard Barkley

I would agree with the folks who said keep it the bank while you learn! It’s nice to have liquid cash to be able to jump on deals when they come up. You have to lean what is a good deal for you, that meets goals AND is fun. Once you get to the new city start learning areas and learning about RE. I personally would buy value add MF, fix up, trade up, keep going and going (because that’s what I actually do). However, there isn’t a right thing to do with this money, there is only what you enjoy and gives you good returns. I would be wary of buying cash flow - you want to be able to gain equity in some way. Don’t let this cash burn a hole in your pocket! Good luck and keep everyone posted on how you turn this cash into never working a 9 to 5 again, it will take some work to make that happen!

Originally posted by @Joe Caron :

@Jay Hinrichs, when you mention the licensed duplex is she in the short term rental zone? 

 

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