Real Estate Agent · Oklahoma City, OK · Member since 2020 · 471 posts · 462 votes
I am in the midwest, I refinanced my house and pulled some cash out, I am curious how some of you would go about investing it in real estate (or other means).
Rental Property Investor · Petaluma, CA · Member since 2018 · 203 posts · 164 votes
6y
It really depends on your goals and experience level. You could split the $60k up into multiple down payments, or you could buy something all cash and do some rehab and cash out refi again down the road. You could also buy something semi turn key all cash and just sit on the cash flow.
Numerous ways to go about it and each one will have different outcomes, but you should start with your end goal in mind and work backwards
Rental Property Investor · Petaluma, CA · Member since 2018 · 203 posts · 164 votes
6y
It really depends on your goals and experience level. You could split the $60k up into multiple down payments, or you could buy something all cash and do some rehab and cash out refi again down the road. You could also buy something semi turn key all cash and just sit on the cash flow.
Numerous ways to go about it and each one will have different outcomes, but you should start with your end goal in mind and work backwards
It really depends on your goals and experience level. You could split the $60k up into multiple down payments, or you could buy something all cash and do some rehab and cash out refi again down the road. You could also buy something semi turn key all cash and just sit on the cash flow.
Numerous ways to go about it and each one will have different outcomes, but you should start with your end goal in mind and work backwards
I was actually curious how YOU would invest it personally, to hear different ideas and strategies that people are using.
Rental Property Investor · Petaluma, CA · Member since 2018 · 203 posts · 164 votes
6y
Ah got it! Thanks for clarifying!
I'd buy a property that qualified for financing that needed cosmetic work, fix it up with the leftover cash and then refi down the road...a standard BRRRR
Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes
6y
Buy a house hack using a 3-5% downpayment and invest the remainder of the money before doing it again next year.
You could invest the remainder in real estate, stocks, bonds, be a private lender, whatever suits you best. Besides the house hack it's like Michael said, it depends on your experience level and goals.
Are you focused on generating more passive income, do you want to self-manage property or hand it over to a management company, investment horizon, comfort level with other investment vehicles, etc. Putting the money in an index fund is very passive, easy, and safe although I think the money would be put to better use in real estate using leverage and taking advantage of lower interest rates.
I'd buy a property that qualified for financing that needed cosmetic work, fix it up with the leftover cash and then refi down the road...a standard BRRRR
Nice! Is there a particular reason you would pay cash to fix it up rather than say get a construction loan and retain some more cash? To keep your debt down and potentially have more cash flow?
Rental Property Investor · Petaluma, CA · Member since 2018 · 203 posts · 164 votes
6y
Yes to keep the debt down and maximize cash flow. Construction loans are typically expensive and a real pain in the butt in my personal experience. All cash just allows you to move more quickly with so much less red tape.
Rental Property Investor · Houston, TX · Member since 2017 · 29 posts · 25 votes
6y
@Forrest Faulconer
I'm working with 60k and I am going to own 4-6 SFR. Just did my first one for <12k cash out of pocket. Do the math and that lands me about 5 properties. Each cash flowing at 10-20% (I could get higher cash flow but I'm going for high equity capture instead). With 60k I could make about $1000/month no problem. I would then take that 12k I get per year and invest that every year and acquire one more property until I get to 10 properties. After 10 properties lenders won't lend a conventional loan so I might sell all 10 via 1031 exchange and get into a multi family passive deal. With the passive deal I would then repeat buying more single family homes because after selling all 10 the lenders will then allow me to refinance to conventional loans again. That whole cycle would take me about 5 years but my net worth would triple (180k) by year 5.
As you can see, 60k can snowball very quickly so jump in and find SFH that need about 20-30k in rehabs. That amount of rehab usually gets me about 70% equity capture. My first deal was 300% equity capture.
Investor · Los Angeles, CA · Member since 2017 · 523 posts · 476 votes
6y
Find the best syndicator I could who will take $50K, and have him or her put it to work. Put the rest into an index fund.
Although, if you're talking about the Midwest, I suppose you could buy a run down house or heck, even a small multifamily, for cash, well under market, and fix it up and do a BRRRR. I'd still go with the syndication personally, but if you have stuff in your local market where you can put this money to work on your own, awesome.
Lender · United States · Member since 2020 · 1k+ posts · 499 votes
6y
Not enough for a decent MFH depending on your market. I'd probably use it to flip a home. Aim to make 30%. Turn the $60k into around $80k, then take the $80k and buy a $400k MFH.
Real Estate Agent · Oklahoma City, OK · Member since 2020 · 471 posts · 462 votes
6y
@Ben Lapane, love it man! With 12k out of pocket, what did your deal look like? 20% down with a construction loan wrapped up in it? I am thinking a similar path, 2-4 SFH or 1 MFH. However several people on this thread have brought up syndications which has got me thinking..
I am thinking something similar! Take advantage of having a lump sum of cash because most loans require 25% down for a MFH. 20% down on a SFH is much more attainable in the future.
Investor · Leander, TX · Member since 2016 · 299 posts · 402 votes
6y
I would look for a pre existing performing (good payment history) note from a bank or CU or a web company platform that services this niche.
Basically just become the bank and take over the collection of the loan.
Just be aware that the forbearance period is trending upward in 2020 where people can file for extensions up to 12 months on making payments, so like anything else when investing, there are risks.
Any particular syndications you look for? What terms do you find favorable?
I look for multi-family, industrial or data center deals. For most, you need to be an accredited investor. I also look at the syndicators track record, and references. As for deal specifics, I like a 8% return with at least a 2x equity multiple and a favorable waterfall (at least 70/30 hopefully better).
Investor · Tampa, FL · Member since 2017 · 589 posts · 251 votes
6y
Lots of great advice on here but really it comes down to what you want out of real estate. Can be stretched to leverage or dumped into for equity. Numerous ways to go with that amount.
Rental Property Investor · Camano Island, WA · Member since 2020 · 10 posts · 7 votes
6y
@Forrest Faulconer I'd say BRRRR, but it's completely dependent on your skill set and strategy. There are a million versions of a BRRRR, we finance properties and then sell them in to syndication to get our capital back and recycle. No matter what you decide, go with a strategy for multiplication of capital like you described. 👊🏻 Good luck with it!