Advice - how to invest $300k today?

Question

Hi all!

I’m ready to dive substantially deeper in real estate investing and have up to $300k ready to be deployed. I’m currently grappling with which path / options to take and would love all your thoughts – below I have outlined some context of my situation and options.

Context:

• - Currently      own 2 properties – my SFH (which I don’t want to move out of) and a condo that      is rented (currently to family members which makes it easier)
• - Have      150k cash + 150k available from a HELOC at 3.75% -- have more available but      this is all I want to allocate to REI right now (I say this so you know I’m      not being super stretched investing the 300k)
• - I’m      open to investing locally or remotely within the US – we live on the WC approx.      3hrs from SF
• - My      wife and I work demanding 9-5 jobs – we are open and willing to spend material      time on this but cannot make it our full-time roles for at least a couple      more years

Options – I have outlined these in my perceived level of difficulty, would also love you thoughts on that

• 1. Buy      a multi-family unit (3-4 unit) in SF with 20-30% down and rent out
• 2. Invest      remotely by purchasing a property for $40-75k that needs a lot of work put      in $50k of reno, REFI for $120-150k appraisal, and then rent for $800-1k/mo      – repeat many times in 1-3 different markets (do 2-3x a year)
• 3. Start      a syndicate / fund and raise a total of $1-2M in funds from other      friends/family/investors to buy a 10-20 unit apartment building
• 4. Buy      a small piece of land (1-3 acres) n a mid-sized WC city for $100-250k and      develop a small 2-6 unit multifamily structure (would have to take out an additional      construction loan)
• 5. What other options am I missing???

Thanks for all your help / thoughts -  very much appreciated!

Paul Moore · Answer

@Kent Santin congrats on being well positioned.  I’m probably biased, but in the 20 years of real estate investing I’ve done the best situation has been investing with a great syndicator. If you decide to do this I would recommend reading Brian Burke‘s excellent book: The Hands-Off Investor. The book is very well written and full of tips about how to find the very best syndicator to invest with. Good luck!

Caleb Brown · Answer

What excites you the most or one you'd enjoy? All the options you said are great. You are smart and could build a team/system for any so it's choosing the one. You could also do multiple ones and then see which one fits you the most

Adam Polignone · Answer

@Kent Santin keep it simple IMO put 20% down on 1.5M worth of property.

Josh Caldwell · Answer

All of your options will work but your goal is to get as much bang for your buck as you can with your 300k  What that means to you is that you want to use as little of your money per deal as possible.  How much leverage can you use?  You are speaking of broad categories, when the fact is that individual deals are what matters, not categories of investment. You are looking for a maximum ROI.  So start shopping.  Your real answer might be a mix of the techniques above, but I suspect that you will find your greatest ROI in SFH.  The best ROI you will ever find is in owner financed deals  Get one of those to cash flow and your ROI is infinity, with the added benefit of not consuming any of your capital.

Kent S. · Answer

Thanks AJ - all very good points, thoughts / answers below:

Time to support tasks - albiet having demanding workloads, between my wife and I we are more than open to spending time getting critical tasks over the line to ensure sucess (e.g., contractor mgmt, tenant screening / mgmt, etc.)

Why REI / goals - focused on investing in RE to support my portfolio diversification, creating a second sustainable income stream, and growing overall wealth. Specifically, looking to build wealth/income via the 3 core benefits of RE investing: 1) cashflow (feel quite strongly that things need to cashflow neutral and more than likely positive from the onset) 2) appreciating over the long-term (I understand boom and bust cycles will come) 3) Having tenants pay down debt to create equity.

Syndication - this is something I have lightly looked into but based on everything I have seen the return are good (6-10%) but not as strong as they could be if I do this myself. Perhaps I'm looking in the wrong places?

Aaron W. · Answer

@Kent Santin That's great you have funds to deploy right now into real estate!

You mention having demanding 9-5 jobs, but the options you came up with each take time unless you were to hire out the tasks.

Before deciding how you want to invest your funds, have you thought about the why in investing in real estate?  What goals do you need to accomplish your why?  Are you investing for cash flow or appreciation?

Have you thought about less time-consuming tasks, such as investing in a syndication or looking for more turnkey properties?

Best of luck!