$700k to Invest: Need Advice
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Real Estate Investor · Palm Beach County, FL · Member since 2017 · 3k+ posts · 2k+ votes
8yI would be careful advertising how much cash you have to invest on a public forum.
There's lots of great posts and resources here regarding your question though.
52 Replies
- 8yRyan M.Fairfax, VA · Member since 2017 · 7 posts · 5 votesOP
@Brian Burke, great info. Thank you very much! I'm going to look into sponsors more.
@Brent Coombs, I'm heavily invested in crypto already.
@Account Closed, I've heard this before. You can have the money to make more deals but it's limited to how many good opps are out there. Trust me I'm not going all in on anything, just trying to get some ideas.
- Downers Grove, IL · Member since 2017 · 366 posts · 165 votes8y
Tough to make decent cash flow investing in your neck of the woods, too many wealthy government workers with money burning a wholes in their pockets. If you have time, would advise getting your own RE license, and monitor the market over a period of time, suspect you could use your cash more effectively to purchase flips / under 3 year holds, than generating long term cash flow in that particular market.
- Investor · Austin, TX · Member since 2013 · 933 posts · 1k+ votes8y
Hi Ryan,
Lots of good advice above. Here's a helpful blog on vetting deal sponsors you may find helpful. I like a couple niches areas such as MF value add apts, mobile home parks and self storage syndications that produce good passive cash flows and have some level of downside protection. With syndication, good to diversify across geographies, a few niches and sponsors.
- Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes8y
@Ryan M. Here is a BP article I wrote on some advantages & disadvantages of passive REI options Three Key Routes for Passive Real Estate Investing
- Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes8yWith that kind of money to start, I would go straight to multifamily Apartment complexes. Get a solid mentor to go in with on your first few deals to teach you the ropes. Swanny
- Realtor and Investor · Scottsdale, AZ · Member since 2017 · 1k+ posts · 1k+ votes8y
Wow. Everyone jumped right in with options, but I think my approach would start with some exploratory questions like I would first want to know what the monthly income was that you are trying to replace with Real Estate.
Then, I would want to know if paying cash for your investment, versus leveraging financing over many projects would get you closer to the monthly figure you seek. This is the key. If 1 cash investment in a commercial property gets you to the monthly figure you were seeking to replace, then why look any further? If it doesn't, then leveraging financing over many projects not only provides for some cash flow, but also appreciation if purchased correctly, for an end result that far exceeds a single investment.
I would caution you on crowdfunding syndication sites. I would rather connect with a syndicator directly that can provide you with details of a specific project.
Trustee sales would be another idea to explore. It would give you an opportunity to build a rental portfolio from deeply discounted properties.
Anything you choose will have pros and cons, so pick something that interests you.
Best of Luck!
- Seattle, WA · Member since 2016 · 249 posts · 54 votes8yRyan M. Ryan, we are in the same boat. I have a portfolio of websites and also run a brokering/wholesaling business for websites. The income from these things always get funneled to less risky long term assets like real estate. End of 2016, I also disposed of one of my large websites. My wife gave me the best advice after such an exit. She told me to sit on it for a year, which I did. When one gets such extreme funds at once, they may make rash decisions. Keeping the money stashed away in savings for a period of time allows the “vanity” of it go away. Then educated decisions can be taken. Feel free to reach out via PM if you have specific questions on website assets, website to real estate transition, etc.
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Cara Lonsdale as a grizzled trustee buyer for 30 plus years like @Brian Burke trustee sales are WORK
I am thinking this person with his wind fall is looking for more of a passive route for his investing dollars.
Heck he could just go and buy up domain names as well.. there was a neat show on some guy in middle America doing that with the newest .com ending.. can't recall but I think he sold one of them for 1 million.
- Realtor and Investor · Scottsdale, AZ · Member since 2017 · 1k+ posts · 1k+ votes8y
Originally posted by @Jay Hinrichs:
@Cara Lonsdale as a grizzled trustee buyer for 30 plus years like @Brian Burke trustee sales are WORK
I am thinking this person with his wind fall is looking for more of a passive route for his investing dollars.
Heck he could just go and buy up domain names as well.. there was a neat show on some guy in middle America doing that with the newest .com ending.. can't recall but I think he sold one of them for 1 million.
Trustee sales can be passive as there are plenty of people who provide a Buying service to assist. I only mentioned it as an option when considering having a Buy and Hold rental portfolio as it would give him an opportunity to have a lower cost of entry.
Of course anything can be passive if you set up a good team to facilitate and manage for you, right?!
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Cara Lonsdale I understand your city has buying services I am on their e mail chains.. and a few others but that is a Rarity.. plus your putting a lot of faith in someone making 2 to 3k as a buying service why you spend 100 to 200k and have all the risk of bad title or other defects..
don't get me wrong I love trustee sales its fun exciting and there can be some good money there especially buy and hold.. but its WORK to do it right.. and most folks especially someone like this OP who is asking what to do .. that inference means not a lot of experience in the real estate space.. or at least that's the way I take it.. Maybe Brian will chime in he was/is a very large trustee buyer in N CA... with a lot of war stories and wounds and a Lot of good outcomes for him and his investors as well.
- Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes8y
You have received a ton of great advice above already! I'd like to add from personal experience. If your goals to collect passive income only, then invest in whatever your comfort level allows (after you educate yourself in a particular niche). That can include but not limited to various sorts of syndications that invest in multi-family, mobile home parks, storage, office complexes. With commercial as @Joel Owens stated above you can get triple-net leases which is also a more or less passive form of investing.
As someone who invested as an equity partner in apartment building syndications, I can tell you that educating yourself in each field to some degree is essential. If you would like to talk further feel free to reach out to me at any time.
Best of luck!
- Realtor and Investor · Scottsdale, AZ · Member since 2017 · 1k+ posts · 1k+ votes8y
Originally posted by @Jay Hinrichs:
@Cara Lonsdale I understand your city has buying services I am on their e mail chains.. and a few others but that is a Rarity.. plus your putting a lot of faith in someone making 2 to 3k as a buying service why you spend 100 to 200k and have all the risk of bad title or other defects..
don't get me wrong I love trustee sales its fun exciting and there can be some good money there especially buy and hold.. but its WORK to do it right.. and most folks especially someone like this OP who is asking what to do .. that inference means not a lot of experience in the real estate space.. or at least that's the way I take it.. Maybe Brian will chime in he was/is a very large trustee buyer in N CA... with a lot of war stories and wounds and a Lot of good outcomes for him and his investors as well.
That's the point. He can partner with a proven professional.
Another idea would be to hook up with a good wholesaler. That would eliminate the issue of title questions at trustee sale if he was worried about getting matched with an incompetent Buyer service.
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Cara Lonsdale good wholesaler is an Oxymoron.. LOL none of those are appropriate for someone with limited experience but of course we don't know their experience at all do we.
there is Always buying Timber stands in the NW talk about passive and 10 to 14% returns year in year out.. with no management at all.
- Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes8y
Originally posted by @Jay Hinrichs:
@Cara Lonsdale good wholesaler is an Oxymoron.. LOL ...
A classic statement to quote. Very much like my one quote from many years ago that somebody up voted the other day: 'The "wholesale" deals I see have incredible numbers - when I say "incredible" I mean don't believe them'
- Investor · Dallas Fort Worth, TX · Member since 2012 · 21 posts · 25 votes8y
If you decide to explore passive syndications, my recommendation would be to to first study the asset types and narrow down your choices. Syndications are used for several types of assets - apartment complexes, mobile home parks, retail strip malls, office buildings, government leased large buildings (think Veteran Affairs, USCIS etc) and the list goes on. Within each of these asset types, there are niches. For example, as an apartment complex investor, you would want to further narrow down whether you prefer to invest in value add B/C class or you would prefer a cash flowing A/B+ stable asset. Similar variations exist in all other asset classes. You can make money in any asset class and you can lose money in any asset class. The difference between the one who makes money and the one who loses money is usually the knowledge gap.
Just like any other investment, learning real estate takes time and energy. To shorten the learning curve, you can leverage someone else's experience who is already doing what you want to do. You will find a lot of other investors here on BP who have been investing in syndications for a few years.
- 8yBob LangworthyPro MemberAccountant · Brunswick, ME · Member since 2017 · 352 posts · 242 votesHere's my two cents: 1) Don't make any new friends. 2) Move very slowly into real estate. 3) Read A LOT. 4) As others have said, define goals for yourself. 5) Develop a team of advisors. They should be individuals with a lot of experience in real estate. If I were in your position, I would be looking for people with at least 2 to 3,000,000 in income generating property. I try to model my business practices after successful individuals and not take random Internet advice. And yes, I appreciate the irony of my own statement. Congratulations on realizing a big payday. Now it's time to make that money outlive you.
- 8yBrian BurkePro MemberInvestor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
Originally posted by @Jay Hinrichs:
@Cara Lonsdale I understand your city has buying services I am on their e mail chains.. and a few others but that is a Rarity.. plus your putting a lot of faith in someone making 2 to 3k as a buying service why you spend 100 to 200k and have all the risk of bad title or other defects..
don't get me wrong I love trustee sales its fun exciting and there can be some good money there especially buy and hold.. but its WORK to do it right.. and most folks especially someone like this OP who is asking what to do .. that inference means not a lot of experience in the real estate space.. or at least that's the way I take it.. Maybe Brian will chime in he was/is a very large trustee buyer in N CA... with a lot of war stories and wounds and a Lot of good outcomes for him and his investors as well.
Jay, I’m sure you agree with this—I couldn’t imagine many things worse than a novice buying property at Trustee’s sales except maybe anyone (novice or not) using a buying service to do it for them. In my nearly 30 years at the “steps” I’ve seen countless one-and-done’rs who show up not knowing what they are doing and buy a property where the outcome would have been the same as if they would have just lit their cashiers checks on fire right in front of the crowd.
People mistake Trustee’s sales as a venue to purchase property when in fact they are a venue to purchase only the title held by the foreclosing loan, which may or may not be marketable title or even clear title. I couldn’t imagine trusting some firm earning a small fee with hundreds of thousands of my investor’s dollars. They have little at risk, we have everything at risk. No thanks!
It’s just not an appropriate venue for the casual or novice buyer. Not to mention it’s anything but passive unless you are a limited partner in a fund that acquires properties at Trustee’s sales, but finding those is difficult, and if you do find one, finding one with highly experienced management is just as rare.
- Realtor and Investor · Scottsdale, AZ · Member since 2017 · 1k+ posts · 1k+ votes8y
Originally posted by @Brian Burke:
Originally posted by @Jay Hinrichs:
@Cara Lonsdale I understand your city has buying services I am on their e mail chains.. and a few others but that is a Rarity.. plus your putting a lot of faith in someone making 2 to 3k as a buying service why you spend 100 to 200k and have all the risk of bad title or other defects..
don't get me wrong I love trustee sales its fun exciting and there can be some good money there especially buy and hold.. but its WORK to do it right.. and most folks especially someone like this OP who is asking what to do .. that inference means not a lot of experience in the real estate space.. or at least that's the way I take it.. Maybe Brian will chime in he was/is a very large trustee buyer in N CA... with a lot of war stories and wounds and a Lot of good outcomes for him and his investors as well.
Jay, I’m sure you agree with this—I couldn’t imagine many things worse than a novice buying property at Trustee’s sales except maybe anyone (novice or not) using a buying service to do it for them. In my nearly 30 years at the “steps” I’ve seen countless one-and-done’rs who show up not knowing what they are doing and buy a property where the outcome would have been the same as if they would have just lit their cashiers checks on fire right in front of the crowd.
People mistake Trustee’s sales as a venue to purchase property when in fact they are a venue to purchase only the title held by the foreclosing loan, which may or may not be marketable title or even clear title. I couldn’t imagine trusting some firm earning a small fee with hundreds of thousands of my investor’s dollars. They have little at risk, we have everything at risk. No thanks!
It’s just not an appropriate venue for the casual or novice buyer. Not to mention it’s anything but passive unless you are a limited partner in a fund that acquires properties at Trustee’s sales, but finding those is difficult, and if you do find one, finding one with highly experienced management is just as rare.
I can appreciate and respect both of your opinions as they come from different states, and it is noteworthy that not ALL trustee sales in EVERY state will have the same rules, or outcomes (property versus title, etc). I can only speak to my experience in AZ, which has been favorable on several occasions. We have tools here for title searching that ensure that we aren't bidding on 2nd lien positions, and title companies who provide owner's title insurance to offer a level of protection.
I WAS that "novice" several years ago that you speak of with such distaste. You make it sound like people without your level of experience aren't smart enough to navigate through a trustee sale. I find that silly. My first trustee sale was early on in my RE experience. It wasn't hard, and it wasn't a disaster...and it wasn't a one time thing either. I have completed several successfully since. If you have the ability to follow directions, do the necessary research beforehand, and have the funds available, you can do it. Equally, if you partner with one of the 'good ole boys' who is at the courthouse steps as a living buying trustee sales, there should be confidence that you could walk away without the horror that you speak of.
So, while I appreciate the warnings to people about the POTENTIAL risks (like with ANY investment), the scare tactics you bring to this thread are rather silly from my perspective. But again, I can only speak to my neck of the woods. So, maybe its a scary trustee sale world out there beyond AZ where people don't dare venture out..... lol.
- Real Estate Agent · Charlotte, NC · Member since 2015 · 29 posts · 22 votes8y$700k is alot or a little relative to your risk tolerance. Have you thought about how much risk your willing to take? Also, how passive do you want to be? Passive residential real estate earns about 10% or so per year. You can get a little higher yield in apartments or commercial space. If I had $700,000 cash, i would buy a small commercial property for approx $2,000,000. In the Charlotte, NC marketplace that would get you a 10,000 - 15,000 foot well located strip center. On a passive level, you would make $120,000 per year while buying down your mortgage. Residentially, if you asked, there are lots of guys who have 8-12 houses that they would sell and then manage for you while looking for others to round out your portfolio. The important thing is to know what you want. This is a good forum and opportunities abound. Good luck.
- 8yBrian BurkePro MemberInvestor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
Originally posted by @Cara Lonsdale:
Cara, thanks for sharing your experience in AZ, sounds like you guys have it figured out down there and it’s working out well.
I don’t want to distract from the OPs question, but as I’ve been called out for bringing scare tactics to this thread I must respond.
There was a very smart young woman that attended the Trustee’s sale for a few weeks and I had occasion during the down time to have some casual conversation. She seemed to have a good handle on real estate and sounded like she spent time on due diligence, and I even saw her doing research at the recorder’s office. One day she showed up and qualified to bid on a house for the first time. As the bidding was about to commence I approached her and said “I wouldn’t buy this if I were you”. She brushed me off, probably thinking, as you have, that I was just trying to scare her off. She won the bid, spending about $200K on a property worth over $300,000. She seemed very happy and excited about her first purchase.
I never saw her again, but I did see the property again when it came back up for auction on a senior lien. This woman was wiped out, not only did she lose the $200K that she bid, but she had also fixed the property up in preparation for resale, probably spent another $50K. The senior lien that she missed had an unpaid balance far more than the property was worth.
This is one example that I’ve seen repeated several times over the years so I stand by my post that there is a legitimate risk for inexperienced buyers at Trustee’s sales, even the intelligent ones. Heck, it’s even risky for the experienced guys...I know plenty of them that have had total losses due to title failure. I had a total loss on a title miss once (and with over 650 purchases I think that’s pretty good, but it’s bad given the systems we have in place). But the experienced guys do so much volume they (we) can absorb those kinds of things once in a while. But for that to happen to a new or casual buyer? That would add to the one-and-done’er count.
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Cara Lonsdale I hear ya but I think the tenor of this thread is the OP is looking for a passive investment and not a job or niche to get into.. other wise he probably would have title the post
Hey I have 700k I want to buy foreclosures..
Of course everyone has to start some where even Brian .. and I bought my first one in Lake co California in 1976.. so been at it a while.. mostly good some bad..
its the begineers like Brian mentioned who WIFF on their first one or next to first one and are ruined for years to come.. when I did this in earnest we were buying at least 50 to 70 of these a year and if one did not work no biggee like Brian said but its a JOB FULL time to do it right.
- Professional · Lowell, MA · Member since 2014 · 232 posts · 223 votes8yOk, first, everything here said previously was valid for consideration... (especially the part of keeping your valuations to yourself, in the future!) so you can just consider this to be piling on. I’m not in your area, but I have Close friends from your area... I’m going to go out on a limb, and the assumption that 700k isn’t worth too much in/around Fairfax. Maybe one small duplex or three-family, give-take. It’s akin but a step up from my assertion that same won’t be worth much in greater Boston. Consider the Eastern Shore. Dirt cheap land and housing means your dollars go farther— in this case MUCH, MUCH farther. You may need to familiarize yourself with Section 8 and figure out a way to develop a little empathy, too, BUT you could seriously make some major cash when the rest of the civilized world figures out what a gem that peninsula is, and gentrifies the place. If I had some capital and if I was closer, that’s where I’d land for the long (very long) term hold. Congrats on your previous work. Kudos to you!!
- Realtor and Investor · Scottsdale, AZ · Member since 2017 · 1k+ posts · 1k+ votes8y
Originally posted by @Brian Burke:
Originally posted by @Cara Lonsdale:
Cara, thanks for sharing your experience in AZ, sounds like you guys have it figured out down there and it’s working out well.
I don’t want to distract from the OPs question, but as I’ve been called out for bringing scare tactics to this thread I must respond.
There was a very smart young woman that attended the Trustee’s sale for a few weeks and I had occasion during the down time to have some casual conversation. She seemed to have a good handle on real estate and sounded like she spent time on due diligence, and I even saw her doing research at the recorder’s office. One day she showed up and qualified to bid on a house for the first time. As the bidding was about to commence I approached her and said “I wouldn’t buy this if I were you”. She brushed me off, probably thinking, as you have, that I was just trying to scare her off. She won the bid, spending about $200K on a property worth over $300,000. She seemed very happy and excited about her first purchase.
I never saw her again, but I did see the property again when it came back up for auction on a senior lien. This woman was wiped out, not only did she lose the $200K that she bid, but she had also fixed the property up in preparation for resale, probably spent another $50K. The senior lien that she missed had an unpaid balance far more than the property was worth.
This is one example that I’ve seen repeated several times over the years so I stand by my post that there is a legitimate risk for inexperienced buyers at Trustee’s sales, even the intelligent ones. Heck, it’s even risky for the experienced guys...I know plenty of them that have had total losses due to title failure. I had a total loss on a title miss once (and with over 650 purchases I think that’s pretty good, but it’s bad given the systems we have in place). But the experienced guys do so much volume they (we) can absorb those kinds of things once in a while. But for that to happen to a new or casual buyer? That would add to the one-and-done’er count.
Sorry to hear your story...
At this point, I think it's best to just agree to disagree. I think this horse has been severly beaten enough.
The question was about ideas for investing. I provided an idea. You don't like it, and you have your reasons. I can appreciate that. However, it is still an idea worth mentioning as many have had success when executed properly, or partnered with a professional, which is the only way I would suggest proceeding.
My only other point was that ANYTHING can be passive with the right team in place.
- Turnkey Service Provider · Fort Worth, TX · Member since 2013 · 135 posts · 41 votes8yAnswering your question, I would visit a few different markets and people in them to determine where you will invest, then leverage 50% and buy the other half of properties without financing. Single family homes, duplexes and or fourplexes. Vetting your “team” will be crucial.
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