Santee, CA · Member since 2017 · 13 posts · 2 votes
Hey everyone! First post here :) I wanted to get some opinions on how/where you would invest 100k to produce monthly cash flow. How much cash flow do you think you could get? Would you buy one multi-family rental or a few single family rentals?
I'm thinking of purchasing five 100K properties, 20% down on each. The hope is for 1-2K net income/month. Turnkey, multi family, or BRRRR and the area in which I plan to purchase are still the main questions. I would like to live close to my family in Oregon, possibly Portland or surroundings areas.
Thanks for the follow up!
Hi Jason. First, to get conventional financing, you can only do 4 mortgages (including primary) at 20% down on SFR. For #5-10 you will need to do 25% down on SFR. Next if you have $100k to spend you will need to also add in closing costs, including inspections and appraisals for each home, plus you will want to have a reserve for the unexpected. In short, $100k will not get you 5 $100k homes. Plus if you are looking to invest pretty much anywhere in any metro area of Oregon, $100k homes are pretty much a thing of the past, unless you are talking about a very distressed property. Even then...
So, if you are looking at the price point, I suggest looking elsewhere, like the midwest and certain southeast cities. Maybe working with a turnkey company in one of those markets, or if you want to get more involved build your own team to acquire, renovate and manage. All best in your REI..
Specialist · Indianapolis, IN · Member since 2014 · 670 posts · 352 votes
9y
@Jason Rostar to answer the where I would invest portion of your question. I would invest where I have the strongest team. I've always said that I would rather invest money with an absolute rock solid team in a marginal area than a marginal team in an rock solid market.
How would I invest? If your strictly looking for cash flow then I would leverage those funds into more of the BRRRR method so you could buy quite a few single families. If your looking to maximize your money, multifamily or mobile home parks are also a nice play.
Santee, CA · Member since 2017 · 13 posts · 2 votes
9y
I'm thinking of purchasing five 100K properties, 20% down on each. The hope is for 1-2K net income/month. Turnkey, multi family, or BRRRR and the area in which I plan to purchase are still the main questions. I would like to live close to my family in Oregon, possibly Portland or surroundings areas.
Hey everyone! First post here :) I wanted to get some opinions on how/where you would invest 100k to produce monthly cash flow. How much cash flow do you think you could get? Would you buy one multi-family rental or a few single family rentals?
No pressure, just looking for some thoughts!
Thanks,
Jason
If you are using it as 20% down payments for Turnkey properties. That can buy you a few in the Midwest markets. In some cities you can find returns around 15-25%. Could be a good bang for that particular buck!
I'm thinking of purchasing five 100K properties, 20% down on each. The hope is for 1-2K net income/month. Turnkey, multi family, or BRRRR and the area in which I plan to purchase are still the main questions. I would like to live close to my family in Oregon, possibly Portland or surroundings areas.
Thanks for the follow up!
Hi Jason. First, to get conventional financing, you can only do 4 mortgages (including primary) at 20% down on SFR. For #5-10 you will need to do 25% down on SFR. Next if you have $100k to spend you will need to also add in closing costs, including inspections and appraisals for each home, plus you will want to have a reserve for the unexpected. In short, $100k will not get you 5 $100k homes. Plus if you are looking to invest pretty much anywhere in any metro area of Oregon, $100k homes are pretty much a thing of the past, unless you are talking about a very distressed property. Even then...
So, if you are looking at the price point, I suggest looking elsewhere, like the midwest and certain southeast cities. Maybe working with a turnkey company in one of those markets, or if you want to get more involved build your own team to acquire, renovate and manage. All best in your REI..
Santee, CA · Member since 2017 · 13 posts · 2 votes
9y
Thank you very much for the input, Larry. Very unpolished plans on my end... hopefully, they are nice and polished by next August! Advise like this will help greatly.
Rochester, MI · Member since 2017 · 7 posts · 0 votes
9y
Hi, I am David & brand new member & am thinking to be REI. I am thinking to buy 5-6 units with good cash flows somewhere in MI. Any suggestion how to start?
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
9y
Hey Jason! Whether to buy 1 MFR or multiple SFRs all depends on where and what you are buying. As far as where to buy, a lot of that will depend on whether you like more urban or suburban, higher risk or lower risk, etc. And then different markets are better for SFRs and MFRs usually. Some really good markets right now are Chicago, Philly, Indy, Kansas City... for example.
Happy to chat markets and more details anytime if you want to PM me!
Real Estate Investor · Palm Beach County, FL · Member since 2017 · 3k+ posts · 2k+ votes
9y
@Ali Boone Hey Ali are you knowledgeable on the South Florida market at all? I currently reside in Palm Beach and being a new REI this is where I would feel more comfortable with my investments rather than out of state at least until I'm more comfortable and experienced. Would love to hear your thoughts!
Real Estate Broker · Portland, OR · Member since 2016 · 97 posts · 90 votes
9y
Some of the best investing advice I got was that too often new investors chase cash flow but true wealth comes in appreciation and equity. Since then I see cash flow as an indicator of a good deal and insurance in tough times but I'm focused on building wealth by investing in an appreciating market and specific neighborhoods that still have a ways to go.
Some of the best investing advice I got was that too often new investors chase cash flow but true wealth comes in appreciation and equity. Since then I see cash flow as an indicator of a good deal and insurance in tough times but I'm focused on building wealth by investing in an appreciating market and specific neighborhoods that still have a ways to go.
Are you referring to buying flips in those markets/neighborhoods?
Real Estate Broker · Portland, OR · Member since 2016 · 97 posts · 90 votes
9y
Brian Garrett I'm actually talking buy and hold. Faced with the decision to buy a bunch of less than $100,000 properties in Ohio (for example) that may cash flow $300-800 per month versus a $300,000 property in an appreciating market like Portland, that only cash flows $100-200 per month, I chase the Portland property because in 30 years the value will likely exceed the cumulative cash flow over the year .
Brian Garrett I'm actually talking buy and hold. Faced with the decision to buy a bunch of less than $100,000 properties in Ohio (for example) that may cash flow $300-800 per month versus a $300,000 property in an appreciating market like Portland, that only cash flows $100-200 per month, I chase the Portland property because in 30 years the value will likely exceed the cumulative cash flow over the year .
That's the same strategy I'm planning on utilizing as well. It's basically a BRRRR strategy but focused in markets/areas/neighborhoods/cities where the long term appreciation play is more of the priority than the cash flow it will generate right away. This way you still generate positive cash flow (although not as much) but also get the exit strategy payoff when you want to sell.
Brian Garrett I never thought of it like that, but yes! It's a slow BRRR!
It doesn't have to be slow if you think about it. The strategy is really just a hybrid between a flip and a rental. You're technically buying the house on the front end at a discount with the hopes of rehabbing it to force initial appreciation and renting it (BRRRR) to eventually sell it for a profit (flip) but you can sell at any time. If the property appreciates quickly and you want to take your cash and run to the next property you can flip it and move on. If not you can rent it and generate positive cash flow until the appreciation has reached your goal. It's the best of both worlds!
Investor · Tampa, FL · Member since 2017 · 122 posts · 87 votes
9y
@Melissa Dorman Just remember the markets that appreciate the fastest also have the most to lose in an economic downturn. Properties that have more long term stable value are less likely to drop as much in value. If you are looking at a 30 year period you may do better in the faster moving markets, but you may be under water at some point on it as well. If possible, it may be best to diversify between properties with higher cash flow with lower appreciation and those with lower cash flow but higher expected appreciation.
Santee, CA · Member since 2017 · 13 posts · 2 votes
9y
I really appreciate the feedback from you all! Learning a lot.
Currently, I have negative cash flow in an appreciation market (Hawaii) so I'm looking to turn that into monthly cash flow in order to make a career change. If I were already happy with my job I would hold the property in Hawaii until I retire. But, I see my property appreciation as an opportunity to change careers.
Real Estate Investor · Kansas City, MO · Member since 2015 · 63 posts · 19 votes
9y
In general, you will see more cash flow investing in multi-family units but more appreciation investing in several single family houses. There is also the logistics of managing multiple properties in different locations or one property with multiple units together. I always encourage investors to know *exactly* what they want and how they want their money working for them so they can be strategic and specific in their investing criteria.
Overall, I look to my multi family buildings to generate cash flow and my single family houses to build equity I can take out and reinvest at the appropriate time. But part of that strategy has to do with how I initially bought the properties and recognizing how they can best give you a return on your investment. There is no one size fits all plan...
You summed up the current climate for Hawaii real estate investing pretty well. Great appreciation, tough cash flow. With a $100k, you could find a condo in Hawaii that would net about $250 a month (assuming you'd hire a PM). For multifamily, you'd just about break even or be slightly negative. Tough margins, especially after taking into consideration periodic and major repairs. But the appreciation is great. :)
In Hawaii, I believe we have 2 years of reasonable growth in this current market cycle. Projections are around 10% (cumulative) between now and then. So as far as timing for your sale here, any time over the next year or so should be good. It's tough to time it right on, but since we're not anticipating any huge gains, I don't think you'll leave much on the table if you pull the trigger a little early. Especially if you are ready to move into your next target market.
Flipper/Rehabber · St Petersburg, FL · Member since 2016 · 44 posts · 14 votes
9y
Jason, if you plan on buying five 100k homes at 20% down keep in mind that you have to have reserves when something will need to be fixed or replaced. Also, I look at other people, they only buy with OWC, they typically spend up to $10k to buy a $100k house. Also consider private money lending at 6-8% returns to fund flips. Or if you have time to work, you can make really successful wholesaling business with just a part of what you plan on investing.
Santee, CA · Member since 2017 · 13 posts · 2 votes
9y
@Lukas Vanagaitis Thanks for the post! I don't know a lot about owner carry but it sounds like I should look into it to really stretch my buck. I have considered house flipping or BRRRR.
One really interesting idea that I heard just recently was to open a few big credit cards with zero interest (at least for the first year or so) in order to hire contractors and pay it off once the house is flipped or refinanced. This method should work with BRRRR or house flipping and I'm kind of excited about it.
Thanks again to everyone who's taken the time to share their thoughts!
@Lukas Vanagaitis Thanks for the post! I don't know a lot about owner carry but it sounds like I should look into it to really stretch my buck. I have considered house flipping or BRRRR.
One really interesting idea that I heard just recently was to open a few big credit cards with zero interest (at least for the first year or so) in order to hire contractors and pay it off once the house is flipped or refinanced. This method should work with BRRRR or house flipping and I'm kind of excited about it.
Thanks again to everyone who's taken the time to share their thoughts!
Assuming the contractors would accept credit cards. I believe most like checks and/or cash.