Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
8y
Why are you looking for a "creative answer?"
Just curious your goal for the question? Are you looking for investment advice? If so, you probably want to include more information than just an amount. It's unlikely we're in the same financial situation, have the same goals, have the same experience, have the same amount of time, etc. -- so it's unlikely that an investment that makes sense for me would necessarily make sense for you.
Or is there another reason you're asking the question?
Real Estate Investor / Realtor · Miami, FL · Member since 2017 · 125 posts · 67 votes
8y
@J Scott Thanks for your reply. I guess I am looking for investment advice. My husband and I own 7 doors at the present time but are in the process of selling one of our duplexes. We want to invest some of that money back into real estate but would also like to diversify a little with some of the cash.
Real Estate Investor / Realtor · Miami, FL · Member since 2017 · 125 posts · 67 votes
8y
Thanks @Account Closed my husband will absolutely not hear about mortgages. He wants everything free and clear. I would like to use some of this money with leverage to buy bigger properties but he won't go for it.
@J Scott Thanks for your reply. I guess I am looking for investment advice. My husband and I own 7 doors at the present time but are in the process of selling one of our duplexes. We want to invest some of that money back into real estate but would also like to diversify a little with some of the cash.
What are your goals from the investment? Active income or passive income?
When you say diversify, what do you mean? Not a rental? Not a real estate investment? Something else?
What level of risk are you comfortable with?
What is the minimum cash-on-cash return are you looking for?
If real estate, are you willing to invest outside your area?
Shawnee Mission, KS · Member since 2017 · 34 posts · 25 votes
8y
I honestly think the best thing you can do is self fund some flips. If you do not want to deal with mortgages it is honestly your best option. You're not going to be able to generate a substantial amount of rental cash flow with 500k in most markets without leveraging some amount. With 500k you could flip and grow your "bank roll" and slowly build buy and hold turn key properties, or buy properties that need to be renovated that will still cash flow well. As you continue to flip you could grow your cash in hand and buy rental properties as you generate more cash in hand with out dropping much below 500k. @J Scott asked a lot of really important questions. My answer above is just what I would do knowing my goals, assuming I wouldn't be using any loans. To get the most accurate suggestions I would recommend answering the questions.
Thanks @Account Closed my husband will absolutely not hear about mortgages. He wants everything free and clear. I would like to use some of this money with leverage to buy bigger properties but he won't go for it.
I honestly think the best thing you can do is self fund some flips. If you do not want to deal with mortgages it is honestly your best option. You're not going to be able to generate a substantial amount of rental cash flow with 500k in most markets without leveraging some amount. With 500k you could flip and grow your "bank roll" and slowly build buy and hold turn key properties, or buy properties that need to be renovated that will still cash flow well. As you continue to flip you could grow your cash in hand and buy rental properties as you generate more cash in hand with out dropping much below 500k. @J Scott asked a lot of really important questions. My answer above is just what I would do knowing my goals, assuming I wouldn't be using any loans. To get the most accurate suggestions I would recommend answering the questions.
What would you considered a substantial amount of cash flow?
Shawnee Mission, KS · Member since 2017 · 34 posts · 25 votes
8y
@Michael Plante That definitely depends on your goals, but to answer you question from my perspective... Say you're able to buy 3 properties for 150k each (pretty generic numbers, but work with me in my hypothetical situations) so you're nearly all in with 50k to have in hand for some cap ex, repairs, vacancies, or possible holding costs. Now, assuming these are turnkey and you can probably get 1300ish in rents for the properties. You're looking at $3900 per month gross, just for the sake of quickness use the 50% rule you're at $1950/month. Leaving your annual cash on cash incredibly low at 5.2% (of course this is just my opinion). Now maybe it looks a little bit better since more than likely you can minimize some of those expenses, but the difference would be minimal. Maybe you do not agree, and maybe my goals are significantly different, but I don't want to spend all of my money I worked hard for and saved hard for to get an extra $1900 a month.
He'd buy 1% of a syndicate that owns 5,000 units and then brag that he just bought 5,000 more units... ;)
"Bruh, if you ain't pullin' 5,000 unit deals on the reg like I do, you're wasting your damn time. I'd like to get you in my 16 week online sales training program."
Rental Property Investor · wyoming · Member since 2017 · 76 posts · 73 votes
8y
@Account Closed asked! I think they are very intelligent questions because that will help you solidify the best answer. Always crucial to know exactly the what, when & why.
If no leverage I would personally look to turn that 500k into $1M+ through as minimal risk as possible fix and flips and from there buy & hold strong cash flowing properties. This is exactly my strategy and I think would serve you well to achieve financial freedom!
Investor · Corvallis, OR · Member since 2013 · 40 posts · 26 votes
8y
Without leverage you probably shouldn't be looking at rentals. I think hard money lending first. There are a lot of people that need money for their deals and will be glad to split it. After that do some flips. But you'd be better off in the stock market than real estate if you don't want to use any leverage.
Real Estate Investor / Realtor · Miami, FL · Member since 2017 · 125 posts · 67 votes
8y
Wow! Lots of great answers and questions also. I think I'd like to do some flips and then passive income. I live in Miami. Prices in my area are beginning to slow down. I can't get a decent property for $150k as suggested by @Michael Minor. Areas that are decent and still researched by retail buyers have a starting price on the lower $300k.
Since I know my market fairly well and already have my crew in Miami I think I'll stick around there. I was thinking of looking into Vegas, but think the market there is saturated and starting to decline too.
@John Thedford I have thought about HML but don't know how to go about it. I'd have to look into it.
@Dan Wickland I'd love to turn that $500k into 1 Mil. I'm sure gonna try.
@Sam Shue California is way too expensive for me.
@Kelly Krezec I'd love to know about these properties.
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
8y
If you're already in or approaching a high tax burden income threshold, I'd stay away from flipping and lending.
But who knows? Are you guys already earning a bunch of highly taxed w-2 income @Orita Issartel? Flipping and lending will just give you a bunch more ordinary income to report.
Maybe you should pay off your credit cards or that car payment in your driveway. Not nearly enough quality info given to provide any guidance at all here.
Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes
8y
Franco Vallejos if we are better off in the stock market than RE unless we use leverage then shouldn’t we then be in the stock market exclusively using leverage in a margin account?