Have $200k to Invest. Where should I put it?

Question

Hi guys,I've saved up a lot of money and now I'm looking to invest into real estate.  Which types of properties do you think I should invest in?  My main goal is to create cash flow for myself.Thanks,Glenn

Marco Santarelli · Answer

Hi @Glenn Thompson,

Sounds like you have your hands full.  ;-)

I'm not that familiar with the Edmonton market but I've heard it's also appreciated considerably along with Calgary.  You may find better opportunities there in terms of price and returns, but I think both cities are going to be finding needles in a haystack for good cashflow property.

Flipping on the other hand may be doable in the right areas for quick sales.  Those probably won't make good buy and hold properties.

The NAIT properties might be in the path of progress, but that's a waiting game.  The key is to get something with positive cashflow to wait it out.

It's nearly impossible to find 1% properties within both the city limits.  You might need to consider surrounding towns or look into other markets for B&H properties.  Flipping can be done almost anywhere there are sales.

Continued success!

Monique Sanders · Answer

Hi @Glenn Thompson! Congratulations on your discussion to start a RE business.  You have a great start, a team and capital.  I would suggest that you not advertise how much capital you are working with. There are a lot of predators out there who would live to take advantage.

Sounds like you have narrowed the playing field down to buy and hold. I read beginners like myself should start small, single family houses, get a handle on management then work up to multiple units. Are there any investment group in your area?

Glenn Thompson · Answer

@Marco SantarelliOk thanks for the advice

Looking to be more of an active investor with my team.  Our goal is to buy and hold properties.  We'd like "rehab" properties as my friend is quite skilled in renovations and can do a lot of the labor for a lower cost and equity in the home.  After we renovate I want to be refinance the home, take some of the money out and repeat the process.

I want to do the investing with my mom and my best friend to give back to them and help them out, specifically my mom to give her more options when she retires.  I value helping out my family and those I'm close with a lot.We plan to focus on a specific type of property and get really good at doing those.  I'm just unsure which types of properties are best to specialize in for the Edmonton market.Is Edmonton a market you would avoid altogether too because you think it's too "expensive"?I have a property in Stony Plain that has an ROI of 35-40% annually assuming 3% appreciation at the moment.  It's a 2 bedroom bungalow with a 1 bedroom income suite in the basement, built in the 50s.  My original plan was to find older homes that needed work and repeat the process I did on that place as I think that's a pretty good return.  The property cashflows $900 a month and cost me 234k two years ago now.I see a lot of properties in Edmonton in the 160k - 250k range, that are old homes just north of downtown Edmonton near NAIT.  The area isn't the best but it's starting to get better with the LRT going to NAIT now and the new infrastructure going up where the old airport used to be.  Most of these homes are pretty small 800-1100 sq. feet, some with potential to put a basement suite in.  Others the basement just isn't a usable space.  The only way I can see cash flowing on these properties is to convert the basement into an income suite.I also see a decent amount of 4plexes in the area but they don't fit the 1% rule.  They are priced pretty high imo.

Glenn Thompson · Answer

delete

Marco Santarelli · Answer

Hi @Glenn Thompson,

Welcome to BiggerPockets!

First of all, I wouldn't post how much capital you have to invest.   You're just inviting unwanted replies.

It's great that you want to start investing for cash-flow, that's a good start.  The next questions is WHERE to invest.  As a native Calgarian I can tell you that you will be hard pressed to find much in Calgary that generates a good return that's not "expensive".  The market has become very pricey.

Are you looking to be an active or passive investor?

Be sure to set up some Keyword Alerts so you'll be notified when people mention that which interests you here in the forums.

Also check out my 10 Rules of Successful Real Estate Investing and download The Ultimate Guide to Passive Real Estate Investing.

Continues success!

Jon A. · Answer

I would say find a niche.  For example, we have a few small 2/1's.  We get families looking to move up from apartments, that can't or won't buy and can't afford to rent a bigger house.  We own 30-40% of the inventory in our small (50k pop) community.  There's a nice sweet spot between the better houses and the apartments.  These houses only go vacant about once a month at large.  Ours, less than one per year.  We're priced 5-10% under market to reduce vacancies and increase our pool of prospects.

Glenn Thompson · Answer

Good point I should be more clear.  Sorry about that.I'm specifically looking to invest in Edmonton, or possibly Calgary.I have a team of three.  My mom who is able to acquire financing, and my close friend who is very skilled with renovating and rehabbing properties.I want to buy and hold properties in the area.  Our goal is to buy, renovate, and refinance these properties.  Taking the money out to put into new properties.My question is which types of properties are best to go after in the area to do this?  Should we focus on bungalows and putting an income suite in the basement or is it better to look into 4plexs and triplexs?  I have just over 200k to do this now and I think if I choose the right types of properties, do the right types of renovations, and  refinance these places taking some money out to put into the next property.  I think that should be enough to repeat that process quite a few times and obtain 5-6 places.

Brie Schmidt · Answer

@Glenn Thompson You are asking a very broad question that nobody can really answer for you.  Where to invest is a personal preference and there are pros and cons to each market.

By your post I am assuming you are looking for buy and hold properties.  I personally believe if you are investing our of market you should scale up to afford your own in-house team, or buy turnkey properties that have their own in house team.  Property management is more important than the house or market so I would focus on finding one that you trust.