How best to invest $750k?

Question

Through a bit of luck I ended up with $750k and intend to invest some or all of it into real estate.

I'm a remodeling contractor and have worked on hundreds of projects, making OTHER people lots of money. I thought this was my chance to use my experience to make MYSELF some money by flipping houses.

However, I'm suffering from paralysis-by-analysis, because there I don't see much of a spread between run-down 3/2 houses in the $350k range and nice houses selling in the $450k range ... at least in the Austin, TX area. In other words, my hope was to buy a 3/1 or 3/2 for $350k, make $100k of improvements, and sell for $550k ... but that might be wishful thinking.

I realize there are a million details to discuss, but I was wondering if I'm missing something, or am I'm blinded by my bias to want towards "fixer-uppers"?

I have an agent, I have a lender. Just curious if there what other ideas might be out there, especially in this weird lull, where sellers are still hoping for last year's prices, and buyers are on the sidelines waiting for interest rates to drop.

Rick Pozos · Answer

If you have worked for investors in the past and made them plenty of money, TALK WITH THEM!!!

Ask them what investor groups they are in. What investor clubs can you be a part of in your local area?? How are others finding deals in your area??

Ask them directly, "Wow this house needs quite a bit of work, How did you FIND this one??" Listen to what they say and figure out how YOU can do it. It does not have to be exactly how others are doing it. Make it your own way.

Eric Gerakos · Answer

Forget the fixer uppers in this market. Be the bank and buy first trust deeds currently paying 9%. That's $5,625 a month and completely passive. No tenants or contractors to deal with.

Account Closed · Answer

Personally, I buy Off Market using Subject To, which gives me Instant Equity. I need little money down, no credit check, no bank. You can too.

I take over the loan of the seller, give them their equity. I now own the property. I then sell the property on a Lease Option and get a 10% Option fee (Instant Cash). I get the tax write offs, depreciation, cash flow, principal pay down and I get a big chunk of additional cash when they exercise the Option.

You can do these too if you are interested and this is the best time of year to find off market, Subject To deals for great prices. But, ya gotta know what you’re doing and a lot of people teaching/talking about it are going to learn the hard way what they weren’t told about. So, do it legally and wisely if you're going to do this.

Jake Andronico · Answer

@George McQueen

You're definitely in a unique position with your skillset and capital you have to deploy.

There are some great nuggets in here, but it all depends on your goals. We're seeing flips over an 18-36 month period for 5-10 units be best in our market, but there are different dynamics than in Austin.

@Eric Gerakos has an interesting suggestion and is very attractive if you're looking for income specifically. Being the bank allots you a lot more time freedom. Just depends on your comfort level and how much work you want to do.

Getting clear about an end goal has helped me tremendously (and maybe you already have one).

You now have a good chunk of money to use and a skillset that virtually everyone in these forums  wish they had.

Looking forward to following this thread and hearing about what you decide!!

Bob S. · Answer

Buy rentals, you can get about 75k per year NET , refi and do more

ALL the best

Mohammad Parwez · Answer

I would suggest investing in multi family units or multiple SFH where your money can go a long way.

I know a portfolio of 54 SFH units in Winston Salem NC that sellers are claiming 9.2% cap rate based on Zestimate.

Based on my analysis on current rent roll it seems to be 8% ROI and 2% cap rate but there will be possible rent increases.

There is always room for negotiation in when we start giving an offer. Let me know if you wish to invest outside your state. Please note the numbers are based on what we learn on Bigger Pockets and it considers every cost associated with owning a real estate.

David M. · Answer

@George McQueen

If you specifically want to flip, you need to develop your lead generation to find off-market deals.  rmember, you make your money when you buy, not when you sell goes the adage....  Any sort of this investment is "hard."  Also, remember that flipping profit is taxed as earned income subject to self-employment tax as well.Along with actively buying properties, as mentioned there are all those "creative" deals you can try --- it just depends on what sort of leads that you get and what sort of risk will you take on.Certainly, there are other investments such as private lending (secured by real property) doing 12% or better...  Syndications, DST, OZ funds, etc are other avenues although not my preference.  You can also invest more passively in the public markets in REITs, bonds (of REITs or others), other high yield (10% or more) funds/securities including some REITs, etc.

Anyway, if you ran your own business you know that you need to develop leads to get the business.  Now, I think you need to develop a different sort of leads to go after flips.

Hope that quick overview helps.  Be happy to chat.  Good luck.

Account Closed · Answer

Where exactly do you source these off market deals?

Benjamin Aaker · Answer

You've got a great position, where you have the experience, tools, and labor to do a big flip yourself, but also the cash to purchase and rehab. You'll save a bunch on borrowing as well as on the rehab. Either avoid the retail sales, which are selling way too high even for run down garbage, or go for the ones that can't get a traditional mortgage, such as those needing a new roof, or that have the water turned off.

How best to invest $750k?

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