What What You do with 100K?

Field Engineer · Van Alstyne, TX · Member since 2015 · 12 posts · 2 votes

Hello All,

I am new to BiggerPockets and this is my first post. My question to those experienced investors our there is: If someone happened to give you 100K, what would you do with it? Thanks!

-Chris

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Brie SchmidtBusiness Member

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Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes

10y

Originally posted by @Chris W.:

Hello All,

Welcome to BP! If I had an extra $100k I would use it as a down payment on $500k worth of property for buy and hold

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Brie SchmidtBusiness Member
Moderator
Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
10y
Originally posted by @Chris W.:

Hello All,
Welcome to BP! If I had an extra $100k I would use it as a down payment on $500k worth of property for buy and hold
Podcast Guest on Show #132
Second City Real Estate4.821 Reviews
Website View Page
1 Reply
Rod Sanford
Wholesaler · Jacksonville, FL · Member since 2015 · 24 posts · 5 votes
10y
You should look at going to your local tax deed office to purchase tax certificate s or tax deed properties. This type of investment offers the biggest return on your money right now.
0 Reply
Justin Fox
Software Developer · Vidor, TX · Member since 2015 · 922 posts · 639 votes
10y
Hello Chris,
I would take 20k and keep it on the side for fun, and use the rest to put down payments on a few rentals.
Justin
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Chris W.
OP
Field Engineer · Van Alstyne, TX · Member since 2015 · 12 posts · 2 votes
10y
Originally posted by @Rod Sanford:

You should look at going to your local tax deed office to purchase tax certificate s or tax deed properties. This type of investment offers the biggest return on your money right now.
That's funny because I was just looking at tax deed properties where I live in TX. There seem to be some good deals but the only thing that concerns me is that Texas has a "right of redemption" period of up to 2 years. I did notice that many of them are against estates of individual who have passed and I'd imagine that these would carry less risk?
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Chris W.
OP
Field Engineer · Van Alstyne, TX · Member since 2015 · 12 posts · 2 votes
10y
Originally posted by @Justin Fox:

Hello Chris,
I would take 20k and keep it on the side for fun, and use the rest to put down payments on a few rentals.
Justin
Justin,
Again, I'm new to this so excuse my ignorance on the matter but is it fairly easy to do this? Being approved for multiple mortgages? Or would you use OPM?
-Chris
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Chris W.
OP
Field Engineer · Van Alstyne, TX · Member since 2015 · 12 posts · 2 votes
10y
Originally posted by @Brie Schmidt:

Originally posted by @Chris W.:
Hello All,
Welcome to BP! If I had an extra $100k I would use it as a down payment on $500k worth of property for buy and hold
Brie,
This is a tempting option! In the Dallas market, prices are going up and this would probably render a big return in the future. I'm going to definitely look into this.
-Chris
1 Reply
Justin Fox
Software Developer · Vidor, TX · Member since 2015 · 922 posts · 639 votes
10y
It all depends on what your debt to income ratio is. The bank I used recently only requires a rental be in service for one year before it is considered as part of your income. Some banks may require longer, not sure.

I currently have two mortgages and was pre-approved for another.
Justin
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Rod Sanford
Wholesaler · Jacksonville, FL · Member since 2015 · 24 posts · 5 votes
10y
Donald trump had a saying never use your money unless it is necessary. In short you can buy tax deed properties that have past the waiting period, refi take to money and repeat the process and become vary successful. Check in your area for quiet title action. Thats another area to understand.
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Rod Sanford
Wholesaler · Jacksonville, FL · Member since 2015 · 24 posts · 5 votes
10y
The foreclosure and tax deed auction is the first Tuesday of every month 10:00 am sharp on the counties court house steps.
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Justin Fox
Software Developer · Vidor, TX · Member since 2015 · 922 posts · 639 votes
10y
Originally posted by @Rod Sanford:

The foreclosure and tax deed auction is the first Tuesday of every month 10:00 am sharp on the counties court house steps.
Is there a difference in the foreclosure/tax deed auctions you're talking about and tax sales? I see properties in the county's list, but their tax sale dates are not strictly on Tuesdays.
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Rod Sanford
Wholesaler · Jacksonville, FL · Member since 2015 · 24 posts · 5 votes
10y
The foreclosure sales are for properties owned by the bank. The tax deed sales are for properties that have deliquent local taxes. Tax certificates sales are use by counties to bid on delinquent taxes to get a return on your money.
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Marc Dupuis
Rental Property Investor · Ottawa, Ontario · Member since 2015 · 42 posts · 9 votes
10y
Chris
this is a wealth building question, you need to have a long term game plan. Everything you invest in will have different tax consequences so you have to look into it all so you know up front what your getting into. There are some good incentives for investing, you just have to look into what fits within your risk profile.
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Hattie Dizmond
Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
10y
@Chris W.
You've gotten some great advice, particularly around putting together a wealth building strategy.
As a local, and assuming you have already determined you want to make REI a part of your wealth building strategy, I'm going to be a little more specific.
Assuming your horizon is further into the future, and you're more interested in building wealth than immediate cash flow, I would buy land along the 75 corridor. 75 is being widened up that direction. Nebraska furniture is already open. State Farm is still ramping up. Toyota will be fully occupied in 2017. Etc. Etc. Etc. There is nowhere left to develop south of the George Bush. (I'm speaking of North & Far North Dallas.) Easily 95%+ of all new development south of the George Bush is single house builds from scrape-off projects.
30-years ago no one could figure out why anyone would want to live way out in The Colony, Frisco was still just a water tower in the distance, and Plano was just another suburb. Now it is difficult to tell when you've actually left Dallas. Soon, everything up to Sherman will be developed. There's still cheap land to be had. That's where I would focus. Alternatively, if you are looking for more immediate cash flow, Van Alstyne and several of the other smaller towns up that direction have excellent ISD's, and that drives desirability around here.
Just my 2 cents
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Eric Gard
Health Benefits Rep. · Meridian, ID · Member since 2011 · 44 posts · 8 votes
10y
I would buy 2 or 3 rental houses in the $20-30k range, wholesale, then save the remaining balance for a safety net. I would rent these houses out for $600-$650 each, collecting $300-350 each net per month. Pretty simple +10% ROI, and with no mortgage, you can ride the fluctuations in the market and sell at a later date for a profit.
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Doug Johnson
Investor · Frisco, TX · Member since 2015 · 84 posts · 52 votes
10y
I would buy into a couple of Multifamily syndication deals. Double digit cash flow and 20% IRR and totally passive. I am investing another $50k in one this week. Message me if you would like to discuss.
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Doug Johnson
Investor · Frisco, TX · Member since 2015 · 84 posts · 52 votes
10y
Originally posted by @Chris W.:

Originally posted by @Brie Schmidt:
Originally posted by @Chris W.:

Hello All,
Welcome to BP! If I had an extra $100k I would use it as a down payment on $500k worth of property for buy and hold
Brie,
This is a tempting option! In the Dallas market, prices are going up and this would probably render a big return in the future. I'm going to definitely look into this.
-Chris
The Dallas market for SFR is over priced. Better in other cities.
1 Reply
Luka Milicevic
Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
10y
I would use it to put down payments on SFRs and acquire as many as I can for the money.
0 Reply
Alberto Camacho
Investor · Flower Mound, TX · Member since 2015 · 179 posts · 48 votes
10y
Originally posted by @Doug Johnson:

I would buy into a couple of Multifamily syndication deals. Double digit cash flow and 20% IRR and totally passive. I am investing another $50k in one this week. Message me if you would like to discuss.
Nailed it!
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Tyler Bernhard
Investor, Real Estate Agent · Sacramento, CA · Member since 2015 · 56 posts · 32 votes
10y
I would start to invest in buy-fix-sell SFR property. I would leverage the money using hard money financing. With 100K you could purchase and rehab a couple of properties simultaneously, as this is the benefit of hard money financing. Your returns are much greater when hard money is involved. You could expect to see 25-35% returns on your money in a couple of months depending on the size and area for the project. I would look to increase my production of buy-fix-sell, and accomplish 4-6 projects in a years time. In a years time you could increase your 100K to 160K (without investing any of your net profits, your total returns would increase if the net profits were put towards additional property). After about 3 years of dedication you could look into acquiring a more thriving MFR that will provide great returns for years to come. Or acquire multiple SFR that are more advantageous to your bank account!
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John Cohen
Rental Property Investor · Mineola, NY · Member since 2014 · 838 posts · 212 votes
10y
@Chris W. first question I would ask myself is WHY! Once you answer your why its easier to pick a path. You have some great options, I love tax sales and multifamily apartments. Texas is a great place for tax sales, I do believe the redemption period is only 2 years on homestead properties. Interest is 25% in 6 months penalty state, but not an expert in TX.
If I have a 100K I would invest part into my business, possibly put a bid on an office building to expand and invest the rest into a multifamily property.
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Brian Fouts
Investor · Fall City, WA · Member since 2013 · 200 posts · 63 votes
10y
@Chris W.
Everyone is going to give advice based upon their goals and desired outcome in life. Lots of factors here... family, kids, career, job, hobbies, etc.
The quality of the answers reflect the quality of the question. You have some GREAT responses already.
But perhaps a better question would be: "If someone happened to give you 100K, how would you use this to achieve your real estate/financial goals and what are your goals?"
This would allow you to "align" your goals with others.
My goal is massive passive income NOT through real estate (well... some through real estate). I would use $100k to finance short term real estate projects, such as fix/flips, to generate significant chunks of revenue that I would then use to purchase or acquire other assets. These assets would be businesses, larger real estate if it makes sense, and oil/gas options. I would also funnel the revenue through certain channels in order to reduce the tax implications.
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Chris W.
OP
Field Engineer · Van Alstyne, TX · Member since 2015 · 12 posts · 2 votes
10y
Originally posted by @Hattie Dizmond:

@Chris W.
You've gotten some great advice, particularly around putting together a wealth building strategy.
As a local, and assuming you have already determined you want to make REI a part of your wealth building strategy, I'm going to be a little more specific.
Assuming your horizon is further into the future, and you're more interested in building wealth than immediate cash flow, I would buy land along the 75 corridor. 75 is being widened up that direction. Nebraska furniture is already open. State Farm is still ramping up. Toyota will be fully occupied in 2017. Etc. Etc. Etc. There is nowhere left to develop south of the George Bush. (I'm speaking of North & Far North Dallas.) Easily 95%+ of all new development south of the George Bush is single house builds from scrape-off projects.
30-years ago no one could figure out why anyone would want to live way out in The Colony, Frisco was still just a water tower in the distance, and Plano was just another suburb. Now it is difficult to tell when you've actually left Dallas. Soon, everything up to Sherman will be developed. There's still cheap land to be had. That's where I would focus. Alternatively, if you are looking for more immediate cash flow, Van Alstyne and several of the other smaller towns up that direction have excellent ISD's, and that drives desirability around here.
Just my 2 cents
Hattie,
I agree with you 100%. That's actually one of the reasons why we ended up buying in Van Altstyne opposed to McKinney, Plano, Frisco, etc...I'm not saying that there aren't any deals left in Dallas but there seems to be a lot of untapped potential as you go North up 75.
-Chris
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Richard Dunlop
Investor · Detroit, MI · Member since 2014 · 755 posts · 462 votes
10y
RE Investing should provide Cash Flow AND Appreciation.
Find a market that does that!
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Christopher Winkler
Specialist · Dallas, TX · Member since 2014 · 900 posts · 392 votes
10y
Great question Chris W, we share a similar name!
We don't like to get dirty, so we either buy REO's or vacant Contract for Deeds and sell to rehabbers, or buy Non-Performing Notes & fix & flip the note, or get a Deed-In-Lieu or Foreclose if they won't repay.
We would, depending on the investors exit time frame;
1. Short time frame of 3-6 Months: Purchase 2-4 Contract for Deeds or REO's for up to $80,000 that we can turn around in 3-6 months and sell as is, or consider light rehab if it helps increase sale price. Leaving $20k in reserves for misc expenses.
2. Medium Time Frame of under 1 year: Purchase 2-4 Nonperforming 1st lien notes, for up to $80,000, and reserve $20k for any legal, workout, or rehab. We would attempt to get repaying the note, and flip the reperforming note in 12 months while we split the cash flow. If not, we obtain a Deed-In-Lieu in 2-4 months, or Foreclose in 4-12+ months. Once we get title we can sell As-Is or consider rehab to increase the sale price.
3. Long Time Frame of 1-1.5 years: Purchase a blended pool of 7-9 Nonperforming Junior liens, and attempt to workout repayment, a settlement, or foreclose. Time frame 18 months.
1 Reply
Chris W.
OP
Field Engineer · Van Alstyne, TX · Member since 2015 · 12 posts · 2 votes
10y
Originally posted by @Christopher Winkler:

Great question Chris W, we share a similar name!
We don't like to get dirty, so we either buy REO's or vacant Contract for Deeds and sell to rehabbers, or buy Non-Performing Notes & fix & flip the note, or get a Deed-In-Lieu or Foreclose if they won't repay.
We would, depending on the investors exit time frame;
1. Short time frame of 3-6 Months: Purchase 2-4 Contract for Deeds or REO's for up to $80,000 that we can turn around in 3-6 months and sell as is, or consider light rehab if it helps increase sale price. Leaving $20k in reserves for misc expenses.
2. Medium Time Frame of under 1 year: Purchase 2-4 Nonperforming 1st lien notes, for up to $80,000, and reserve $20k for any legal, workout, or rehab. We would attempt to get repaying the note, and flip the reperforming note in 12 months while we split the cash flow. If not, we obtain a Deed-In-Lieu in 2-4 months, or Foreclose in 4-12+ months. Once we get title we can sell As-Is or consider rehab to increase the sale price.
3. Long Time Frame of 1-1.5 years: Purchase a blended pool of 7-9 Nonperforming Junior liens, and attempt to workout repayment, a settlement, or foreclose. Time frame 18 months.
Another Christopher W! To be honest, I'm not familiar with the concepts that you mentioned above but I am interested. Do you recommend any podcasts or blogs that discuss these types of sales? Also I see that you're based out of Cali while I'm in TX. Are these types of purchases limited to certain states or are they common throughout the US?
-Chris
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