Curious to know how far $400k would go in different parts of the country.
What type of ROI would you expect?
Type of asset? SFH? Multi-units? Commercial?
In Houston you can get a single family house with on average about $15,000 out of pocket. That $400,000 will get you about 25 houses. Right now you can get about $500/month cash flow per house. So you can get about $13,000/month positive cash flow or around 40% return on your money.
In Dallas/Fort Worth, I would invest it in lower income houses. You can get houses for $20k to $40k, and rent them for $600 to $800 per month. Being a low income landlord sounds “not very exciting”, but with a good system in place and good tenant screening it can be extremely profitable.
How do you make money on cheap houses? I know property taxes are high in the metroplex. I would expect the maintenance costs on an old house to eat up anything left over from taxes.
Having never actually done this, I would say…
Either rehab houses, which would leave you with the “problem” of having more cash…
Or go with 1 or 2 commercial properties… maybe just one apartment complex…
Or start a home building company…
Either way, do lots of research and take advice from people who have done it before…
Become a private money lender and loan it out at 12-15% to these idiots suggesting you buy 20-30 low income rentals, that’s a recipe for disaster if you’re not experienced.
Buy a storage facility, mobile home park, etc. When you’re able to buy larger assets do so…
Hi,
As a hard money lender their are no tax benefits and you are taxed as earned income (Not Capital Gains) which could be 50% in some states, yea charge 12% and yield 6% with no appreciation or upside and you take obvious risk if you had to foreclose on one of your loans. (You have no control over!)
GR
That’s about 1 1/2 houses in my area.
I’ve got some inexpensive places and those used to be great. Easy to rent and good rent for the investment. However, this area used to have proud, hardworking, employed poor. Now the low income people are dopers, welfare rats, criminals, cheats, and liars. I’m tired of dealing with them, so I am getting rid of my lower rent houses. I dread vacancies with the huge parade of scum lying to me and trying to trick me and cheat me.
In that scenario, you are not seeing your money back for 32 years.
Why not build homes or do rehabs?
Redstar, I enjoy your comments and find it comical.
Just want to point out $13,000/month cash flow comes to about $150,000/year. So you’ll make your $400,000 back in 3 years, not 32.
I guess you’re a decimal point off somewhere. Keep making mistakes like that, you’ll be out of business in no time.
2.56 years. I still think you’d be better off rehabbing for ROI.