If you had 200k cash in your hand, didnt own a home. How would you invest it?
Rentals? Vacation rentals? Duplex/triplex?
If you had 200k cash in your hand, didnt own a home. How would you invest it?
Rentals? Vacation rentals? Duplex/triplex?
georgia redeemable tax deed at 20% flat rate - meaning you could potentially make 20% in like a few weeks or few months…
or Texas - same deal but they pay 25% flat rate…
or. go to a tax deed state, buy a prop. at auction for 30-40 cents on the dollar…and then flip it for 50-60 cents on the dollar…
or Tennessee at 10%, Hawaii at 12%, and If I remember Delaware at 18%
depends on what part of the country you live in…if oyu even reside in the US…need more info!
your investment is secured by the real estate…and protected by the local Government tax laws…so this is a considerably safe investment, with good returns…
I’m 22, live in Oregon. I’m a student and work for the state as a revenue agent. I inherited about 225k. Paid off all my debt which was about 3k, put 20k into a saving account for a rainy day and in case of an emergency.
I do not own a home. I really like the idea of rental’s because of the idea that buying at this point in time your principal will always be there in the equity of the real estate. Plus I would love the supplemental income/cash flow monthly.
I’m just looking at every possible option, I know having this much at this young of an age puts me in a very good position for the future.
$200 + is a nice little sum of change…
Rentals can be good…however make sure you consider the 4-T’s
tenants, trash, termites, and toilets…
anyways, if you want to rent, that is great…now just need to decide, “where am I going to get the prop to rent?”
I know a lady who drives down from canada and goes to deed sales in Washington…she tells me there are some incredible deals for those who are aware of that particular arena of investing…might be something to consider?..also, I would put another $50,000 aside for security purposes…
If I had 200k I would go find all of the REO’s in my area that meet my requirements of being in a decent to nice neighborhood where there are a majority of 3 bedroom 2 bath houses 1800 sq ft or so w/ 2 car garages where the median fair market value (FMV) of the area is in the 120-130k range (this depends on where you live but this is how my avg selling price home in my market.)
I would find the REOs that are for sale that are in need of a bit of fixups where they are asking about 70% of FMV (they are all over the place around here.) Then I would start making cash offers showing my proof of funds of about 70%-80% of their asking price. So essentially I would start offering around 60-70k for these properties. You won’t get all but you will get some. Once I get a couple I would put 5k into each so that I have about 150 into two properties and then put a tenant into each for $1200 per month. After a bit, I would refinance the two properties at the price that I paid for them including closing costs, title insurance, etc. so that I could get my cash reserves back up to 200k while holding two properties at about 60-65% of FMV value and I am cashflowing approx $500 per prop.
Now I have my 200k again and I am making 1k per month on cashflow. I repeat this process a few times until I have at least 6 properties and am cash-flowing 3k per month. The nice thing is that I have some really good quality properties that are in the avg selling point in the city so there are tons of people looking to buy these properties fixed up. Also, you are getting the types of tenants that are easy to deal with and will be less likely to tear up your property.
Now you get your name out there and let everyone and anyone know that you will buy distressed properties. Before you know it, you start finding properties that would be good “flip” properties. You finance these deals putting your 20-25% down and financing the rest, put a good 5-10k into it and sell it below FMV to rid of it quickly and double your money each time building you 200k cash reserve by 20-30k each flip. You work on one of these every month and you build yourself a reserve of approx 400k cash. Also, I say you continually purchase a good 3 bed 2 bath property that you would like to keep and rent it out always building your monthly cashflow…
Repeat all of this until you are cashflowing at least 10-15k per month and you have a cash reserve of over 1 mil… then have fun and do what you want, go on vacation, keep doing real estate. Have fun!
I would pay cash for low income rentals
What would I do if I only had $200k dollars?
Very first thing since I am an advocate and encourage the investors I help to always set up proper family reserves of 6 to 12 months of all cost’s and expenses in savings to insure family security! Which includes the need to have life insurance, long term disability insurance and medical insurance.
Then of the remaining dollars set aside about 25% to use as a prudent reserve against any problems, repairs, vacancy’s, etc. with your future real estate investments. Now with what’s left, let’s say you have everything else covered and put away 25% of $200k into savings for prudent reserves, which gives you a capital investment fund of $150k.
I think if you want long term portfolio property and cash flow, I would go into either Florida or Arizona (Both states continue to grow yearly) and I would buy condo units for all cash, in either state there are opportunities to pick up condo’s for $15k to $20k and own these properties free and clear, HOA fee’s are generally $60 to $125 per month, but a lot of these 2 or 3 bedroom units will rent for $500 to $700 per month, even after paying 10% property management fee’s, and even paying the HOA you would have a cash flow of $400 a month on a $20k investment, that’s a $4800 a year return and essentially get’s you back your whole investment in cash in roughly 5 years.
I know a few guy’s on this site will say Why Condo’s? Well you have no yard upkeep, no outside building maintence, no exterior painting, no roofing or window repairs and no responsibility for electrical, plumbing or sewer outside the actual unit! This significantly reduces your demands for repairs, upkeep and replacement reserves!
You could buy 6, 7, or 10 units all cash and have returns of better than 20% on your investment! And although these unit’s may take longer to sell 10 years from now, you certainly will make returns on resale better than your original investment considering you will have paid off your original investment and the second 5 years are basically infinite returns!
These properties are certainly not the sharpest, not in the best area’s, but none the less can be good investments considering there is now more demand for rentals in both states!
I would do something very close to what mcinvesting said, buy distressed property, but i wouldn’t pay cash, I would go hard money, buy, rehab, put renters in and convert to conventional financing. You would pick up 12+ properties and still have cash for reserves
If you only bought 12, but you averaged $25k in unrealized cap gain, and $300 monthly cash flow from each (which is not not that hard in this market), you would have $300k in cap gains, plus have $3,600 a month in cash flow,and still have cash reserves
Basically here’s my situation. I’m 22 have no student loan debt, car is paid off and I have about 2k in CC debt because I was laid off for a few months.
Once my grandmother’s estate gets done in probate court which should be in the next month or 2 I should end up with a minimum of about 200-225k. With a maximum of possibly 280-300k.
So far I have liked Gold River’s idea the best. I have been looking at every possible option. I REALLY love the idea of REI because of the idea that you always have that $$ in the equity of the house. where as with stock’s -etc-, you always have that chance of losing and having less then your principal balance (lets just say 200k).
I’ve thought about vacation rental condo’s, upscale corporate type rental condos in downtown Portland. I’ve thought about the multi plex units, which so far seems like they would have the most potential for cash flow / monthly income.
I do like mcinvesting said, but I really dont know if I want to have to deal with repair’s and fixers at this point in time. I have heard so many horror stories about people flipping houses. Essentially his idea sounds like easily the most profitable, although there is definitely some risk.
I had looked earlier this year at moving to AZ buying a house and a decent fourplex. But that idea passed and I think now just buying a 2 fourplex’s at 100k/each would be a decent idea. I had found a few they were wanting 100-125k/each for. One specifically pulled in about 2800/month gross. After HOA, taxes, property management and a umbrella policy you were looking at about 2k cash flow. There were a few properties like this I found. If I could manage to buy 2 outright at 100k/each and bring in 1800-2k/month from each that would be pretty decent IMO.
Really at this point in time I am just trying to get more idea’s, the more idea’s the more I can research the more things I can look into the pro’s and cons. It just gives me ideas. This is a great opportunity to set myself up for a very profitable future, including possibly retiring at 35. Something we could all dream about.
100 unit mobile home park and resell after three years of rental raises
do the math on the returns
A lot of flippers use a hard money lender, then cash out refi.
With that pile of cash I’d try to be my own hard money lender.
If I inherited over 200K, first thing I’d do would be quit my job.
I would be very careful about just selecting one strategy and “putting your eggs into one basket” so to speak.
You have a wonderful opportunity here to not only make money on top of the money you have just inherited but to also set yourself up for life and also your family and kids and future generations. So please don’t take this lightly.
It’s good that you put some aside for a rainy day. You will want to figure out how to develop multiple streams of income and how to use the least amount of your own money as possible. Just because you have it now doesn’t mean you need to use it all now.
I would also consider hiring some verified competent professionals to help you figure out how to best protect your money now and in the future. (laywer, accountant, tax planner, etc)
You should educate yourself before diving into whatever venture there is. There are great books, seminars out there. Just be sure to do your research and due diligence.
As for me, I would use multiple strategies to ensure my income is not dependent on my success in one area. So I would put some in real estate investing via fix/flips, do some buy and hold rental properties, invest in tax liens and deeds, and learn as much as I can.
Remember it is only risky if you don’t know what you are doing. You can minimize risk through education and mentorship.
I think you have some good and bad suggestions in here. I am a senior Finance student that will be graduating in May from a respected institution. I have had the privilege to network and build relationships with some very respected and successful businessmen/women and investors in my area. Here is what I have learned from them and what I see them doing.
To start, I don’t mean to offend anyone on this board, and if anything I say does offend anyone, I apologize for it now. You have an enormous opportunity in front of you, you have found yourself in a position that most will never be in and many often dream of. It is funny I ran across your post as I was asking myself the other day what I would do if I (just) had $20k sitting in my bank account.
The first thing successful people do is surround themselves with other like-minded, successful professionals. Meaning, go find yourself an excellent attorney, CPA, and a good wealth manager. Network, network, network with successful people in your area because they can help you become more successful and wealthy than you ever imagined. In regards to a wealth manager, do not go to Edward Jones or any commission based financial planner or use your local banks financial planner. Find someone who has their CFA and/or CPA license and only charge you a % of the total assets they control. Also, they should have at least their series 7 and series 66 certifications as well. Their commission set-up is very important, by simply charging you a % of total assets you know they will be motivated to help you grow your personal wealth instead of selling you crappy products because they get big commissions from the sales. Also, if they don’t have any of the licenses or certificates listed above then don’t consider working with them. Feel free contact me with any questions regarding this, I have been fortunate enough to get to know one of the most prominent wealth managers in my area.
As for some of the suggestions and techniques people have suggested and you can find on this site… be aware. I’m not saying they do not or will not work, but ultimately your in a position now to establish yourself as a serious player in your local residential real estate market (not considering large-scale development or high rise apartment buildings). In example, wholeselling can be done, I’ve had the opportunity, and it can be financially rewarding for someone that has an average job and little to no money to invest. However, with the amount of capital you have access to, you have the opportunity to involve yourself with much larger, more profitable real estate ventures… which seems to be what your implied goals ares.
As to what you should invest in, well that is difficult answer because there are so many variables that play into it. What level of risk are you willing to accept, what kind of time period are you looking for, do you want your assets to be liquid, do you want immediate cash flow so you don’t have to work a 9-5 or do you have a career your passionate about and simply want to build your wealth? The answers to these questions are only known by you and I would recommend sitting down with a successful investor in your area and discuss these; you’ll be surprised by how willing to help successful investors and businessmen can be.
I love real estate, I currently own a duplex of my own and find multi-family properties to be interesting, exciting, and meet my personal financial goals. Multi-units are not the only properties I have intentions on acquiring, but I see it as my specialty. The key, like one poster mentioned, is to diversify. Diversification will lower your overall exposed risk, providing financial stability regardless of external market forces. If you put all your eggs in one basket, especially with real estate and the stock market, then your going to understand the pain many investors have gone through since 2008.
The most successful and wealthy people I know, and like I mentioned I am lucky enough to network with some of the most successful people in my area, are not buying houses for $15k, knocking on peoples doors and giving them low-ball offers, or wholeselling properties. Flipping properties can be lucrative, but its a lot of work and your next payday is always a question mark. Not demeaning any of this, as I am actually tracking down an owner of some rundown properties myself right now. Put simply, the players in my area invest their money into marinas, restaurants, or scalable business opportunities. For example, one gentleman I know invested in a breath right strips and is now collecting over $50k a month on this investment alone. Basically, its ok to find yourself doing some of this dirty in the beginning as you build your wealth, but one needs to keep the ultimate goal in mind. Involve yourself only in projects that are going to advance you to a position of more wealth and less work… unless you just happen to sincerely enjoy the work your doing.
Real estate is a fantastic way to build your personal wealth. It can provide immediate cash flow and long-term equity gains. It is important to remember that whatever you invest your money into, you will need/ should want cash flow in-order to continue leveraging yourself into more properties, businesses, and investments. There is a diagram marketing and finance professors across the country utilize, it consists of : Cash Cows, Stars, Question Marks, and Dogs. You want to have cash cows (whether it be a nice paying job, business you start, or rental properties) to fund your questions marks (business opportunities, real estate, etc), and turn them into stars (making $50k+ a month of a smart business investment), and ultimately be able to afford the money you lost in the dogs(the ARV wasn’t as high as you thought it would be and are now taking a loss on the property or ENRON stock you own) without going bankrupt.
In summation, set-up your financial security by putting money away for rainy days, have good life insurance, and putting some money into the markets (your wealth manager will advise you on all of these). Take the rest and start/invest in a business or real estate that will generate cash flow. Obviously the business should be able to generate much larger sums of cash for you than real estate. Don’t buy 200k in properties and wait 20yrs for your return, you have the ability to use that cash to get yourself into many properties, not just 1 or 2. Ultimately, in the end, you should have numerous properties and even a business if you want. I’d leverage the cash to get your properties first then invest the money in a business if thats a route you want to take.
Here is an example of the deal I performed with my piece of property for reference of how I leveraged the money of some family members. I purchased a rundown duplex.
Purchased Duplex: $71k
Rehab Expenses: $35k
Total Expenses: $106k
After Repair Value: $140k
I borrowed money from family members, using a revolving line of credit they had access to for their business. With no money out of my pocket, I renovated the duplex and used the gained equity in the property as collateral for the loan, repaying my family members in full. In the end, I now own a nice rental property which I currently live in(and purchased) for free and was able to repay my family in full. When I move out I will be generating a cool $9k in cash flow per year from a property I paid nothing for out of pocket. Also, I now have $34k in equity sitting in my property that I can use to help leverage myself into other properties and as a safety buffer in-case housing prices drop like they have in the recent past.
If you can leverage yourself into properties with this technique among the many others out there, you will be a very wealthy man in a short period of time. I wish you the best of luck.
great post bushymule. :beer
I did not like this post!
lol, why GR?
You are young and can set yourself up really nicely by making savvy investments. You have to start with goals, minimize risk and maximize annualized return. Using leverage is also a very powerful way to improve your cash on cash return.
Where you invest is very important, we did 100s of hours of research before identifying out target markets. The smaller, less hyped markets usually have great cash flow, big discounts and multiple exits which is very important.
Rentals is a good idea, you can use leverage as well to build a portfolio. You can also do flips to improve your annual return but you must do them right as their is more risk.
Partnering with an experienced investor is also a great way to get started. Once you are confident and have honed your craft you can go at it alone. I hope this helps.