Hi we have some cash and wanted to invest in some real estate. Most likely for buy and hold in the South West US. If you had between $250-300K where would you invest? What would you invest in?
South Florida. The area was crushed during the crash and only now appears to be forming a base. Seems like a good time to begin buying real estate here.
- Focus on an area you care about. A place you will want to visit if not live in.
- Focus on an area where the number stack up. Or focus on properties in an area that stack up even if the rest of the area does not.
- Focus on a quality area that people want to move to and where they want to be owners rather than just renters.
In other words, lots of areas can be fine. There is no right area in terms of what is hot, or similar. It all comes down to the deals you do. If you do not like an area you will not find many opportunities as you will not want to look.
I would honestly take the simple way out on this one… I would research Counties that pay the highest interest rate on Tax Liens and purchase Tax Liens I would not go into Real Estate directly with that money. And here are the reasons why!
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Tax Liens are a very secure investment and you can make up to 20% Interest in some areas. Now if you take 200k and get a 20% R.O.I. (Return on Investment) you could make a very nice income off of that money.
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Way to much risk in Real Estate in my opinion, Sure I still invest in some deals yet if I was just starting out with 200k I would want a very secure investment.
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The only way you are going to lose money in a Tax Lien situation is if December 21st 2012 really happens. Then I can promise you that you will lose everything. Then again I don’t think that is going to be a major issue.
The only other option I would consider is to call HML’s (Hard Money Lenders) and see if they are needing more capital to fund projects. Just make sure you are dealing with someone that has been in the industry for awhile.
any recommendations on where I can read about this “tax lien” investment you are talking about? or would you care briefly explain it?
20% Safe ROI sounds insanely high, too good to be true. even 10% on safe investment is super high. I would like to know more about it. 
The good thing about real estate is that it finances itself. If you do it correctly you should have very little of your own money in the properties. Real estate is no better than any other investment except for leverage. You are going to get 7% to 10% or so on any deal you pay cash for, but if you finance it your returns go over 50% really quickly and if you can get all of the property costs financed you can get infinite returns. For example if you buy a house that is worth $120k and you pay $100k cash for it and you get $1000/month rent for it you will be getting $12,000 a year for your $100k invested that is 12% and you own $120k worth of real estate. If you take that same $100k and put 10% down on 10 houses you still have $100k invested but now when you rent those 10 house for $1000/month each and pay the taxes insurance and notes you will end up pretty easily with $300/month per house. That times 10 is $3000/month or $36,000 a year for a 36% return on your money. You also control $1million worth of real estate. You are also now in position to bundle the mortgages into an umbrella loan in which you can finance out all your cash (as long as the portfolio mortgage will be 70% or less of the total property value) and do it all over again. The thing you don’t want to do is become locked out because you ran out of money. Using strategies like this allows you to continue investing without your cash being the constraint.
That is why rich people own real estate.
Why do you think tax liens are largely without risk?
Thanks I agree with you.
I wanted to put $250-300K as a down payment on a building for buy and hold.
I just wanted some input on where you would invest.
Where would you buy properties based on the current market. Or are you all saying that you would not? Either way, I was wondering what markets or cities you would invest in with this sort of down payment.
Once again I’m talking about “buy and hold” as I said in the OP. I probably titled this wrong by saying cash investment. I would probably pull a commercial loan.
I am not sure of your experience and the time you will have to monitor things after you buy.
Assuming you would be doing this as a side activity, I would look close to home. A community or city that you can get to pretty easily if you wanted to drive by and deal with things or just take a look around. It also would be a community that you can monitor just by watching the news.
If you are happy investing at some distance, is there a location where you would want to visit if you really had to make a trip?
You want a community with strong employment trends as that underpins the local rental market. A community where people want to move to rather than one where the residents are looking to leave. Beyond that I would check the cap rates to see if there is a premium or discount for a community. If the cap rate is higher, try to understand why. It could mean the location is no desirable. Even as a buy and hold investor you need to think about the exit plan.
I would invest in some non performing notes and tax lien certicates been investing in them for years never lost a dime!
Tell us more about how you identify what you buy and how you then monitor the investments. I know people who have lost money so there is risk of default. What are you doing to manage the risk?
Well I have experience managing houses and quads. I manage properties and own some so this is what I do with the majority of my time.
I was thinking of Las Vegas, but it seems to be a declining scene from what I’ve read. I don’t know if it is a good or bad time to buy there. The cap rates you can in the 10% range which is great compared to my area in Los Angeles. I was thinking of purchasing something near the strip in the 8-20 unit range because the vacancy rates seem better there.
Anyone have any other opinions on Las Vegas or other areas to invest?
I didn’t mean to put all cash i meant cash for a down payment then pull out a large commercial loan most likely…