$100k to Invest - curious how others would spend it...my goals inside...thanks!!

[JPMessina44]

Hello All,

Awesome website, have been an active reader for the last few months, learned a ton and thank all you seasoned investors for sharing your experiences and being so open to help us newbies!!

A little about me personally.  I own two condos, which I rent out - one in NJ and the other in orlando.  I do have a positive cash flow of $300 (NJ) and $400 (Orlando.)  I currently work full time in an Investment Bank (always fun times right now) but have been deeply considering moving down to Florida into my dad's condo, which I would live for free and start up a career as a full time investor.  I have 70% LTV in New Jersey so the rent negates the considerations for a future mortgage and the Florida condo i bought very low, so even with the devastation, I have some positive equity left in the place and rent more than covers my payments. 

My goals would be sustainable, long term wealth with a strong rental income eventually leading to passive income where I can be hands off- I am not much of a flipper, but more of the "Buy and Hold" mentality, maybe look to sell them properties off when the market gets better (or hold if it is a solid investment).  I plan to reinvest back into paying down the principal, this way I will have more equity, HELOC to pick up more income producing properties.  I like the idea of Sub2, and would utilize creative financing at some point in my REI career but with a substantial down payment ability, I think the first purchase(s) could be done using my savings.  I also have another $50k as back up which I did NOT include in the $100k number.  I wanted to leave myself a bit of a cushion.

I am looking in Central Florida, since I wanted to be close to the properties as I plan on managing them actively until further down the road where I will hand the day to day operations to a prop. mgmt company.  My fiancee also works for one of the top property management companies in Manhattan, so she will really be hands on for my LLC. 

Central Florida as defined: Orlando, Kississmee, Tampa, St. Pete, and anywhere "quality" locations in between.  I am just most familiar with Orland and Tampa areas, hence why I am targetting. 

Now, my options and this is where I wanted your advice:
1.  Buy a few smaller (sub-5 unit buildings), smaller downpayments
or
2.  Buy a larger apartment building, perhaps between 5-30 units, using the $100k as a DP and get conventional commercial mortgage. 

Other opinions would be welcomed as well. 

Sorry for the long post, just would like some ideas/opinions - I will still need to put in the time, research area for better understanding, etc but more of a "general" what would you do with the $100k cash spending money would be appreciated!

Thanks again and again, appreciate everybody's advice and willingness to help and share in your success'. 



Joe

[nemmert]

My "goal", and understand I have 0 experience to date, is to get as much financing as possible in the next few years.  I figure as long as the banks are giving away free money, I want it.  I'm young, it's a longer term play, don't need immediate cash flow or quick hits.

So assuming you can use your money as a DP and get an equal amount of financing either way... my understanding, far easier to manage one property than several.  I believe you only start small if you're cash strapped or risk adverse... if you have the finances to go a bit bigger, go for it.

[JPMessina44]

Thanks for the first response, That was my thought process, 10 units under one roof is easier to manage than 10 units under 10 roofs. 

I feel the pain about being young, I'm only 27 myself, so still hanging onto the last years til I hit 30! 

Yes, I would have the $100k to spend on a DP alone.  Figuring I could get a conventional mortgage of at least $400k considering the bank will most likely as for me to lay out 25% ($100k)....

Thanks again. 

[nsu1997]

You're in a good situation. I'd look into buying a self storage facility personally. There's a boot camp, I forget the guy's name. I haven't been to it so I can't tell you how good it is. But to my knowledge there's really only 1 guy teaching it. Good luck!

[justin0419]

Hello,

I was wondering if you would be open to properties outside of the Florida area.  Right now our Company is buying properties in NV and AZ that cash flow very well.  We believe in the same strategy as you in the buy and hold which is the best strategy in this market.  All the properties we acquire have at minimum a 15% discount and cash flow at $300 and above.  We do all the work for you including property management.  The low end $300 cash flowing properties are the ones that are under management.  We devise 10 year Game Plans for people like yourself who are Interested in building a portfolio.  In 2011 alone we purchased 461 properties off the court house steps in NV and AZ, two of the hottest markets right now for distressed Real Estate.  I would love to offer you a Game Plan free of charge if you are interested.  Contact me directly!

Of course, none of these posts are sales pitches or anything of that sort on an educational board.... 

[gaulkin]

Start with a 50k house and learn the ropes. Then once you understand where you can lose money, refine your process.