How to Invest $80k cash? - Posted by Adam

Posted by Ronald * Starr(in No CA) on August 05, 2002 at 23:19:28:

alan–(SOCAL)--------

I can buy properties at a lower percent of their market value than I can at tax sales in CA. Also, the properties are lower priced in OK than in Coastal CA, thus the absolute number of dollars I have to expend it lower.

Then, I get a higher ratio of rent compared to the property value than in CA.

I buy for cash flow. I do far better in OK than I could here in CA.

I live in CA because it is much nicer here than it is in OK. There is no law that you have to live where your investments are or that you have to invest where you live.

Justify expenses? To whom? I spend maybe $1000-$1200 on each trip and I buy maybe $30K worth of real estate more than I have to pay for it. Seems ok to me.

Good Investing*******************Ron Starr**************

How to Invest $80k cash? - Posted by Adam

Posted by Adam on August 03, 2002 at 24:19:41:

I am about to get about $80k cash, what the best way to invest it in Real Estate to have it grow quiclky?
My idea was to purchase about about 3 rental properties that will generate at least 4 or $500 postive cash flow each, then buy a few fixer uppers a year to rehab and resell. Is $80k enough to start such a project? Am I on the right track?

Re: How to Invest $80k cash? - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on August 03, 2002 at 17:23:19:

Adam–+++±---------------

On your second post you state “As for goal I would like to turn that $80k into a least a $50 t0 $75k a year income within the next year or 2.”

M Lee asked you several questions which, when answered, would allow a reasonable response to your question.

I buy houses on tax sales for less than 1/2 of market value. What I would suggest you do is buy four houses at tax sales, resell them as soon as possible for a total of $150K to $250K. Then take the money out and do it all over again. After about 5 cyles through you should have about $1Mill. Now, invest that in rental income property. Probably one to 5 apartment buildings, modestly leveraged – say 40% cash, 60% loans. You should be able to make about the yearly income you mention. There would not be much work if you hire others to do the management for you. It would be pretty safe with that leverage. If there is inflation or appreciation, your leveraged position will give you more return than just the cash flow.

It will probably take you about three or four years to do, unless you are a real go getter and devote full time to it.

Now, do you know how to do what I suggest? It is a good program, from my perspective. But, since I know nothing about you, I can’t tell if it is a good program for you or not.

That’s why you will get a better answer if you frame your question more precisely, with information about your experiences, skills, approaches, time avaiable and so on. IF there are some types of investing you do not want to do, mention them. If there are approaches you are attracted to already, mention them and ask if they could do what you want to do.

Most investment approaches will not come close to accomplishing what you want to do with the money you mention. Not unless you are out there really working like a madeperson, with a very powerful, carefully formulated investment program.

Good InvestingRon Starr***

Re: How to Invest $80k cash? ( LONG ) - Posted by HOUSEROOKIE

Posted by HOUSEROOKIE on August 03, 2002 at 08:37:43:

Hi Adam,

$80,000 is a lot of money. Some people die and don’t have that much to their name. So consider yourself extremely lucky.

If I had to start over this is what I would do. I would spend little if any of the $80k on actual RE investments. Instead, purchase one or two courses here and search this site for info on how to take possession of properties without loans and without cash or very little cash out of your pocket.

On the other hand if your objective is to earn 10-20% annual return on your money secured by real estate, I would investigate further the possible of buying
real estate notes, trust deeds, and contracts at a discount.

There are people and financial institutions that will sell you a 100K loan for $80K. It’s like purchasing a $10 bill for 8 bucks and earning whatever interest rate that is on the contract.

Eventually, the person paying on the loan will refinance and you will get cashed out.

From there you can start over and get another loan to purchase.

I must caution you tho that there is a 1% chance that the person paying on the loan will default. In which case you will have to foreclose on that person and take the property back. I have not had this happen to me yet, but I can be convinced into taking a $100K house back, which someone owes me $80,000. This doesn’t include possible appreciation in between.

Another way you can gamble your $80K is the stock market. Man, are stocks ever cheap these days. Problem is which one of these good companies will get sued out of business or claim accounting errors tomorrow?

Good luck to ya.

Austin

Re: How to Invest $80k cash? - Posted by M Lee

Posted by M Lee on August 03, 2002 at 01:24:22:

Hi there,
I think what you should provide, is what your real estate goals are…so that someone can help tailor the answer to how you could invest the 80k to meet your goals. Typical most investors choose an investment vehicle based on ROI, and Risks, Intitial investments, etc. So know what you want out of it, can help us present a way for you to achieve your goal.

Also good info to know
-Are you able to work RE full time?
-Do you have good credit?
-What type of REI interest you the most?

What I would do If I was in your position is find the top 10-20 most knowledgeable poster to this forum, and ask them "what would you do if you had $80K coming to them, and they were in your shoes(ie. little experience)…I thnk you will get interesting answers, and very valuable ones.

Good Luck, sounds like a good position to be in…

Matthew

Re: How to Invest $80k cash? - Posted by Juan

Posted by Juan on August 07, 2002 at 14:00:17:

Ron,

Your posts are always very informative. Buying properties at tax sales sounds like a pretty lucrative plan but my understading of the process is that you purchase the tax lien certificate and wait until either the property is foreclosed upon by the locality which imposed the lien, at which point you would get the chance to buy or the property owner pays the tax lien and any underlying penalties. it seems as if your are purchasing the properties outright. Please correct me if I’m wrong. Any further details on your approach to doing tax sales would be appreciated. Thank you.

Re: How to Invest $80k cash? - Posted by Adam

Posted by Adam on August 04, 2002 at 21:44:35:

Are you actually buying the houses at tax sales? My understanding was you can only by a tax certificate that you draw interest on for a period of time depending on your state. This time period is the time given for the owner to redeem his property by paying back taxes. The time period for redemption is anywhere from 6 months the 3 years depending on your state. During this time you cant do anything with the proprty but collect interest it. please correct me if I am wrong.

Re: How to Invest $80k cash? - Posted by jerry

Posted by jerry on August 03, 2002 at 19:52:05:

OK, not looking to TOTALLY jump on Adam’s bandwagon, but - I’m 60, lost my retirement, have a HELOC for $200k and have been studying and reading here for 6 months. I haven’t done my first deal yet, but have studied subject-to and lease/option, primarily. I have not found the motivated seller yet. Your post to Adam sounds like something I should explore. Is this a matter of going to the courthouse and looking for tax sales? Is this at the assessors’s office? What research is neccessary before deciding on bidding? Is every Carlton Sheetsy and John Becky and his brother bidding them sky-high? Is there a chunk of money I should spend on a particular course for buying tax liens? Will the archives give me a good start. Thanks for any help.

Re: How to Invest $80k cash? - Posted by Doug (in So. Cal)

Posted by Doug (in So. Cal) on August 03, 2002 at 18:43:56:

Ron,

As always, great post.

What kind of research do you do on the houses you buy at tax sales?

Thanks.

Doug

Re: How to Invest $80k cash? - Posted by Adam

Posted by Adam on August 04, 2002 at 21:55:11:

Also good info to know
-Are you able to work RE full time?

I could as long as I am getting a decent cash within 6 months. 12 to $1300 per month will keep me going with my savings.

-Do you have good credit?

Yes I have A-1 credit.

-What type of REI interest you the most?
Buying fixer uppers from motivated sellers, but finding a motivated seller is a job in itself.

Re: How to Invest $80k cash? - Posted by Adam

Posted by Adam on August 03, 2002 at 10:05:32:

As for goal I would like to turn that $80k into a least a $50 t0 $75k a year income within the next year or 2.

Re: How to Invest $80k cash? - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on August 03, 2002 at 20:17:28:

Jerry–(xx)------------------

“Will the archives give me a good start.” Good idea, go for it.

I recommend John Beck’s “Free and Clear.” Much good information for low price. Find it on johnbeck.tv website.

Study the state law. As treasurer/tax collector’s office for any literature on the topic. In fact, you find a lot of mention of it on the websites for the tax-collecting offices. Just check for county webs in the state in which you might invest.

The interest-rate or penalty return can be very attractive. And it is easy to do and learn to do. Not much risk either. And, yes, it is more difficult now than in the past. But, there will be someplace where you will be able to invest your money for a good return. Just search for it. Call around to taxing offices and ask them what happened last year and what they expect this year.

Buying property is really for experienced investors, I feel. But if you do get into it, it can be quite lucrative. Just much trickier than doing the liens for interest and penalties.

Good InvestingRon Starr******

Re: How to Invest $80k cash? - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on August 03, 2002 at 19:43:07:

Doug–(CA)-------------

Not much. In OK, most encumberances are knocked of the property. So I don’t do a title search. I get the resale list, pick out the ones with high bids, since those are usually the better properties, then go to the assessor’s office and get whatever informatioin I can on the properties. I ignore those with no improvement assessed to them. I may look at a picture in the assesment file. I pick the ones I want to look at.

If I think I will need them, I get assessor’s parcel or plat maps for the properties. I mark on a hand-drawn map the locations of the properties in the county. Study the county map a few minutes, then start driving around to look at the houses. Look at the houses, writing down my comments on my property information sheet, since it is easy to forget details when I look at dozens of houses. I may take a picture or two of the property with a little one-use 35 mm camera. On to the next property. When I’ve seen all the houses I might want to buy in the county, I move on to the next county.

Good Investing**Ron Starr

Re: How to Invest $80k cash? - Posted by M Lee

Posted by M Lee on August 03, 2002 at 11:33:23:

Next step- What type of investing do you feel most comfortable doing?
-Lease/Options-Subject To’s
-Flipping/Wholesaling
-Rehabbing/foreclosures
-anything else ie. private investing, etc

Re: How to Invest $80k cash? - Posted by alan (socal)

Posted by alan (socal) on August 05, 2002 at 17:00:32:

Ron,

It appears that you live in NORCAL, but do business in OK (oklahoma)??? Why do you not do business in CA???

Just wondering,

Alan

Re: How to Invest $80k cash? - Posted by alan (SOCAL)

Posted by alan (SOCAL) on August 05, 2002 at 16:57:01:

Ron,

It appears that you invest in OK (oklahoma), but live in CA??? Is that true? How do you justify the expenses and why do you not do business in CA???

thanks,

Alan

Re: How to Invest $80k cash? - Posted by Adam

Posted by Adam on August 04, 2002 at 21:30:36:

I am not comfortable with any of it since I have never really done it. But I am ready to jump in, since I have purchased and studied my share of books and courses. I thought I might buy a few 4 unit apt buildings and branch of and do fixer uppers to resell, but finding fixer uppers and motivated sellers is a job in itself. Doing the fixup and selling is the easy part.