Robert Vegas Bob Swetz

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Rainmaker
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Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Bob,

I would talk to my financial advisor/CPA/etc.  As real estate agents and brokers we are not experts of how one should invest their money.  Not all real estate produce cash flow, some produce negative cash flow.  There are so many factors to consider that are in the realm of CPA's and pertain to your individual tax situation.  A

Mar 13, 2016 04:53 AM
Ambassador
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Robert Vegas Bob Swetz
Las Vegas, NV

I have been told that it's better to purchase as many homes as possible with a large amount of money, and create net producing investment properties.

VS purchasing 1 or 2 homes with cash.

Now on the other hand cash purchased homes would mean you own the homes straight out so there would be lease chance of losing the homes if there was to be a market crash, etc.

But on the other hand, purchasing 6 - 12 homes with loans vs 1 - 3 with cash would produce more money producing income for investment.

Mar 13, 2016 04:47 AM
Rainmaker
4,798,566
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

If it were me, I would leverage these investments with loans to get greater returns.  Interest rates being so cheap at the moment.

Mar 13, 2016 05:46 AM
Rainer
410,043
DEANNA EARLY - - ( NMLS # 268590 )
American National Bank & Trust - Smith Mountain Lake, VA
Highest Ranked Mortgage Loan Originator Virginia

I think I agree with Dan Pittsenbarger to buy multiple houses with loans and keep a reserve for unexpected vacancies or maintenance.   If the rental is equal or greater than your monthly using OPM, you aren't spending a dime out of pocket in the long run AND you're building equity in multiple properties rather than having all your eggs in one basket (or house).   Finally, I agree with the bulk of the answers; don't do anything until you consult with a CPA or Financial Planner.   Good Luck, Mr. Landlord !

Mar 13, 2016 11:37 AM
Rainmaker
803,744
Candice A. Donofrio
Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker - Fort Mohave, AZ
928-201-4BHC (4242) call/text

You may want to look into purchasing some seasoned notes, if you can get them at a good enough discount and if the property passes the sniff test. No management, no upkeep, no maintenance, you collect interest on your income stream and if they default you foreclose and get the property (but buy right and this shouldn't happen). Of course, I am simplifying this. And, you must consult with a financial expert before doing anything.

Mar 13, 2016 09:03 AM
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Jeff Dowler, CRS
eXp Realty of California - Carlsbad, CA
The Southern California Relocation Dude

It depends on your situation and your personal financial goals. I would work with a financial planner, or at least a CPA, for some advice on what makes sense financially, short and long term

Mar 13, 2016 08:56 AM
Rainmaker
2,550,732
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Whatever you buy, pay cash and own it. Also, not all in one place either and for my money, I would pick better neighborhoods which cost more but hold

Mar 13, 2016 07:27 AM
Rainer
270,791
Caroline Gerardo
Pinnacle Home Loans - Newport Beach, CA
C. G. Barbeau the Loan Lady nmls 324982

I would suggest you buy six houses that can rent for $3000. Put $130000 down on each saving some funds for closing costs, vacancy and repairs. Paint the interiors all the same color and make all flooring as you upgrade the same. There is trend with porcelain tile that looks like wood floors = indestructable. Find great contractors and an excellent managment company (this is very difficult). Check out tenants carefully.  If you manage yourself - can you do plumbing repairs Sunday night at 1 in the morning?

Mar 13, 2016 06:39 AM
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Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

It depends on how you feel about leverage and risk. As long as you can sleep at nights with your choice, then go for either. Paper generated ROI always looks better with leverage when you use OPM, but I always throw in risk assessment.

Mar 13, 2016 04:47 AM
Rainmaker
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Olga Simoncelli
Veritas Prime, LLC dba Veritas Prime Real Estate - New Fairfield, CT
CONSULTANT, Real Estate Services & Risk Management

Always use someone else's money, especially when it's cheap, like now.

Mar 14, 2016 01:15 AM
Rainmaker
1,404,977
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Robert 'VEGAS BOB' Swetz Leverging your funds always works. Your ROI will tell you what to do.

Mar 13, 2016 11:56 PM
Rainmaker
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Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Invest in an apartment community rather than individual homes.

Mar 13, 2016 10:53 PM
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Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Robert 'VEGAS BOB' Swetz I'd perhaps borrow money - and buy multiple properties.... (What was that book?Rich Dad Poor Dad...)

Mar 13, 2016 04:33 PM
Rainmaker
1,300,462
Ryan Huggins - Thousand Oaks, CA
https://HugginsHomes.com - Thousand Oaks, CA
Residential Real Estate and Investment Properties

My money would be on putting 40-50% down on multiple homes.  It'll keep the payments low, allowing you to make a larger profit and it'll get you more homes.  Out here, you'd likely get 2 homes if you paid cash.  You may be able to get 4-6 if you got lucky with financing.

Mar 13, 2016 12:04 PM
Rainmaker
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Joan Dickie
Keller Williams Premier Realty - La Crosse, WI
Keller Williams Premier Realty

I would purchase them for cash.  Then use them as collateral or use the equity to puchase other homes I find that will make good investments.

Mar 13, 2016 11:54 AM
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Bob Crane
Woodland Management Service / Woodland Real Estate, Keller Williams Fox Cities - Stevens Point, WI
Forestland Experts! 715-204-9671

If I had a million to spend, I would leverage it to buy 6 million worth of timberland.

 

Mar 13, 2016 10:47 AM
Rainmaker
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Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

I would go with Gabe Sanders answer

Mar 13, 2016 10:15 AM
Rainmaker
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William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Depending on your needs overall

Mar 13, 2016 09:08 AM
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Noah Seidenberg
Coldwell Banker - Evanston, IL
Chicagoland and Suburbs (800) 858-7917

Money is cheap, why pay cash? I would get mortgages and use the money to invest in something else like stocks or mutual funds.

Mar 13, 2016 08:15 AM
Rainmaker
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Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Leverage yourself. Buy as many as you can with the $1M instead of paying cash for (let's say) 3.

Mar 13, 2016 07:15 AM
Rainmaker
453,597
Dan Pittsenbarger
Keller Williams Western Realty - Bellingham, WA
Improving Conditions

IMOP - as long as you put a large enough downpayment so the properties easily cover the debt service (ie income is 1.5+X the debt service) and assuming there are no expensive differed maintenance issues - one can realize a much better return on their cash if one buys as many properties as possible meeting the above criteria (getting loans) until about $950Kis is spent - save some of the cash in reserves for unexpected expenses/vacancies.

Mar 13, 2016 04:53 AM
Rainmaker
815,765
Annette Lawrence , Palm Harbor, FL 727-420-4041
ReMax Realtec Group - Palm Harbor, FL
Making FLORIDA Real Estate EZ

Depends on the resources you have to work with, experience and model.

Producing income was the prime focus three years ago and still is but if you don't have the property management skills or resources, you can quickly become disillusioned with being a land lord.

Of course you already know paying cash creates a great deal more latitude with future decisions.

I would suggest, that with 1 million dollars, you should be the bank and look upstream, 12 months upstream at non-performing notes.

 

Mar 13, 2016 04:48 AM
Rainmaker
634,116
Kathleen Luiten
Resort and Second-Home Specialist - Princeville, HI
Kauai Luxury Ocean Home Sales

I crunch the numbers, figure the ROI and see if projected ROI is significantly greater that the projected net ROI if paying on a loan. Choose the one that gives the larger return assuming you can diversify your portfolio sufficiently. 

Mar 14, 2016 06:39 PM
Rainmaker
331,624
Matthew Sturkie, CRS, GRI 909-969-3805
Action Realty - Apple Valley, CA
CRS, GRI 909-969-3805

Leverage is the best answer. If you could borrow $3 million and have someone else pay it back, would you do it? 

Mar 14, 2016 11:01 AM
Rainmaker
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Richard Weeks
Dallas, TX
REALTOR®, Broker

A good question for your cpa or financial advisor.

Mar 14, 2016 12:24 AM
Rainmaker
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Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Alexandra Ron and Alexandra Seigel answered it well.  

 

 

Mar 13, 2016 11:19 PM
Rainmaker
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Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

You will have to do the math based on payments and rents and how long to payoff.

Mar 13, 2016 10:45 PM
Rainmaker
3,168,154
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

Buy it, fix it and sell it. Cash is king and less cost, if can, do it

Mar 13, 2016 10:36 PM
Rainmaker
2,333,643
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning Vegas Bob. It depends, if the investments properties are for short term, I'd pay cash, if they were for long term, I would get mortgages on the properties and leverage as much as I could.

Mar 13, 2016 06:22 PM
Rainmaker
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John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Robert 'VEGAS BOB' Swetz It depends on the buyer and the area.

Good question!

Mar 13, 2016 11:13 AM
Rainmaker
552,772
Abby Stiller
REMAX Realty Group - Cape Coral, FL
Professional Bilingual Realtor (239) 284-8637

Buy properties cash here in Cape Coral, FL and rent them out with a property managment. You will quickly see a return.

Mar 13, 2016 10:18 AM
Rainer
307,260
Melissa Jackson
Century 21 Alliance Properties - Azle, TX
Helping You Make The Right Move

Stop by to read your replies.  Very interesting different views. 

Mar 13, 2016 09:56 AM
Rainmaker
1,157,329
FN LN
Toronto, ON

It would not be possible to answer this question without conducting a detailed review of the properties you intend to purchase, cash flow and income tax analysis, whether you can obtain financing in your particular situation and more.

Mar 13, 2016 07:50 AM
Rainmaker
195,719
Jill Moog
Coast & Country Homes and Estates, Inc. - Carlsbad, CA
Carlsbad, CA Homes for Sale

It depends on your situation but I would probably pay cash 

Mar 13, 2016 07:37 AM
Rainmaker
1,081,900
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

income property like apts in LV with a loan.

1 Mil buys a condo in my area these days.   

Mar 13, 2016 07:34 AM
Rainmaker
562,150
Women of Westchester Working Together
Women of Westchester Working Together - West Harrison, NY
Women helping Women get ahead

In general, assuming this is extra money and I'm totally covered/don't need it, I then think it depends on my interest level of managing properties.

And, in general, I prefer to leverage OPM when possible, assuming I'm looking at long term horizon and won't have issues/risks over next 10-20 yrs at a minimum.

And, LOL, 1 million dollars doesn't buy that much real estate here.  I suppose you get 2 below avg homes for that.

I'm actually not so sure I would invest it in real estate at all, though.  

Mar 13, 2016 07:03 AM
Rainmaker
796,957
Liz Wallace
Century 21 Sherlock Homes - Rockville Centre, NY
Broker C21 Sherlock Homes, Rockville Centre, LI, N

Purchase 6+ with loans as long as you can bring enough to cover loans and make some income.

Mar 13, 2016 05:25 AM