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What would you do if you had $200K to start?2017-08-27T21:52:32+00:00

LandInvestors.com Forums **Ask A Question** What would you do if you had $200K to start?

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  • Curtis Harris
    Participant
    Post count: 3

    Hello Land Academy family,

    I am an experienced yet lightweight real estate investor with a good paying W2 job. I know a lot about SFR investing, and if I were to go that path I know I’d be successful over the long haul. Bumps and bruises sure, but all in all I’d accomplish my goal. HOWEVER, I’ve been doing a lot of learning about land investing, as initially I wanted to find a way to creatively by my own piece of land with the postcard view in a few different spots around the country and bounce from place to place when I retire. As I listened and read more and more, land investing struck a chord because you are not really dealing with people and houses. I do like that from a retirement standpoint and generating passive income. Right now at my age (38), I’ll admit land investing seems a bit boring, but it seems like the quickest way to get to my ultimate goal and my “Why”. That is to retire from a W2 job in 7-10 years. Sooner if I can. I’m done. I want to enjoy my wife and travel the world with her.

    In about 30 days I’ll have a $200K HELOC on my primary residence to use to invest WISELY with, and help accelerate my path to retirement. My plan was always to buy at least one rental property per year, then 1031 exchange those 10 properties or so into an apartment complex or two when I retire and just live off of the rental income. Solid plan, many people have done it, and it would work unless I screw it up. The land game seems less competitive with much higher returns. The biggest difference being in this game is that selling is a major part of the equation, and with traditional buy and holds, selling is something you do very rarely.

    Curious if there are any traditional home investors that made the switch and if so, how is it going? I’ve spent a decade learning to invest one way, and now that I finally have an influx of available capital, I’m getting second thoughts about my investing strategy! I was thinking of putting about $20-30K aside for land investing and seeing how I do?

    Thoughts?

    Curtis

    Milan
    Participant
    Post count: 461

    Nice plan Curtis! Good luck on your journey.

    Brandon
    Participant
    Post count: 38

    You can do a lot with $20K-$30K in the land business. However I don’t know how I feel about going into debt to do this business. But, if I were to go into debt, I would only flip for cash until I could at least double my money and pay off the debts. And then use “the houses” money to continue the business. Maybe others can chime in here, but another thing I have noticed with this business vs. rentals is that you have to keep buying and selling in order to keep that cashflow coming in. Because most notes are only for 24-60 months. With a rental, you buy it once and it will throw off cashflow forever. My plan is to have the land business pay for the long term rentals.

    Curtis Harris
    Participant
    Post count: 3

    “My plan is to have the land business pay for the long term rentals.”

    Sounds like a solid plan to me, and one that I feel ultimately I will most closely follow. I don’t know if I could just solely do land deals, as I like a little more excitement. I do like the fact that you can sell on notes and earn a much better return, and it comes in every month like clockwork. With houses come tenants and repairs, and with apartments come worse tenants and repairs. I would have a property manager so most of that I won’t have to deal with, but it hits the bottom line, as these things costs money.

    Would you guys advise that I start out with $1-$2K land deals to start off and see how well I do doubling my money? I’m thinking of going that route for the first 5 or so land deals and gradually work up to $10K purchases, etc. Anyone know if you can buy and sell land in a Solo 401K? I know a lot of investors buy and sell notes this way, not sure about land. Trying to be smart tax wise.

    I’m familiar with mailers, as I have done a few to find deals with rentals. I don’t imagine that will be different in the land arena, other than the fact you are making OFFERS in the letters, which is brilliant.

    Curious as to what other people’s master plan is as well. Just the thought of learning something else all over again when I haven’t even finished what I started on the rental side makes me feel like I’ve wasted a lot of time and money. However, I need to get to my goal of retirement as quickly as possible.

    Thanks,
    Curtis

    Shammgod
    Participant
    Post count: 127

    Curtis, totally depends on your level of risk tolerance. There’s no right or wrong answer, and you can definitely get things rolling for $20k or less.

    Curtis Harris
    Participant
    Post count: 3

    Shammgod,

    Appreciate the reply. I know it’s not everybody’s preference to take a HELOC out and invest with it, but my thought there is..It’s not doing anything just sitting there! If you buy right, I don’t really see the risk to be honest. The key is to buy at a deep enough discount, that even if something REALLY bad happens you sell and get your money back…or at a small loss. From what I’ve read and listened to, that is extremely rare. Add to that, any potential deal I will run it through the forums to get another set of eyes on it, and I think I’ll be fine.

    If I don’t touch the HELOC money, I feel like that’s the riskiest thing I can do, because I’ll probably end up doing nothing but continuing to work my 9-5, and can’t retire when I want. If I can take $30K of that money, turn it to $50K, then take that $50K and turn it into $90K, I don’t see why I wouldn’t. My thinking is that no matter how much money I use on the line of credit, I MUST be able to replenish it in 12 months. So If I buy a rental at 75 cents on the dollar, within a year I must do a cash out refi and pay the HELOC money back in full, and pocket the profit. Same with land purchases, within a year I must pay the line of credit off.

    I think I will start with $20K to pursue land purchases and see how that goes. I think one podcast I heard Jack and Jill recommending to start with $1K properties until you get 5-6 deals under your belt and gradually move up to bigger deals. I think I’ll try that.

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