if you had 200k in seed capital...

[trifectaCEO]

hey guys I am in the kw area and my partner and I are looking to invest 200k into real estate locally. we are looking for cashflow now and asset appreciation. we don't know which direction to go but we both have the goal of leaving our day jobs in a 5 to 10 year time frame. thanks in advance for the suggestions

 

[Thomas Beyer]

200K buys a 600,000 to $800,000 (maybe $1M but unlikely) smaller multi-family or commercial asset.



With a 5-6% CAP rate you make $40,000 to $50,000 on a $800,000M asset per year in NOI (net operating income), and with that you pay the $600,000 mortgage at 3% for a modest cash-flow, much of which will have to be re-invested into asset for in-suite or exterior upgrades. Assuming a 15%-20% value upside in 5 years you make 120,000 to 150,000 in 5 years plus pay the mortgage down about $90,000, so you will turn $200,000 into $400,000 to $450,000 in the right asset, but assume zero cash-flow for 5 years in that case !



Repeat until happy.



If this is done in the US, you can roll the asset using the 1031 rollover provision tax-free into a larger asset, which unfortunately is not doable in Canada. Keep sending letters to request same to the Hon. Stephen H and Jim F.



In 5 years you could also re-fi the asset, pulling out most or more of the initial equity and then have two assets in 10 years, worth about $2.2 to $2.5M and equity of about 700,000 to 800,000 [if markets don't crater like 2008-2010.]



Decide what is more important to you: cash-flow or equity growth - as more of one will mean less of the other. More on this here: http://myreinspace.com/public_forums/Real_Estate_Discussion/62-26733-133015-What_is_better_cash-flow__or_higher_ROI_.html

 

[housingrental]

I'm located in Waterloo - send me an email through my website if you have questions on any properties / areas

You will have a hard time replacing two full time (even modest) incomes with $200K in 5-10 years

Doing small renovation and/or build projects can be the fastest way to get there IF you can execute well





[quote user=trifectaCEO]hey guys I am in the kw area and my partner and I are looking to invest 200k into real estate locally. we are looking for cashflow now and asset appreciation. we don't know which direction to go but we both have the goal of leaving our day jobs in a 5 to 10 year time frame. thanks in advance for the suggestions

 

[Thomas Beyer]

[quote user=housingrental]You will have a hard time replacing two full time (even modest) incomes with $200K in 5-10 years


Indeed. Even if you can double your money every 5 years in 10 years you'd have $800,000. Invested at 6% that is $48,000/year or $4000/month - not bad but hardly champagne life style (on a beer budget) !



Do real estate part time, and in 15-20 years you will look like a rich genius .. then decide !