What would be a good investment for 400,000

i co-own a house in Richmond that rent is paying for mortgage and property taxes..we don't mind it's not cash flowing as we are working and would rather the property cash flow when we are retired.
We owe 80,000 and will be paid off in 4 1/2 yrs. then we will cash flow $1400/ month.
Opportunity comes up that we might be open to selling this property in a few months..
After paying taxes,bank...etc partner and I will be able to walk away with 400,000 each.
I would like to invest in a immediate cash flowing property . Condo ?house? In Abbotsford or chilliwack?
thankyou in advance for ideas

Buy a REIT or buy 2-4 THs, as one house in Richmond is far too concentrated and a poor return on the cash. $1400/month times 12 = 16,800/yr .. divided over $500,000 is not even 5%. Plus I bet you aren't even counting property management and required upgrades. Or co-own a land development project, a commercial building or a mobile home park. Divvy up your $400,000 into 10 $30-50,000 chunks.

Never thought of reit.how does one invest in reit? Do I buy it with the bank?

Any online trading account allows you to buy REITs, just like stocks, ETFs, mutual funds or debentures. Any major bank offers an online trading account. Good for RRSPs and TFSAs too as those cannot hold real estate in it directly.

I would be a bit leery of a stock market correction soon, but REITs could be a safe bet. Yes the 400K is concentrated in one asset in a heated market. If it was me I would sell and go half REITs to load up your TFSA, and buy 5 townhouses in Edmonton, a small apartment building, or co-venture with an expert in that space. It really depends whether your goal right now is cash flow or growth, but for me at my age it's growth, and highest and best use of available cash.

If you plan on entering the stock market I highly recommend reading - the professional financial advisor IV by John de goey before you do.

REITs essentially a hybrid on real real estate and stocks. Based on real assets. With perpetual income between 4-9% per year.

Any experience of where to invest in Bc.. that will cash flow...

Victoria , I have a couple good friends there I could refer you to if you like
Shoot me an email at [email protected]

Price to rent in metro centres in BC are so elevated they will not cash flow at 80% LTV. Most valuations and properties that cash flow with 80% LTV are based on 2 - 3% annually appreciating rents continuing into perpetuity (forever). It is an incredibly risky time to be buying in these centres and the mania can be fairly easily compared to the dot com bust. These valuations are just loony from an investment perspective. Negative equity yield in every year.

I'd check out a local IIROC dealer with the capital you have available. You may have enough for a minor stake in a private equity deal in real estate or another industry. With that capital you may be able to invest in a private equity deal development/opportunistic/value-add and get around 12-15% IRR after all fees. Smaller deals in BC are very risky right now because price levels are so elevated. If you invest with a PE company that has a deal secured or strong deal flow then you can buy below replacement cost and then increase tenant profile and exit 4-7 years typically. We see lots of these deals available right now in southern US and select deals available in Alberta.

In my opinion you'll get the best lift outside of BC in Alberta and Saskatchewan where they have taken a beating, and are showing signs of recovery, and in migration continues. For many reasons including the new political regime, now may be a good time to divest BC assets and re-deploy elsewhere.

Snoopy8460 said:

Any experience of where to invest in Bc.. that will cash flow...

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I purchased a brand new 4 bed / 4 bath row home (non strata) in Garrison Crossing (Chilliwack on the Vedder River) 8 months ago for $485,000 + tax and it rents for $2500 per month.
Another investor bought 2 and rents them for $2650 so I may have sold myself short.

Great new developments with a lot of trendy shopping, the UFV campus, and army base close by. If I were you, I'd buy 3

You can also split your investments between financing second mortgages. Currently i am getting 18% on $30,000. Higher ROI on smaller loans. 12% minimum i would settle for. A company in ontario continuously offers apprix 14% on larger investments above 50k wiyh community trust.

I also haf good luck with MICs, avg 9.5%. Good security with very low default rate.

Depends how active you want to be. Personally i am digging the private money loans amd trying to sell off my singles in regina. But if any property with that kind of cash i would buy my multiplex wealth builder for 1.6million wiyh 25% down in Edmonton

Sent from my SM-G930W8 using myREINspace mobile app

12-18% lending is very high risk. Perhaps you haven't lost any money yet so the risk is not yet real enough for you.

Generally speaking buying any commercial or residential asset that yields 5-9% ( ie CAP rate ie unlevered yield) with money borrowed sub 3% is a good idea.

ThomasBeyer said:

REITs essentially a hybrid on real real estate and stocks. Based on real assets. With perpetual income between 4-9% per year.

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Hi Thomas, what reits would you recommend right now? I have been watching Mainstreet but wondering if there are better ones around.

MEQ is not a REIT. I do not usually give free well researched stock tips.

I have never invested in a Reit and usually start my research by asking questions. I can pay for good information if you like or even point me in the right direction. I do like the idea of 4 to 9% return.

REITs yield between 4 and 10%. Let's use 7.5% as a decent average. That would be $30,000 in income unlevered. Most banks allow you to leverage some stocks and REITs up to 70% at prime to prime plus 1 using your margin account.

Let's use 3.5%.

So with $400,000 you could buy $1M of REITs .. yield $75,000/year minus $21,000 interest ($600,000 at 3.5%) so that would be $54,000 a year or over 13% on your 400,000.

Of course it might lose value or is far more volatile if levered.

But a great strategy for TFSA or RRSP and with margin in a cash account.

Thanks Thomas, That sounds like a great strategy for an RRSP. I have done some reading on Riocan and Northview Reits and will continue to research others.

ThomasBeyer said:

Buy a REIT or buy 2-4 THs, ....

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What is 2-4 THs? Yea I know its half, half of what?