If you had $100,000 .... ?

by Ken Longley
(Vancouver, BC)

No, this is not a Barenaked Ladies spinoff (sorry to plant that song in your head now). I have had this question in my head, wondering what would Tom and Nick do if suddenly $100,000 dropped into their laps.

Given your variety of investment strategies, the current market, etc, I'm wondering how you would use it.

Would you use it as a 10% downpayment on a $1,000,000 Apartment building?

Would you use it as a 20% down on a $500,000 triplex/apartment/student rental?

Would you make 2 $50,000 (20%) downpayments on $250,000 single family homes?

Or spread it real thin and make 5 $20,000 (10%) downpayments on $200,000 townhomes?

I know this is a wide-open question, and knowing you, I'd expect you to mix and match, but I guess I'm just curious about which market you would be leaning towards and how thin you might spread yourself.

Comments for If you had $100,000 .... ?

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Jan 20, 2010
RE: Barenaked Ladies
by: Tom Karadza

Hey Ken, love the Barenaked spin on the question!

Great question!

It would come down to my goals.

1. If I'm in a stage where I want to aggressively grow my own portfolio I would likely put as little down as possible and maximize my leverage. There would be a lot of due diligence in the area, the type of property, future appreciation projections etc. in my decision but that's the answer.

I would also have to accept that with many properties and only one of me (assuming I didn't have a team yet and/or no property management) that many nights and weekends would be busy managing the properties. It's a trade off.

2. Now, if I'm at a stage in my own wealth creation where I don't care about maximum leverage any longer because I've build a bit of portfolio and the cash is flowing I may choose one nice single family home and put a lot down on it, perhaps the entire $100,000. That would increase my cash flow (because I would have a lower mortgage) and give me less to manage.

So it comes back to my goals at the time, my preferred strategy and my exit plans.

Hope that helps!

And yes, you've got the Barenaked Ladies song stuck in my head now! :)

Tom.

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