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Updated over 3 years ago, 08/03/2021
What do we do with our cash now?
With rents going up and property values too high, what are people doing with cash? For my investment style I see better value in winter on beach vacation rentals, but I worry about not deferring my taxes. I have long term rentals and vacation rentals. I am trying to figure out what to do with the cash. I see value in building, but not earning money on money for a year is disappointing. I thought of out of state investing, but I have a legitimate trust problem with property managers. The beach rentals do not seem to be at a discount when I calculate depreciation and other losses. Long term rentals are too high and I cannot receive the rents needed to cover cost. I wish I bought more property the last ten years. Inflation looks to be real and increasing. It is difficult because I went through the Great Recession and am naturally a pessimist. I never speculate and only let the “actual” numbers be my guiding light. So in this environment, do we sit on cash and wait or buy high? Or are there any other thoughts?
#3 Managing Your Property Contributor
It depends on your market. I bought a place a few months ago. If the type of homes you buy aren't available right now for a price that works, either wait a bit or tweak your plan.
@Theresa Harris I have purchased this year too. Since my purchase they have rapidly increased in value. My concern is buying in a Sellers’s market. How do you make sense buying when everything is on the seller’s side. I think having something to sell in a seller’s market is smart, but maybe not for buy and hold folks?
#3 Managing Your Property Contributor
Originally posted by @Mitchell R.:
@Theresa Harris I have purchased this year too. Since my purchase they have rapidly increased in value. My concern is buying in a Sellers’s market. How do you make sense buying when everything is on the seller’s side. I think having something to sell in a seller’s market is smart, but maybe not for buy and hold folks?
The numbers made sense. If the market spikes and the numbers no longer make sense, then don't buy. You can either wait or look elsewhere. I have places in two areas that are very different. I would have bought in the one place, but the prices have almost doubled in 6 or 7 years and it is really hard to find anything that works in my price range. So instead I bought in the other market where prices have been stable and I can cash flow.
@Mitchell R. I think if your numbers aren’t working you could try looking elsewhere. I’ve bought in my area this year and my numbers are working.
However I’m shifting plans and am about to switch to a different market in order to try to scale my portfolio as the largest property I can buy where I’m located is a 4 unit and I’m ready to go bigger now.
I think the key is to figure out your plan and stick to it. If you want to invest in beach property but Florida is too expensive maybe the Gulf Shores of Alabama would be a better fit monetarily and you’d find you could be just as comfortable there.
Maybe if you just step back a little bit and brainstorm (you and any other decision makers in this process) about what other alternative options might fit into your investing plans you might find a solution.
@Mitchell R.
Most investors are always looking for ways to deploy their cash. You may need to shift your thinking into the future a bit. In appreciation markets you may not get your cash on cash goals this year but will you be able to raise rents next year?
I invest locally but when it became too pricy I moved to out of state investing. I don’t use a property manager anymore and self manage from 2000 miles away.
There’s always a way but it may not be easy.
@Mitchell R.
It depends on your market. I live in CA and it’s expensive. So I bought out of state like NW San Antonio TX and Cape Coral FL. Ended up closing on 3 deals since last March. I’m only 34 so wanted to go all in and let this ride. Fingers crossed there will not be another real blow up like 2008…. I’m ok with a slight correction but not crash.
Anyone with crystal ball for next 7 years for TX and FL markets?
@Mitchell R.
Plenty of short term funds online these days. Invest in a mentee’s deal. You don’t need to build, you can buy new construction rentals already with new tenants (happy to connect you in this department).
- Dustin Lauer
Originally posted by @Dustin Lauer:
@Mitchell R.
Plenty of short term funds online these days. Invest in a mentee’s deal. You don’t need to build, you can buy new construction rentals already with new tenants (happy to connect you in this department).
Good info!