What do I do with 200K cash?

[Deborah Fung]

After losing my husband last Sept, I used his life insurance to pay off a property in Colorado which I will move to from Texas next month. Our Texas property is also paid off.  What should I do with the remaining $200K cash? Buy a property in cash and rent them out? Put only 20% down to get a conventional loan? Get equity out of my houses and use them to buy a property?  Do I wait until the recession kicks in to buy or shall I buy now?  I am a newbie and am very cautious about flipping.

Thank you.

[Andrew Garcia]

Hi @Deborah Fung, first and foremost, I am sorry for your loss.

To start, I would look into a simple long-term rental and put 20% down with a conventional loan. That is your safest option in my opinion.

Make sure you work with an investor-friendly realtor and lender to help guide you and analyze the deal for you.

Then, provided that it goes well, you can use the rest of your cash or take out some equity on your current properties to expand your portfolio.

If you were to wait until a recession kicks in, with the idea that prices will drop, there is a major issue. Inflation is already at the highest it has been in over 40 years plus with recessions, rates usually drop, which means that inflation will likely get higher. Higher inflation = higher home prices. Even with a recession, prices may still rise so I would personally advise buying now.

Granted, this is a conservative approach but it is low-risk and lets you see whether investing in real estate is for you.

Hope this helps! Let me know if I can be of any assistance.