New to the game, but have a nest egg to invest

[Jason Guyton]

I'm almost 50 and just woke up to the power of REI. Kicking myself for not learning about this 30 years ago. But here I am, and I have a decent pile of cash ($120K) and a pretty good 401K. So I'm in a great position to jump in on a few deals and get my money working for me. I just read Rich Dad Poor Dad, and it has me pumped up.

The deals are hard to come by in Southern California, at least from what my scant knowledge of the topic has shown me so far. So, I'm just looking for some good advice on the best approach for my first deal. I'm open to a flip, BRRR, or straight buy and hold. Single fam, duplex, triplex? Local, out of state? One big deal, or multiple small deals? I'm open to whatever.

Any advice is appreciated.  Thank you.

[Jim Pfeifer]

Are you interested in passively investing or being active?  If you buy a property and own it yourself, you will be active - you will need a property manager, real estate agent, and others to help you but you will be in charge of managing the asset.  This is perfectly fine - as long as you understand that it isn't a passive activity, even if it's a turnkey property.  

If you want to truly be passive, you could consider investing in real estate syndications.  You would invest some amount in an asset that someone else is managing.  You will need to do due diligence on the operator, market and deal - but after that you just wait for them to send you reports and (hopefully) cash flow.  You get to benefit from their expertise - they do this full time, so unless you have a skill or some knowledge that gives you a competitive advantage it is very likely that they will be a better asset manager than you.

I started out investing actively, though I thought it was passive.  It wasn't.  I didn't have any expertise or knowledge that set me apart and I had a full time job - I relied on property managers with varying levels of success.  I was fortunate that I bought these properties at a time in the market where everything was going up so I made money even though I did a poor job of managing the assets.

Now, I am a full time passive investor investing in passive real estate syndications.  My cash flow and returns are better than when I was an active investor and my headaches are much smaller!  You definitely give up control and the assets you are buying are long term holds and very illiquid, but you aren't buying yourself a new job and you will likely make more money than if you do it yourself!