25yrs old with 350k+ to invest

[Drew Whelan]

Alright Bigger Pockets friends, I am in need of some advice desperately. This has been keeping me up at night every night and I can’t find the right answer for my unique situation. I’m going to get very detailed with the numbers.

Background info:

I just turned 25, I have been self employed for about 5 years now. My business model is similar to the sneaker heads who resell Jordan’s, so it can be volatile which concerns me. I graduated college (mistake) last year, I have -$16,000 in debt from the first year I attended. I payed out of pocket myself for the remaining. I STILL live at home and my parents are urging me to get out of the house but I don’t want to make a big financial mistake and purchase something out of emotion. They charge me $400 in rent. My only other bills are phone, insurance, gym, and student loan. I own my car. So about 1,100-1200 monthly expenses after groceries and other miscellaneous things I’d say.

This is what I own:

Bank: 35k

Cash: 7k

Inventory (business): 230k

Robinhood brokerage: 27k

Fidelity Roth: 5.5k

Roth 401k: 32k

Personal money market account: 15k

Business money market account: 42k

Total liquid cash: $393,500

Debt: -16,000 college loan

How should I go about investing this? I’ve pondered buying a cheaper 100k rental cash to essentially fund a personal home mortgage if I could find one. This way I can finally move out and get out of my parents hair, we’re all sick of me living there still. But then I keep going back whether or not a personal home is wise or not with all of the phantom costs/opportunity costs and how expensive it will be. I could house hack it though to help supplement some of those costs, maybe get into a home that needs some fixing up and then when rates come down and I get that forced appreciation I could refi and pull out some money if I’ve gained some equity? What I’m really intrigued on doing is getting a short term rental, mainly because of long term appreciation and I can depreciate the first year and potentially reduce my other businesses income so there would be a tax savings there on top of some monthly income coming in. Ideally that is what I’m looking for is some stable monthly cash flow to help me feel more secure since my current business could be volatile or fizzle out 5 years from now. With the short term rental property, I have the time to be active in it and I thought buying with cash or a very heavy downpayment would be a good idea so that way I can have a greater monthly cash flow. I think doing this in the next few months would be really good because eventually once the rates come down I think I would gain some equity from the appreciation and then I could refinance and pull some money out and throw it in another deal? Is there another strategy you would go for? If you’re experienced and read through this whole thing please share what you think I should do. Thank you everyone

[Ko Kashiwagi]

Hi Drew,

House-hack would be a fantastic way to get into real estate to get your feet wet. You can even house-hack and rent out the other units with STR. That way you are learning to manage STR in the best way possible. I don't know about buying a rental cash, as you could easily get financing even without W-2 income.