Stressed, thoughts on direction so I don&#x27;t blow my wad of cash

Jim K.

Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes

@Matthew W.

All I'll say is that if you can come up with that title, you can certainly shoot with confidence for REI greatness, Matthew.

2 Reply

Frank Wong

Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes

Hi Mathew,

"you can't afford to buy in SF or LA where you want" Nothing wrong with renting and continue to live your life.

I agree with Jay. Buy a good quality area and don't chase rates.

If the funds are available I always suggest investors stay local to where they live. Makes a world of a difference. Yes, there are deals in the East Bay that still make sense.

Jeff Dombach

Member since 2018 · 1 post · 0 votes

Do you have the temperament for dealing with tenants? How much time do you have until you need to start using these funds? Do you enjoy your current income producing lifestyle? How long have you been renting your current property? Is it positive cash flow? Why or why not? Is it appreciating? Why or why not?

Certainly, with $200-250k cash you should be able to acquire property(s) valued $600-900k and still have some capital reserves. If you manage it yourself and do the maintenance and repairs you should add to your net worth long term.

You can help reduce your risk with multi-units as opposed to a larger commercial property with a single tenant. If one of you multi-unit tenants leaves you only lose a percentage of your income. You could also buy a vacation residence, however if the economy slows, people will vacation less. They always need somewhere to live.

Aaron Poling

Realtor · WV · Member since 2018 · 454 posts · 310 votes

There are so many different answers to your questions and they can all be right. Figure out exactly what your motivation is, what your goals are, and what you need to do in order to get there. When purchasing at any price range just make sure your numbers are good, this is important if you are purchasing a 500k or a 50k property. You can also consider purchasing out of state in other areas that are good, but priced lower so you can stretch your cash over more properties.

Also, if you can reach your goals without purchasing a primary, then continue to rent and focus on the investment properties.

Good Luck! Aaron

Dennis M.

Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes

I’d invest out of state in multifamily apartments and have a PM manage it . You can do a whole lot with 250k if you know what your doing

Caleb Heimsoth

Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes

@Matthew Walsh option 6. Change the title lol and give me your cash and I will invest it for you. Joking aside, I would look at private lending and sydications if you’re accredited

Mary M.

Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes

I am right there with you..... funds burning a hole in my pocket, I decided to invest in Oregon specifically Eugene , as it has great numbers.

But please be careful ... so many here have stuff to sell so pls just keep that in mind..... I would probably buy a small MF in a good area and let it appreciate..... dont buy in a crap area. buy only where you would live.

Also, I rent. I own MF but i prefer using my $$ to invest instead of for my own home. :)

I suggest spending some time listening to various podcasts... I am enamored right now with Old Capital Podcasts... they are MF lenders and syndicaters and each episode teachs me SO MUCH.

so, my suggestion? learn. learn until you can CONFIDENTLY say "yes this IS a good deal " and be able to back it up with an analysis that makes financial sense :)

good luck!

Gwyeth Smith

Rental Property Investor · Huntington, NY · Member since 2016 · 102 posts · 74 votes

@Matthew W. There's really no right answer here. Try to figure out if you want to be hands on or truly passive in your investments. If you're not sure you can split your funds both ways. Buying a rental property can be a great starting point, but so too can investing as a LP in a syndication or doing private lending. If you're considering investing into an syndication I recently connected with somebody who matches potential investors with deal sponsors (they have both accredited and non accredited vehicles to invest in). I haven't personally invested through him but came away from our conversation thinking that his company was creating a needed niche in the marketplace. Feel free to PM me if you'd like his contact info. Just to be clear though, I have not invested with him and have no affiliation so you would need to vet him yourself.

Ben Leybovich

Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes

I disagree with forlks who say to you - there is no right answer.

If you have to ask, there is right answer. Put your money someplace safe and take the time to learn a little about what we do. Then, when you don't need to ask, you'll know what the next step is :)

2 Reply

Joe Tomko

Specialist · Easton, PA · Member since 2018 · 137 posts · 48 votes

@Matt Walsh

@Mary Mitchell

If you are set on rentals, consider buying a triplex or quad and living in one unit. Another alternative to rentals is note investing. I buy the delinquent debt on properties at significant discounts. I find both the upside and the downside to be better than rentals.

James MasottiPro Member

Rental Property Investor · Washington Township, NJ · Member since 2015 · 1k+ posts · 976 votes

Podcast Guest on Show #312

Originally posted by @Matthew W.:

My wad of cash.

I am 46 and have saved $200K-$250K in liquid cash. I've been saving up to get into passive income investing. I already max out my 401K, my Roth, and own 1 rental property (my previous primary) and have an emergency fund. I now want to get to the "next level" and feel if I play my cards right (invest this wisely) I could actually get there.

But while many would be very happy in my situation, I am completely stressed out!!! I can not afford to buy a primary home where I live (SF), or where I want to live (Los Angeles), nor does it seem to make any sense anyway if I do the math using the tools and info i found in here. Granted I am new at this, so might be missing bigger picture stuff.

I do NOT want to be tied up in the whims of the game of the stock market. I have a hard time trusting anyone, and available advice is often conflicting, making me even more reserved. So the way I figure I have the following options:

1) Buy 1 income property in a decent area ($500K+) somewhere and hope for the best and appreciation
2) Buy 2 properties in less ideal locations and rent them
3) Spread out the money across crowd source investing in $25K increments (e.g. crowdstreet, realtyshare)
4) Invest in alternative investments like life settlements, bridge loans/peer to peer etc. also in $25K increments

5) WAIT. Stay cash strong, as the market cycle is changing!

Please provide some thoughts and guidance on where I should begin.

Options 3 and 4 involve trusting other people which you indicated you don't want to do. My suggestion is to spend the next 6-12 months using option 5 and read as much as you can on the BiggerPockets Forums. Read all the BiggerPockets books. Start listening to all the BiggerPockets podcasts. Do these things and start going to @David Greene's meet-ups in Northern California at the same time. Do these things and your level of knowledge in order to trust yourself will increase exponentially over the next 6-12 months. In the process you'll find many investors who are investing not local and some investing local with whom you'll start to develop some relationships with people who you will start to trust and then you can leverage their knowledge and insights as well to guide you into your next steps. Even at 46 you have plenty of time to qualm your fears and concerns and still get to the "next level"

Matthew W.

OP

Member since 2018 · 28 posts · 13 votes

Originally posted by @James Masotti:

Originally posted by @Matthew W.:

My wad of cash.

I am 46 and have saved $200K-$250K in liquid cash. I've been saving up to get into passive income investing. I already max out my 401K, my Roth, and own 1 rental property (my previous primary) and have an emergency fund. I now want to get to the "next level" and feel if I play my cards right (invest this wisely) I could actually get there.

But while many would be very happy in my situation, I am completely stressed out!!! I can not afford to buy a primary home where I live (SF), or where I want to live (Los Angeles), nor does it seem to make any sense anyway if I do the math using the tools and info i found in here. Granted I am new at this, so might be missing bigger picture stuff.

I do NOT want to be tied up in the whims of the game of the stock market. I have a hard time trusting anyone, and available advice is often conflicting, making me even more reserved. So the way I figure I have the following options:

1) Buy 1 income property in a decent area ($500K+) somewhere and hope for the best and appreciation
2) Buy 2 properties in less ideal locations and rent them
3) Spread out the money across crowd source investing in $25K increments (e.g. crowdstreet, realtyshare)
4) Invest in alternative investments like life settlements, bridge loans/peer to peer etc. also in $25K increments

5) WAIT. Stay cash strong, as the market cycle is changing!

Please provide some thoughts and guidance on where I should begin.

Options 3 and 4 involve trusting other people which you indicated you don't want to do. My suggestion is to spend the next 6-12 months using option 5 and read as much as you can on the BiggerPockets Forums. Read all the BiggerPockets books. Start listening to all the BiggerPockets podcasts. Do these things and start going to @David Greene's meet-ups in Northern California at the same time. Do these things and your level of knowledge in order to trust yourself will increase exponentially over the next 6-12 months. In the process you'll find many investors who are investing not local and some investing local with whom you'll start to develop some relationships with people who you will start to trust and then you can leverage their knowledge and insights as well to guide you into your next steps. Even at 46 you have plenty of time to qualm your fears and concerns and still get to the "next level"

Thanks good advice. All of you. I am leaning towards this option for sure, as I am also hoping the market continues to become more buyer side. It seems every property in every area I am familiar with (which is a LOT of areas given my job) has a negative cash flow, so I am amazing at all the stories I read in here. It is CLEAR i have a ton more to learn.

Alina Trigub

Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes

@Matthew W.

I think you answered your question indirectly. If all properties in your area have a negative cash flow, you can either consider investing Out of state or chose another investing method. In either case, educate yourself first prior to making any decision. Decide how much time you want to spent on RE investing: this will help you narrow your focus and determine whether to concentrate on active or passive investing. Once you figure that out the next step will be to review the various options within the active or passive RE investing.

If you have more questions, feel free to PM.

Best of luck!

Odie Ayaga

Specialist · Delran, NJ · Member since 2016 · 2k+ posts · 951 votes

If I were in your position I would use a chunk to invest actively in something that fits me and then spread the rest across individuals that I trust to invest passively.

The caveat to that being, what is your goal? Are you seeking financial freedom or looking to stay at your job and invest passively? Do you want to create a job for yourself that you like and a business that you run or do you just want to have a bunch of income streams funding your life so you don't have to actively invest anywhere?