If you had $100,000 cash, where would you invest?

Question

I’ll have cash $100,000 in May, I have $50,000 now invested in the stock market (receiving a small windfall in May). I figured I’d wait to invest in something bigger in May when I have more for a downpayment. My initial research seems to point to investing in 1 larger property for more cash out of state is better than buying multiple  cheap small places in questionable areas. First  time buying rentals ever. Will use a PM as I work 65 hrs per week at my current job. If you were me, what would you do with $100,000 “cash”?

Kay Kay Singh · Answer

@Amy Hietala I would Investment $100K in two syndications with a track record syndicator as a passive investor on a value add Multifamiy property where I can get a 7 to 8 percent preferred return every quarter and also get a minus K1 at the end of the year from both properties and wash of my other taxes since I have passive passive income.

Tim Lockhart · Answer

You have already received some very good advice, you can leverage the $100K to get more units and therefore more cashflow and more net worth growth over time.  I personally prefer single-family homes close to where I live.  Connect with a local REI club and find a realtor who works with investors.  Real estate offers inflation-adjusted income, equity growth through appreciation as well as the tenants pay down the mortgage, depreciation, tax deductions.

Kris Bennett · Answer

@Amy Hietala what are your goals with that capital and what's your time horizon? Preservation, aggressive growth, or something in between. Do you have to reach that goal in 5, 10, 20 years? Right now you seem comfortable with illiquid real estate investing, but will you need access to that capital if an emergency hits. Your answers will determine the best course of action for you, whether that's stocks (which as of my post are on sale!), real estate or some combo!

Neil Henderson · Answer

25% in the stock market, 25% in a self storage syndication, 25% in an apartment syndication, 25% in a short term rental.

Andy Mirza · Answer

@Amy Hietala You already have a 65 hour a week job and opening up a plumbing company will require just as much time and commitment. As someone who owns rentals, I can tell you that is another part-time job, even when you have property managers. You still have to manage them, make the big decisions, and keep track of your assets. (Now that my partner took over the management, it's blissfully passive for me.)

I have only one full time pursuit and I focus all my energy on building that business. I use my retirement accounts to passively invest in other asset classes to diversify my portfolio.

I suggest that you invest passively. It requires work upfront to vet potential business partners or investment funds but, once you've done your due diligence and trust that they will do what they say they'll do, it will become very passive where you just need to monitor things. Find the area of real estate that really interests you. Then find the people that are investing in those things. They most likely will take on passive debt or equity partners.

Roni E. · Answer

As you do not have the time available to supervise everything. Yes you still need to manage the PM. I would look at investing in to 2 syndications, maybe apartments or industrial.

Melanie McDaniel · Answer

@Amy Hietala If you are looking for passive income, I think being a Limited Partner in an apartment syndication in an excellent market, with a professional operator, with a great value-add deal is still the most passive and lucrative investment. Sometimes I think LPs fare better than the operators when you calculate all work they put in. I put all my extra money into syndications. To diversify, pick different markets and different operators.

Joseph Koury · Answer

Hi Amy - I started buying Single Family Homes slowly over the last 10 years and recently go into some Multifamily in Kansas City. I don't regret any of it and it has lead me to have the opportunity to buy larger deals now. BUT! If I lived a 2nd life, I would try a different route first. I would take a look at the best markets in the US using some known strategies on growth. Find investors working on large apartment projects and asking how you can invest in the projects. There are opportunities everywhere for real estate. A lot of the pension funds are moving their investments to real estate from bonds due to multiple factors. The S&P 500 has averaged a 1.5% dividened, when comparing that to real estate cash on cash returns, Real Estate looks very attractive. Let me know if you want to connect further!

Jaspreet Baveja · Answer

@Amy Hietala - You're most welcome! If you have any questions about it or need help getting started, please do feel free to reach out. Best of luck!

Max Soukhov · Answer

Amy, do the plumbing! I used to do that and sold it. Great returns it was just too much dealing with staff etc after a while.

Right now with the market tanking on fear, I would start buying up beat down good stocks. Max this falls is 20% because coronavirus is not deadly, it's just temporarily economic slowdown from quarantines so it will pass. I know stocks is not very popular on this board : ) but when you buy on a panic dip, you have a lot of upside