How would you invest $200k?

Question

Hi there - I'm interested in investing other than stock and looking forward to learn from this community! I might have a $200k inheritance coming my way soon and want to get started in real estate investing.

If you were just starting what investments would you consider and how would you build your portfolio? Thanks in advance!

Paul Moore · Answer

Hi @Jack Stryc. Great question. If it was me, after being in real estate investing for two decades, I have learned to focus on my strengths.  If you plan to get heavily involved in real estate investing, then pick a niche and learn all you can first. Then invest in a diversified group of assets in that niche.

But if you have other primary interests, I recommend that you first read The Hands-Off Investor by Brian Burke, then carefully select a few passive investment opportunities. Better to let the experts manage the assets if you're not a pro or planning to move that direction.

Carl Fischer · Answer

@Jack Stryc think about leaving it in an inherited Ira, otherwise a withdrawal will most likely be expensive-taxes unless it is a Roth. You can use your IRA or your inherited IRA to invest in real estate and you have 10 years before you have to pull it out. so you can distribute money out over those 10 years and potentially minimize the taxes.  Talk to your cpa and checkout self directed IRAs.

Jack Stryc · Answer

Thanks for your reply

@Bryan NothIn terms of overall REI strategies can you point me to any resources where I can learn more, i.e. what those strategies are, pros/cons etc. Appreciate!

Max Versteppen · Answer

The answer is the same for any amount assuming what you and I have the same definition of “investment”. An investment is money set aside for the long-term that you will not invade from which you seek growth, not income.

Don’t Pick Stocks

The most important criteria for any portfolio is avoiding catastrophic loss. Investing in the broad market, for the long term, is the way. The average public company is listed for only 7 years. That is, from first listing until it is delisted for bankruptcy, merger, etc. is, on average, only 7 years. Absolutely forget stock picking. About 90% of the gain of the S&P 500 since 1950 is from less than 10% of the companies listed. For every IBM and Hewlett Packard there are a host of companies that have failed.

John Fortes · Answer

@Jack Stryc sorry to hear about a loss since you mentioned an inheritance. Condolences!

To answer your question, once you figure out your strategy that would leave you with the least tax implications. Decide if you want to invest in a hands off approach. If you are utilizing a SD-IRA then you can explore syndications of either multifamily, self storage, mobile home parks, ect.

You can also explore multifamily funds.

Happy investing!

Andrew Hogan · Answer

Since you're just starting, I wouldn't touch it until you educate yourself enough to feel dangerous. Partnering with a proven sponsor will give you the best risk-adjusted return. Good luck!

Chris Bodden · Answer

For those mentioning passive investing in syndications I am very interested in doing this but always run into a barrier that they are only open to accredited investors. If you know of any where this is not the case would you mind pinging me with a referral? thank you

Josh Walker · Answer

@Jack Stryc - as has been mentioned already, I would definitely look into Self Directed IRA's.  It is a very painless process and it allows you to invest directly into real estate from the IRA.  We invest in real estate syndications and roughly 1/2 of what we have invested has been through SDIRA's.

Corina Eufinger · Answer

With a 200k inheritance i would split it 50/50 between secure investments and risky ones. Secure being things like bonds and low volatility investments. I would take the other 50% and spread it amongst 3-4 multifamily properties (triplexes or larger).

Jonathan Barr · Answer

I would look into apartment syndication's.   Usually you can get similar returns if you bought your own turnkey property without the liability.   If someone trips and falls on your property they can sue you.   In syndication you are limited partner and wouldn't be on hook for lawsuits or the bank coming after you.

Happy to talk more about that with you if you have any interest.   Otherwise would try partner with experienced operator that can guide you through the process.

How would you invest $200k?

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