$80K Cash- What should I do?

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$80K Cash- What should I do?

Abdul Jabar
Member since 2021 · 20 posts · 2 votes

Hello good people,

I worked hard and saved $85K cash. I wanted to know what are my best options to invest this and start earning some income. I am open to any idea that would generate a revenue stream without a lot of headaches as Im continuing to work two jobs. I have researched all over and thinking of a couple of moves and would like some expert opinions:

1) What do you think of Roofstock- my only fear is hidden costs, or tenant turning into squatters, or no tenants after a few months- how to mitigate these issues. Is Roofstock a good option.

2) Buy a home purely for investment, around a $150K home with a $1500 rental income and put down $85K cash and mortgage the rest

3) Is there any business that I can invest in which could generate $1500-$2000 after all expenses , without the need of me being there?

Please advise as any information would be highly appreciated.

Thank you

A.J

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Ben Riechmann
Investor · Cleveland Heights, OH · Member since 2017 · 128 posts · 73 votes
5y

I made money building and selling businesses.  A mistake I made early on was to put too much cash into properties.  Also, do not realize I could take on a bigger property than I thought I could.  Although different property sizes always have different pros and cons.  I would try to hold back as much of that cash as you can and fund deals from banks, private investors, or using other people's money as much as money so that 80k will go as far as possible.  Not saying that you are trying to put that all into a property, but especially when I see this boom not lasting forever and not sure how property values can be up despite the low interest rates, but you want some cash in reserve to act quick and not just depend on the bank for equity.  It is always good to have disposable income at your fingertips when deals happen or the economy goes down.  The most money I have made was after 2008 as I saw the subprime thing was crazy.  Not saying we are going to have that, just saying let's make your money go the distance.  I am also giving you advice, not trying to sell you anything or make money on anything, having you learn from some my early mistakes and learn from what I am doing right as a more seasoned investor.

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  • Dave G.
    Investor · Phoenix, AZ · Member since 2016 · 349 posts · 418 votes
    5y

    Go to Vegas

    3Reply
  • Dave G.
    Investor · Phoenix, AZ · Member since 2016 · 349 posts · 418 votes
    5y

    If you're expecting any helpful responses, you're gonna have to provide a little more info...

    0Reply
  • Abdul Jabar
    OP
    Member since 2021 · 20 posts · 2 votes
    5y

    @Dave G. Haha, trust me I thought of that. Used to gamble big time in Biloxi, MS in my youth and learnt the hard way that the House always wins.

    Im just trying to figure out what to do with my cash and how to invest it to be able to earn $1000-$1500 a month. I even tried crypto and I made $5K on Dogecoin...but Im thinking of something long term so I can quit my 2 jobs and work on a business or real estate investments full time, eventually.

    1Reply
  • Dave G.
    Investor · Phoenix, AZ · Member since 2016 · 349 posts · 418 votes
    5y

    @Abdul Jabar weird, when I responded to your post there was only the title - "$80K Cash-What should I do?" There was no posting or info beyond that. Maybe a glitch on the BP site. 

    Now I see what you're asking. I don't know anything about Roofstock, but I am not so much a fan of these investing platforms trying to shortcut or "democratize" the process. I gave Peerstreet a chance and am not happy with it. Inflated property valuations, poor communication and subpar returns. I'll be closing my account once I can escape the last 2 positions (one in foreclosure, the other is REO).

    If you already work 2 jobs I don't know how you could buy a business, unless you put the $80k down on an established & profitable franchise (e.g. Subway) and then you work there as your own employee/manager to save costs. 

    My RE thought is you look for a duplex to buy with $80k, live in one side and rent out the other. Slow and steady, buy another one in a few years and so on. Good luck to you. 

    1Reply
  • Abdul Jabar
    OP
    Member since 2021 · 20 posts · 2 votes
    5y

    @Dave G. Many thanks for taking the time and for posting a candid review. I appreciate it. Yes, I noticed that Roofstock's valuation were inflated. So that is out of question. Business too is out of question. Leaves RE as the only option.

    Thank you for your candid response.

    0Reply
  • Ben Riechmann
    Investor · Cleveland Heights, OH · Member since 2017 · 128 posts · 73 votes
    5y

    I made money building and selling businesses.  A mistake I made early on was to put too much cash into properties.  Also, do not realize I could take on a bigger property than I thought I could.  Although different property sizes always have different pros and cons.  I would try to hold back as much of that cash as you can and fund deals from banks, private investors, or using other people's money as much as money so that 80k will go as far as possible.  Not saying that you are trying to put that all into a property, but especially when I see this boom not lasting forever and not sure how property values can be up despite the low interest rates, but you want some cash in reserve to act quick and not just depend on the bank for equity.  It is always good to have disposable income at your fingertips when deals happen or the economy goes down.  The most money I have made was after 2008 as I saw the subprime thing was crazy.  Not saying we are going to have that, just saying let's make your money go the distance.  I am also giving you advice, not trying to sell you anything or make money on anything, having you learn from some my early mistakes and learn from what I am doing right as a more seasoned investor.

    3Reply
  • Brian G.
    Rental Property Investor · Los Angeles, CA · Member since 2013 · 1k+ posts · 1k+ votes
    5y

    @Abdul Jabar research 1) House Hacking and 2) Vacation Rentals

    1Reply
  • Ivonne Pinedo
    Realtor · Miramar, FL · Member since 2020 · 56 posts · 18 votes
    5y

    @Abdul Jabar maybe call your local merchant cash advance company and ask if they are taking participants. You can put a fraction of that money and you would get the monthly cashflow you want. Feel free to connect if you would like more details. It's a simple contract, returns are paid monthly, and you get a 1099 at the end of the year.

    0Reply
  • Charles Thompson
    Contractor · Pittsburgh · Member since 2021 · 20 posts · 16 votes
    5y

    @Abdul Jabar

    If you are thinking about Real Estate then research research research.... never ask someone what to do but ask how you can improve your current strategy... never mind the two jobs. You stated you would like to work for yourself so find the time to gain knowledge.

    have to navigate your own path in life, it’s okay to ask for directions when needed but never let another draw out your entire map... fastest route to falling off the cliff buddy!!

    0Reply
  • Account Closed
    Contractor · Member since 2020 · 91 posts · 64 votes
    5y

    @Abdul Jabar dogecoin

    1Reply
  • Stephen Resch
    Member since 2019 · 24 posts · 23 votes
    5y
    Originally posted by @Abdul Jabar:

    Hello good people,

    I worked hard and saved $85K cash. I wanted to know what are my best options to invest this and start earning some income. I am open to any idea that would generate a revenue stream without a lot of headaches as Im continuing to work two jobs. I have researched all over and thinking of a couple of moves and would like some expert opinions:

    1) What do you think of Roofstock- my only fear is hidden costs, or tenant turning into squatters, or no tenants after a few months- how to mitigate these issues. Is Roofstock a good option.

    2) Buy a home purely for investment, around a $150K home with a $1500 rental income and put down $85K cash and mortgage the rest

    3) Is there any business that I can invest in which could generate $1500-$2000 after all expenses , without the need of me being there?

    Please advise as any information would be highly appreciated.

    Thank you

    A.J

    0Reply
  • Jay Yoo
    Investor · Seattle, WA · Member since 2019 · 139 posts · 54 votes
    5y

    @Abdul Jabar Question back to youself. How mich effort and time can you commit? Are you allowed to manage construction process while you are keeping your work?

    If you want to stay passive and cashflow without any attention to the property, feel free to send me a DM.

    0Reply
  • Shiloh LundahlPro Member
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    5y

    @Abdul Jabar so let me get the numbers straight. You would like to invest up to 85k and get $1500 to $2000 back a month in passive income. Let's take a look at that return. 1500 X 12 = 18,000 / 85,000 = 21% ROI, or 2000 X 12 = 24,000 / 85,000 = 28% ROI. That sounds fantastic! When you find that investment please be sure to share it with all of us because it's about 2 to 3 times what you can expect being a passive investor.

    I point out the numbers because I think a lot of people are unrealistic about how much they can or should be able to earn being purely passive. Obviously the more active you are, and the more skilled you are, the better your returns will be. Personally, I try to get an IRR of over 100% within 3 years on all my investments, but I can expect that because I am active; not passive.

    So you may want to either adjust down your return expectation if you are looking to be purely passive, or you may want to become more of an active investor if you want higher returns than 10%.

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    3Reply
  • Abdul Jabar
    OP
    Member since 2021 · 20 posts · 2 votes
    5y

    Thank you all for all the candid and great advice. I really appreciate it all and gives me a lot of ammo to think about and revise expectations and rethink strategy.

    Will continue seeking advise and hopefully will soon be able to pull the trigger on something.

    0Reply
  • Aj Parikh
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    5y

    I purchased using roofstock.com last year and the property has been cash flowing well. They are a semi turnkey provider I would say but you will be able to find good deals on there. let me know if you want to connect and chat about the purchase process. 

    1Reply
  • Abdul Jabar
    OP
    Member since 2021 · 20 posts · 2 votes
    5y

    @Aj Parikh:
    Many thanks for your feedback on my post. ARoofstock seems appealing as it purports to be seamless, contactless and pretty much headache free. So I wanted to learn from you, is Roofstock a good option. Noticed that sometimes their valuation is high. My other concern is that what about vacancy periods ( hoping that the prop mgt company will find another tenant). And most importantly wanted to ask, should I pay all cash or should I finance. I have a primary home financed and was wondering what are tax implications or breaks ( I know rental prop you can write off a bunch)- I can buy cash upto 80k or finance a higher prop since i have down payment. kindly share any knowledge about Roofstock and any other opportunities that you can suggest. I can also forgo Roofstock and say put down 80K towards a better home in a good market, a newer home and then rent it out. Lastly, one big concern is tenants not paying rents and refusing to move. How do investors mitigate this risk. Any advise would be highly appreciated. Thank you again.
    Abdul

    0Reply
  • Ray Lin
    Rental Property Investor · MS · Member since 2018 · 67 posts · 46 votes
    5y

        It is really important to find good deals. You make money on the purchase. I think the rule of thumb is 30% equity. It'll depend on your market and median price of houses. Going back to your question with $80K. My investors and I just purchased a property for $76K at a foreclosure auction. Our highest bid is $80K.  The bid price was getting close to our price and we we're extremely nervous of losing the bid. According to Zillow, the house is worth $133K.

    The house is a single family, brick construction, ranch style, 3 bed, 1.5 bath built in 1980. We estimate the repairs to be about $20K. All in for $100K. The rental market is between $1200-1500 a month for that market. The expected ROI is 14% on the low end.

    You're very smart for saving up such a huge amount of cash. I like to call it a war chest. Saving all your money and getting ready for battle. Once the opportunity exist, it's time for war.

    0Reply
  • Abdul Jabar
    OP
    Member since 2021 · 20 posts · 2 votes
    5y

    @Ray Lin Thank you for your encouragement and for your candid advise. I really appreciate it. It helps me understand, guage and plot my move. Thank you all for your contributions and feedback.

    0Reply
  • Ray Lin
    Rental Property Investor · MS · Member since 2018 · 67 posts · 46 votes
    5y

    About risk mitigation.. My market is landlord friendly and the eviction process is pretty straight forward. After 30 days without rent, my property manager files an eviction notice. The tenants loses almost all the time. Also, my manager files for wage garnishment for back rent as well. We could be without rent for about 60 days. Since our rental properties are free and clear, expenses is kept to a minimum. One of our property was vacant for 6 months and my investors still sleep soundly at night.

    0Reply
  • Lucy Atkinson
    Wholesaler · Lexington, KY · Member since 2020 · 51 posts · 25 votes
    5y

    @Abdul Jabar my advice would be to sit down and get a more concrete plan of what you want your investment to look like. Secondly, if you are interested in real estate and have cash to put down, You should look into the BRRRR method. Real estate is a slow money game. You have to invest in order to receive return. Also, you could consider using that 85k to buy a small turn key multi family property. That way if you end up with one tenant not paying or repairs in one unit, you have a little bit more of a cushion than you would with a single family home. Just my thoughts.

    0Reply
  • Vincent Taggart
    Member since 2021 · 2 posts · 2 votes
    5y

    @Abdul Jabar

    I would do #2. Preferably in a multi family you can live in. If you own your current house keep it.

    1Reply
  • Abdul Jabar
    OP
    Member since 2021 · 20 posts · 2 votes
    5y

    @Lucy White and @ Vincent Taggart , thank you very much for your comments and insights. I appreciate it a lot.

    0Reply
  • Paul MoorePro Member
    Commercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votes
    5y

    @Abdul Jabar. I would consider house-hacking for sure.  You may also want to consider doing an Airbnb arbitrage and/or furnishing a rental unit that you lease (as tenant) then turn around and sublease as a fully furnished, full utility corporate rental. Many people have done this successfully.  Check with my friend, @Al Williamson to learn about strategies and systems. You could probably do 5-10 of these (in series) with the capital you have. 

     Good luck!  

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    1Reply
  • Sebastian MarroquinPro Member
    Real Estate Agent · Pasadena, CA · Member since 2015 · 477 posts · 263 votes
    5y

    It all depends on the market, risk factor, threshold, how passive or active you will be. 

    I would say: spend about $100 on audible and read 1 book in each of the topics that sounded interesting to you on the replies on here: listen to about 1 to 2 months of podcast with bigger pockets and get familiar with construction (cost of labor and material) : if you are consistent for about 1 month: 1 to 2 hours every day (almost like your 3rd job) monday to Friday (with realistic breaks) :) 

    you will have a clear idea of where to go next. You could buy a rental with 20% down (100k purchase) and renovate the home with about 20k to 30k : plus closing costs: and refinance it and get most of your money out. Or buy a duplex with 20% down: etc etc  you could buy a flip: fixer etc Find out what it is you actually like and can make money with, get good at it and double your money again and again. and again 

    0Reply
  • Abdul Jabar
    OP
    Member since 2021 · 20 posts · 2 votes
    5y

    Hi Sebastian. Thank you very much for the suggestions and details. It really helps understand options. Many thanks

    0Reply
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