What to do with income from REI?

[Eric Taylor]

I currently have 7 cash flowing properties and I trying to decide what is best way to invest my REI income. The three strategies I am looking at are

1)  Snowballing  (Bird in the Hand)

2)  Put money into Vanguard index fund  ( ? Safer than #1)

3)  Buying more properties

What are your thoughts?

[Linda Weygant]

Obviously one of the key issues with investing is Diversification.  Many here on Bigger Pockets would say that they are diversified because they are in a mix of properties in a mix of markets.  And that is not the worst diversification plan I've ever heard.  It's also not the best.

Personally, I keep my company 401k in Index Funds and they perform adequately.  Not great, not terrible.  I also have a little money in some super safe, but really poorly performing stuff such as some government bonds and bank CDs.  I also dabble a little in Peer to Peer lending.  I know - not all that sexy.  But that stuff is the insurance, the safety cushion, the net.  It's what I'll have to live on in case I lose my job, the Yellowstone caldera blows, all my properties simultaneously get pulled into sink holes and I get sued into oblivion.

The meat and potatoes of my investments is real estate, but I've admitted elsewhere that I am a junkie.  I have a real problem with real estate - I simply can't get enough.  

So for me - because I feel like I have "adequate" reserves elsewhere, I plow my real estate returns into more real estate.  Luckily, I'm kind of a controlled junkie.  I don't run around tweaking and throwing down money on crappy deals.  I'm still pretty careful, but I gotta tell you - I need my next fix!!!