philadelphia, PA · Member since 2013 · 9 posts · 1 vote
how would you invest 100k in today's market. i was privilege enough to get a large some of money at an early age. i would like to invest it in really state but dont know how to approach it due to lack of knowledge. should i purchase a property in full.or put 20% down on different property and rent them out(sounds risky) or what do you suggest.
It totally depends on your situation. What's your income, expenses, debt? I would pay off debt, keep at least 6 mo living expenses in cash and then consider investing the rest. I believe in diversification across asset classes including stocks, bonds, real estate. But dont rush into anything. Study, learn and then make a decision. Remember, keeping capital safe is half the battle. Zero return is still better than a loss. Take risks that you understand fully.
It totally depends on your situation. What's your income, expenses, debt? I would pay off debt, keep at least 6 mo living expenses in cash and then consider investing the rest. I believe in diversification across asset classes including stocks, bonds, real estate. But dont rush into anything. Study, learn and then make a decision. Remember, keeping capital safe is half the battle. Zero return is still better than a loss. Take risks that you understand fully.
thanks for the advise.. well the good thing is that im relatively young and dont have many expenses. to be honesty i dont have much responsibility and i still live with my parents. my main concern is investing the money and watching it grow into something substantial.
Hi Eddy Martinez - that's a nice problem you've got on your hands. :)
If it were me, I'd start by reaching out to as many motivated sellers as I could find via direct mail. With $100K, you could buy A LOT of property without even talking to a lender... it's just a matter of finding the people who perceive their real estate as a "burden" and serving them in such a way that provides relief to them, and a great investment for you.
As ANISH TOLIA mentioned, your personal financial situation may influence on your decision as well (whether you decide to go "all in" with these funds, or use some of it to clean up other areas of life if you need to), but it sounds like you're in a great position to move forward without any past issues to worry about.
Either way, it sounds like you've got a great opportunity. Keep us posted on how it goes! Your situation would make for a great case study.
Eddy Martinez , I commend you for wanting to invest your newfound sum instead of just spending it. Not many young people would be so wise with their money. Good job!
But PLEASE, whatever you do, get educated about money/finances/investing FIRST.
Be careful of who you are talking to when you say something like "I have $100k, what should I do with it?" There are too many people out there who may have good intentions, but will recommend you do something that is not in YOUR 100% best interest.
Only YOU can make decisions that are 100% in YOUR best interest. And because of this, it is imperative that you get educated on this stuff so that you can make your own decisions. Have all the advisors and mentors that you want, but in the end, YOU make the decision.
Without financial education, it would probably be safer for you to put your money in a managed asset like a mutual fund, municipal bond, or some other low-risk/low-yield investment until you get educated, especially in real estate.
If you haven't read it yet, I would recommend, and probably a lot of people on this forum would recommend Rich Dad Poor Dad by Robert Kiyosaki. It is a GREAT place to start.
Ditto on the education. There are financial strategies that enable you to leverage your investments while diversifying them - for example, having $ in stocks and using that asset to collateralize a loan for real estate. But as the others suggest, financial strategy can get complicated. When you seek advise, try to get it from people that "don't have a horse in the race" - i.e., if a guy is a stock broker, he'll probably suggests stocks, etc. Might be a good idea to talk to an expert financial planner that is not beholden to any particular asset or type of transaction.
Right. In my past, I was a Certified Financial Planner. Real advisors have passed a rigorous certification exam and have knowledge in a broad range of investment vehicles & strategies. It comes down to WHO PAYS THEM. If you are getting "free" advice, that person has to make $ in some way, so it's usually on commissions from products. To get unbiased advice, you really need to pay a fee for that advice.
Eddy,
The best idea would be to make the most money with that $100K. You're safest investments are usually real estate. I don't know where you are located, but there are several hot cities for investors right now.
For instance, you can easily purchase three single family or multi-family investments in Detroit Metro area for around $32K each. If you buy more than one at a time, you can definitely get a better deal.
I sell turn-key properties in this area complete with vetted renters and an excellent management property company. Unlike a lot of turn-key companies who don't bother, our partner takes the time to complete credit checks and confirm income with new tenants.
Three SF investments in this area will give you $27,000 Gross Yearly Income and approximately (15%) Net Yearly Income of $15,000 that includes allowances for taxes, insurance, management & maintenance costs. You could also consider buying a multi-family (approx. $40K each) which would net you a yearly income of $8000 approximately.
Annette
Eddy Martinez First, Welcome to Biggerpockets! You said you were young, but didn't say your age. How long ago did you get the money?
The best thing to do, is put the money in a savings account, and do nothing with it for at least 6 months, if you just received it, a year would be better.
In the meantime, start talking to different people as has been suggested, and begin to learn about different strategies. DO NOT tell people you have money, just that you are interested in investing one day, and want to learn about investing.
Go to local Real Estate Investment groups (that don't try to sell you stuff). You can find them through BP members
Fill out the keyword alerts (top of page to right) you can list your city, etc.
Also, have you ever worked? What type of job and experience do you have that would help you in real estate investing?
Most of all, come on to BP and read the posts. You can learn a lot on here. Ask questions, and don't be afraid you don't know enough to know what to ask. ALL of us started someplace. Good luck.
If you decide to invest in something, PLEASE come on BP and run it by experienced investors.
ok, well i have read all the answers so far and none of them are giving you the info you need. And the agent suggesting Detroit is just going to screw you, especially if its a turn key investment, and that is from personal experience.
I was in the same situation you are in and had nobody to guide me but i did my homework and went on sites like this but once i had a criteria of what I needed a property to be for me to buy I just went out and bought it. 1st off, it would be worthwhile to find out if you qualify for a loan, but even if you did, interest rates are moving upward so time is running out on a good rate. I would prefer a loan with a lower interest rate, below 5 percent, but if you run into the perfect property with multiple offers, why not sweeten the deal with an all cash offer. Be prepared for a shark fest because at that price point of 70k to 90k, you will have lots of competition from all over the world. The best investors are looking in the locations you wont see listed on yahoo news as investment property areas. I am not going to tell you where i look because I am currently looking and finding that I am getting bit in the *** with restrictions. But Florida is one of them and since you live there it is worthwhile to start there. Don't expect much help from agents because the commission is not much. Do the math, follow the 1 percent rule, 800 per month rent no more than 80k, 700 per month rent, no more than 70k and that is with repairs. But more precisely it's an income property if you take yearly rent / purchase price + repair cost and if that is .12 or higher you have an income property. In this market I would settle for .11. .09 and you have the real value of the home but that has nothing to do with the market value which is often higher. So as you can imagine there are just a handful of homes like this in the entire country and there are plenty of buyers. As for as short sales go, forget that, unless you have the patience of a saint and are making multiple offers. You're most sure bet is to buy a site built 3bed/2bed 1400sq foot plus house that needs a major repair like a new roof but otherwise is in good shape with hardwood floors. Make sure the surrounding school system is good and low taxes at about 1k with no HOA fees, so no condos or town houses ever as they have rental caps anyways.
last but not least look at the surrounding homes. an 80k home in a sea of 80k homes is not necessarily a good deal. you want an 80k home where they go for 100k plus.
Simply asking the question: "what should I do with my $100K?" indicates that you need more financial education. I highly recommend that you spend some time learning before investing in anything (other than your own education of course).
It's rarely a good idea to take a blind leap into something based upon a recommendation.
Action plan:
1. Get a financial education
2. Find a top tier CPA and develop a wealth and tax strategy
3. Develop your exit strategy
4. Implement your plan with focus and discipline.
@EddyMartinez, firstly, kudos to you for wanting to make your money work for you, and second, as stated many times before, you can't get enough financial education. If it was me, I would think real estate.
Find an agent that has been recommended by people you trust. I would then look for a duplex in a great area. You can live in one side and rent out the other. Don't fall in love with any property; make sure the numbers work. Over the long term, you can't go wrong with a property that you live in and provides you with income, as long as the numbers going in work.
Since you have never been a homeowner or landlord before, starting this way will allow you to get your feet wet without biting off more than you can chew, IMO.
Like others have said, learn how to invest it properly! Do NOT go into a deal because someone else says it's a deal, you have to know how to analyze (and verify) the numbers yourself.
In the meantime look at high yield savings accounts or maybe put it in bank CD's to get some return on it while you learn how and where you want to invest it.