Seeking advice on next investment move

[Tom Murphy]

Hello,

I am seeking advice on the next best possible move for my investment portfolio.

I currently own four properties, one of which is my own personal residence, and three income producing rentals (2 multifamily and one single family). I hold a significant amount of equity in all four properties, approximately $900,000.

I don’t enjoy the renovation and labor it takes to upkeep these houses, and I don’t currently have a reliable handy-man or contractor, which means all of the work falls on myself. I do enjoy the leverage the equity affords me in refinancing to purchase other properties. I don't wish to buy another property that will require me to renovate and manage the day to day.

In my professional career outside of property investing, I make a good W2 income. I max out my retirement accounts, and I hold zero debt except for the mortgages and 2 automobile loans. I have 6 months of savings and $400,000 in stocks.

I am considering the following options:

• Buying an out-of-state property through a Turnkey company in hopes to expand my portfolio with limited stress of managing and kick-starting a new property from scratch
• Buy an out-of-state property without a Turnkey Company’s help and hire a property management firm on my own; however I am nervous to pull the trigger on this one with limited knowledge of the markets and details on how out-of-state investment is done
• Purchasing a vacation rental in a high demand, large market like Florida, with the hopes to utilize it for personal use later on in life or during non-peak rental times
• Or investing in REITs or other stock market investments.

Are there any other ideas I should be considering, or do any one of these stand out amongst the others as the best possible move? Appreciate any thoughts.

[Daniel Murphy]

@Tom Murphy, I can't personally speak to options 1 & 2 but I can to 3 & 4.  

#3 - buying a vacation rental. I have one in Cape Coral FL with the same idea. Investment plus vacation. Our house was fully flipped (and done well) just prior to our purchase. I have been to the property 8 times since we purchased it a year & a half ago and I have never yet had a vacation. A STR is a different animal. Guests don't treat it as well and you want it to stay in top shape so it's a lot of upkeep. It may be a good investment, but likely not going to be the "stress reliever" that you're looking for.

#4 - Be extra dilligent with private placement REITS.  I started my financial advising career at a company that sold a lot of these that went underwater.  I'm definitely biased because I know they can be good investments. But when they go bad, they normally go really bad. And we're currently in one of those home market environments where we don't really know if things will go up, or down.  
The stock market is always a good default idea.  You mentioned that you max out your 401k and you have $400k in stocks.  Are these stocks outside of a retirement account, ie in a taxable account? 
If so, building up this account is an INCREDIBLE idea for the long term.  

You can use it to leverage partial Roth conversions post retirement.  Or, because it's liquid you could be in a position to use it as a sinking fund to pay off your mortgages or buy another house.  A taxable account gives you incredible flexibility.  

Lastly, you may have "meh" power. This is an idea I talk about with my clients. When you've done all the right things & built up enough wealth you eventually get to the "meh" zone. 

As in, you don't need to make perfect financial decisions. You'll be wealthy no matter what you do. At some point in your investing career, you may look at options 1-4 & eventually say "Meh, this one sounds the easiest", "Meh, this one just feels the best for me", "Meh, (fill in the blank).  

Follow you gut, it seems to have led you to good places already.