Where to Invest Between Deals?

Question

The subject line says it all. Where do you invest capital between real estate deals? Individual stocks? Short-term bonds? Mutual funds? Index funds? The dreaded savings account?

Greg Scott · Answer

Keep your powder dry and ready to invest.  You want to be able to jump on a deal when you see one, so don't put it in anything that takes a while to get out of, like a CD.

Don't invest in anything that can drop suddenly either.

I basically keep mine in savings.  I don't care that I'm making 1%.  When it finally gets deployed I make 20%+ but I couldn't do that if I don't have cash ready when I need it.

James Triano · Answer

@Nicholas Gray

I wouldn't get too caught up on this.  I usually just throw money into my savings account.  I really don't care that it's a 1% or whatever return on my money.  The last thing I want to do is find a great property to invest in, realize that the CEO of the company I invested in had an affair with his secretary, and the value is down 20% leaving me scrambling.

Instead of spending time analyzing which funds to park your money in during the downtime, just spend your time looking for new deals and leave it in a simple bond index/money market/savings account .

Thomas Rutkowski · Answer

If you just took advantage of the appreciation in your real estate, I certainly wouldn't put it into another asset class that is highly appreciated and volitile: Wall Street.

All of my money is sitting on the sidelines in semi-liquid, safe financial alternatives. These are private lending opportunities with low loan-to-value ratios. All loans are 9-12 months so I shouldn't miss the next buying opportunity.

I agree with @Todd Dexheimer. Leveraging a high cash value permanent life insurance policy is an awesome way to keep your money liquid and put it to work in two places at one time. The interest/dividend rate is nothing to write home about, but getting a line of credit at Prime against that cash value is huge.

Thomas Rutkowski · Answer

I'm about as passive as they come as an investor. I like my full-time gig too much. My goal is to keep my money working as hard is it can while I am working as hard as I can. I've researched many different private lending opportunities. I'm not lending directly to anyone or any investor. Instead, I make loans to companies that use the money to make loans. I get a good return on my money and I understand and trust their business models. There are many "canned" opportunities that I've researched and are available to anyone.

You're welcome to connect and pick my brain.

Rick Pozos · Answer

I would keep marketing to find off market deals. You can always wholesale something if you think you dont want to rehab something right now. The point is that you keep your marketing going so that when you are ready to rehab again, you dont have to get the whole engine started up again. If you are wholesaling some deals here and there it should more than pay for your marketing.

Mateusz Prawdzik · Answer

@Nicholas Gray It depends on your risk tolerance. Are you looking to continue investing in real estate, I would become a bridge funder or a private lender and finance deals that reputable investors do and just watch the money roll in. A couple of my investors ask me the same questions and I tell them while the next deal is in the working just hold in cash and when I'm ready for you, I'll call you. I have a couple of deals turning soon if you're interested in the out of state investing where you make some return passively. Lets connect and talk if you'd be interested.

Todd Dexheimer · Answer

Depends on what you're doing with that money and how quickly you will have the next deal. If you're waiting for the next down turn, then I would invest in other assets you see value in (oil, bitcoin, other real estate). You could also act as a hard money lender or bridge lender. If you want to be safe and liquid, then money market or savings is good. I hate mutual funds, so I won't recommend that. Whole life insurance can also be fantastic.

Steve Vaughan · Answer

How much money are we talking about @Nicholas Gray?

My acquisition acct can get up there, but I wouldn't 'invest' (gamble?) with bitcoin or commodities even if I had a 5-10yr horizon.  Those have no intrinsic value and trade only on emotion and supply/demand.  No control either.  You gonna be at the next opec cartel meeting or something? Have a say in crypto-currency rates? LOL

I see my acquisition acct and reserve acct as insurance.  Insuring I'll be able to buy an opportunity immediately if needed or insurance I am covered when it rains.  Insurance isn't there to make money - it is there to protect.

Still following this in case a good idea comes up.  I have considered REITs but haven't invested yet. Good discussion!

Alice K. · Answer

I have been wondering this for 2 months now!Sitting on funds and have scanned the market like a crazy ex obsessed with some past lover for far too long... The ROI on 75% of items I've seen lately has been weak with all this appreciation in the places I invest in. (Maybe I need to lower my standards but... I figure I shouldn't be too hot to buy.)

Atm, I feel similar to @Greg Scott-- Just sitting on it (non-401k funds that is...)

Losing money due to inflation this year but I will never forget when I was a younger person and all the more senior employees I was around were panicking in because their stocks tanked... I have some floating in stocks but not all.

@Thomas Rutkowski - How do you source folks to lend to? /Qualify folks? I've heard this and that from hard money people but just now looking into that if I give up on my own purchase.

Where to Invest Between Deals?

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