$500,000 SFH & $200,000 Cash, 21 year old, What would you?

[Mark Sam]

Hello, I recently got a $500,000 (full equity) condo in California and $200,000 cash. I am 21, have a 751 credit score. No Job, but planning to get a Computer Science degree as a margin of safety & then use it to excel my work in real estate. 

I want to have real estate as a business around my life that can cover the expenses for my family. Whats my best plan to build my life and family. Thank you all very much. 

[Scott Mac]

Hi Mark,

1. Park the $200K in an FDIC insured bank in a CD or similar insured product. Spend ZERO of it. (live on some other money source, get a job at fast food if you have to, but do not spend (or lend) any of the money).

2. Rent the condo out (unless you live there), use a property manager to handle the tenants. Use the cash flow to pay property taxes and insurance and upkeep. Be careful who you rent to. Have a stiff rental criteria, you don't want it damaged if you can help it, and you don't want to pay to have them evicted if you don't have to.

3. Use some of the rent money to have an attorney do a living trust for you (which is like a will) in case you are demised in a car accident (might be $2,000 or more for this).

Learn this business before you invest any money into it. Decide what you want to do, go to real estate meet ups and don't invest or lend any money until you know what you are doing because at this point you stand high a chance to lose it.

4. If the California home prices dip down and your $500,000 condo become a $400,000 condo, just ride it out until it comes back, it always does.

When you know more about this business and have decided on what to do, then invest.

READ Rich Dad Poor Dad and pay attention to what he teaches.

Good Luck!