$100k in cash and not sure of the best way to invest

[Dawn Burdette]

While I started investing in 2002, there wasn't nearly as much information available as there is today.  I purchased a few investment properties and also sold a few.  However, my knowledge is limited.  I saved up a bit of cash for the last 7 years because I knew I'd be forced to retire from my full time job.  The retirement will be official September 1.  I currently reside in a major city so I am no looking for property here.  I have been looking at property in NC and recently purchased a condo.  Being a bit of an introvert makes it hard to meet people so I haven't found a mentor.  Some direction would be greatly appreciated.  What would a seasoned investor do with $100k in cash.  

[Chris Jackson]

@Dawn Burdette - start by looking inward and ask yourself what are your strengths and weaknesses. Which areas do you want to spend the time to improve. Are you looking to be truly passive, active or pactive?

Do you want to be more hands on and manage rehab to rent such as a buy and hold model for SFR?

Do you like to analyze deals and are more drawn to the complexity of larger multifamily?

24k per year cash flow from a 100K investment is a 24% CoCR, cash on cash return. Although this is possible it will be very challenging to find. One may be seduced by some rougher areas where on paper that looks like it can be achieved however many times one finds themselves in a situation where the term "looks good on paper" becomes more of a big disappointment.

24% annualized is achievable also albeit getting more difficult in this market but 24% annualized usually means where there is limited cash flow distributions during the hold but the sale yields a high pop at the end annualizing out to 24% over the say 2-5 year hold.  That is different than what most people are looking for with CoCR, cash on cash return, thus cash flow. 

To be able to put your head on the pillow at night from a true cash flow perspective I would set your expectations on 5-8% CoCR for nicer C+ to a A- assets.   Where one can receive 5-8% cash on cash return during the hold yearly but than on sale with any appreciation could achieve a 10-20+ % annualized return.

I know 5-8% is not the same as 24% cash on cash from a real money per month perspective but I see alot of people chasing the amount per month meaning the 2k per month that can make a difference in one's life vs the reality of achieving that return and in the end get into a situation where the return is not achievable because it looked good on paper for an investment but now the principal is at risk. Capital preservation is critical at this time in the market cycle. I'd look for nicer assets with lower return in areas that have good population and job growth story with a bit of hustle on finding a discount off retail with reason and chip away at your goal.