Investment ideas question

[Bernie Burke]

Hello, I’d like to hear some ideas as far as what you would do if you had $100k in cash to invest? I already own a few rentals and feel the market is too high to purchase more right now.

[Derek Dombeck]

I like to do Options with smaller dollars to get high yields with low risk.

Example. A property owner may need a roof on their house they can't afford. You give them 20k for the roof in return for an Option to purchase  the property for X, sometime in the next 20 years. You have locked in a purchase price you are happy with and they have what they needed.

Now you may be thinking, they won't do that because they want to keep the house. You can add language that says, you cannot exercise your Option for the 1st (fill in a timeline) years. 

They get the use, ownership, tax advantages, maintenance responsibilities, and you get the upside equity if it appreciates. If it doesn't go up for awhile, that's fine as you have many years to choose from for the purchase. 

Many times, the seller will approach you in the future and ask if there's a way to not sell the house to you. That's time for a new negotiation and they will likely buy your Option back from you.

You can also sell or trade Options for cash or anything else you like and they are great to hold in retirement accounts too.

I currently hold an Option which I paid $4500 to the local County for the owners delinquent property taxes to save his house from foreclosure. My purchase price is 18k total of which the $4500 gets credited towards when I exercise the Option. This is a fixer upper shack on 2 acres that's probably worth 100K now and I had a 10 year Option which has about 5 years left. 

So if I buy his property today, I would have to add the $13,500 to my initial $4,500 to close the deal. This gives me a Net profit of 82K which is an Average Annual ROI of 57.4% based on the total 18k investment. But in reality, I only had $4,500 invested the majority of the 5 years, so the yield is over 90% Annual ROI.

I hold this in my retirement account, so it's not money that I need to live on and it's tax advantaged.

The sky is the limit with Options.