$200,000 to invest. Your chance to help in the decision

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$200,000 to invest. Your chance to help in the decision

Rich Weese
Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes

I'm bored to death sitting in Quito. That is in Ecuador, on a LONG flight delay. I just put a deal together to sell a foreign property I wasn't counting on and it should net a fair amount.    I've always tried to be well prepared for all possibilities and really don't have a strong feeling in any one direction on use of these funds. BP has MANY other opinionated posters (like me) and I'm curious on your thoughts. I have most of the basics, so it is a question of where to invest more and what to acquire more of.     This would probably be determined on your view of the future. These funds are not needed to live on and can be long or short term investments. So, I really want to know what you would do and why.   More food, barter items, gold, silver, titanium, F&C real estate, mortgaged to the hilt RE, options, stocks, mutual funds, land, movies, HML lending, transactional funding, JV's or others.   I'd love to know your thoughts and back them up with why. I've been open with my personal situation, so most know my beliefs. This current situation has me somewhat confused and unprepared for. There will be no tax consequences on these funds and no need to do 1031 etc. Appreciate any replies. Rich

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Vikram C.
Real Estate Investor · Phoenix, AZ · Member since 2009 · 1k+ posts · 1k+ votes
16y

I think Rich is talking about investing the money in something that gives him a good return at reasonable risk. I do not think he is talking about charity or investing in the lives of other people. Rich, you can correct me if I misunderstood you.

If you do not mind getting involved in your investment, I would recommend flipping properties. If you do not wish to get very involved, I would recommend hard money loans to others who flip. Both of these, if done properly, should give you the following characteristics:

1. Good ROI. Better than or comparable to the ROI that you can reasonably expect from longer term investments.

2. Short term. This insulates you from the possibility of a continuing spiral downwards in RE prices. (You can always wait for a couple of years and do your long-term investments at lower prices than today's.)

3. Liquid. While not as liquid as cash in the bank, these short-term investments give you sufficient liquidity that if you start seeing other opportunities to invest your money, you will not have to wait more than a few weeks / months before being able to start getting involved.

4. Safety. This is related, in some ways, to the short-term nature of the investment. If you comp the property carefully, you will find that these investments (either flip or hml loan) are safer than a long-term investment that could be affected by macroecnomic factors.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    16y

    If you don't need the funds to live off of, and you have some potential tax issues, give the money to charity and take the write-off...

    Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
    1Reply
  • Rich Weese
    OP
    Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
    16y

    Thanks J- I mentioned in post- no income tax issues, but appreciate the quick reply. Rich

    Just got the call. Headed for airport, FINALLY. Later.

    0Reply
  • Mitch Kronowit
    SFR Investor · Orange County, CA · Member since 2009 · 1k+ posts · 1k+ votes
    16y

    Here's a way you can invest and give to charity at the same time. In our area, and I'm sure in yours, there are a few organizations that take care of abandoned and abused children. One that I have personally performed volunteer work for owns or rents several homes in our county where they house 4, 5, or 6 of these children along with a caretaker.

    Consider using that $200k to purchase one or more homes in your area and provide it rent free to one of these charities. They get a free place to house these disadvantaged children and you still own the investment.

    3Reply
  • Ryan Wilkinson
    Real Estate Investor · Southfield, MI · Member since 2010 · 47 posts · 43 votes
    16y

    Its impressive with all the "Deal Makers" & Investors on here that the first two responses to this post suggest "Giving Back." Mad props to you both!

    I agree with Mitch. Find something you are passionate about then find a way for that passion help somebody else. Its a home-run, especially in today's economic climate.

    RE investors today are in a fantastic position to generate opportunities and create much needed solutions for people in need while increasing their own wealth.

    The charity home for abused children is a great idea. You could do the same for battered & abused women or drug addicts, etc... Start an AFC (Adult Foster Care) Home.

    Promote home ownership for qualified buyers the banks wont lend to by purchasing land contract notes, or originating them.

    I can't think of a better investment than real estate that can provide high returns & relatively low risk but that doesn't mean gold or JV's or stocks etc...aren't good investments.

    There are so many things to get into. Most importantly, do what you are passionate about...whatever that is. Finding something worth while for your extra $200G's is a great problem to have!

    4Reply
  • Mike McKinzie
    Investor · Westminster, CO · Member since 2009 · 1k+ posts · 1k+ votes
    16y

    If you could add a little extra to it, you could buy TWO shares of Berkshire-Hathaway stock and see where Warren Buffet could take you in a year!

    You could buy 400 shares of Google, currently at around $450 but has a 52 week high of $629.00.

    If I had $200,000, I would buy 3 houses, $100,000 each, one free and clear and 2 at 50% loan to value. Make sure each home rents for no less than $1,000 a month. $100,000 at 5% for 30 years is $536.82 a month. Using the 50% rule, you have $1,500 a month in expenses and $500 a month in mortgage, giving you a net of $1,000 a month. Then you donate that $1,000 a month to someone like Habitat for Humanity, a battered women's shelter, a foster child care, or a myriad of other choices. You created a lot of tax breaks, helped society and keep building your personal wealth.

    5Reply
  • Mark N.A
    Real Estate Investor · North Carolina · Member since 2008 · 1k+ posts · 483 votes
    16y

    Invest in the future, Rich -- use the money to fund a scholarship.

    2Reply
  • Vikram C.
    Real Estate Investor · Phoenix, AZ · Member since 2009 · 1k+ posts · 1k+ votes
    16y

    I think Rich is talking about investing the money in something that gives him a good return at reasonable risk. I do not think he is talking about charity or investing in the lives of other people. Rich, you can correct me if I misunderstood you.

    If you do not mind getting involved in your investment, I would recommend flipping properties. If you do not wish to get very involved, I would recommend hard money loans to others who flip. Both of these, if done properly, should give you the following characteristics:

    1. Good ROI. Better than or comparable to the ROI that you can reasonably expect from longer term investments.

    2. Short term. This insulates you from the possibility of a continuing spiral downwards in RE prices. (You can always wait for a couple of years and do your long-term investments at lower prices than today's.)

    3. Liquid. While not as liquid as cash in the bank, these short-term investments give you sufficient liquidity that if you start seeing other opportunities to invest your money, you will not have to wait more than a few weeks / months before being able to start getting involved.

    4. Safety. This is related, in some ways, to the short-term nature of the investment. If you comp the property carefully, you will find that these investments (either flip or hml loan) are safer than a long-term investment that could be affected by macroecnomic factors.

    8Reply
  • Account Closed
    Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
    16y

    Sounds to me that you are describing an investment that can be more risky or speculative because you don't need the money to live on.

    It also sounds like tax advantages are not of primary concern either.

    I also assume that you are not looking for something that might require additional investments in the future.

    Perhaps you might want to do some angel investing. You may come across people needing a little money to get there business off the ground. You could certainly work out the terms so that you feel reasonably comfortable that the business makes sense and that you get a good return when the business succeeds.

    Selecting the potential candidates might be quite challenging, but I think you would be up to the challenge.

    1Reply
  • Rich Weese
    OP
    Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
    16y

    I think this thread took a turn away from what I intended. I don't want to sound cold, but these funds are going into an investment that will be in an irrevocable trust for the benefit of future generations of mine.
    I have asked before about causes to donate to, and received great suggestions. (social security checks, proceeds from my e-book etc) I'm also involved in tithes and donations to my church.
    I think the replies on charity were excellent, and some I already received in other threads or PMs.
    This thread was to generate some response as to YOUR investment thoughts in this economy. What would you do, today, knowing what you know (or think) today. This should be a good exercise for each to really have to determine where they'd actually put their money in this situation. Put money where your mouth is?? No generic ideas, real specifics for this amount. Vikram and Mike M were closest on that. Thanks. Rich

    1Reply
  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    16y

    OK Rich, my suggestion won't be a big surprise to you, but here is what I would do:

    Pick a part of the country that is growing quickly, and yes they exist, even in this depressed economy. Preferably, a county outside a large TX city. A county that is growing by at least 5% per year in population.

    I would buy 6 late model double wide mobile homes on acreage. They would each have at least one acre each, and some of the lots would be dividable. They would each have FHA foundations to help with future retailing and FHA loans. With repairs, I'd be into each of them for $30K-$35K. They would be between 5-10 years old. I would rent them out for $800 each, for a scheduled monthly income of $4,800 and $57,600 annually. I would look for tenant buyers who would be working on their credit.

    Then, I'd sit and wait. Wait for the land to appreciate, which it would likely do in areas that will double in population within 20 years. Wait for cash flow to allow for the purchase of more homes. Wait for my tenant buyers to buy. Wait for lending to get to the place where it will once again make portfolio loans on a 15% cap rate investment. Wait for redevelopment to roll through and the highest and best purpose for my land bank changes. Wait until it makes sense to divide and put more homes on the large lots. Hmm, waiting seems to be an important part of real estate investing.

    That's what I would do.

    7Reply
  • Bradley Smotherman
    Real Estate Investor · Murfreesboro, TN · Member since 2010 · 53 posts · 22 votes
    16y

    Interesting topic.

    I think it is always difficult to say what you would do with X or Y amount of money, until you are there.

    I'm a believer that we have a ways to come down in price before we bottom. Some markets will be better than others of course, so that was a broad generalization. One thing I would not do is invest in stock. Interest rates have to rise at some point, and then people will begin investing in bonds again which means equities will fall. I like metals as a hedge against inflation and think that inflation needs to be a concern.

    I like sub2 spin off plays. I would want to pick up as many of these as I could since you have the backing to handle vacancies/repairs etc.

    Would love to hear what you end up doing.

    0Reply
  • Account Closed
    OR · Member since 2008 · 1k+ posts · 845 votes
    16y

    If you really do not need immediate return, I think it is an excellent time to buy commercial zoned land.

    Pick a growth area and buy just beyond where the expensive new businesses are going in, or where the community has firm plans to extend the sewer and water.

    Businesses are hurting and few are building, so it should be possible to get a screaming deal on that land right now.

    The absolute most money I've ever made in real estate has always been on bare land. The only down side is that it provides no income.

    On the plus side, it's cheap to hold and does not require much maintenance.

    I'm always reluctant to advocate bare land to people I don't know, because it's possible to really make serious mistakes. But you know how to pick real estate and understand why one piece of dirt is more valuable than another.

    2Reply
  • Martin Hurley
    Virtual Assistant · Castlemaine, Victoria · Member since 2010 · 5 posts · 0 votes
    16y

    This is not a detailed and in depth reply but just wanted to say - fantastic - I learn so much when you ask (and answer) questions like the topic of this post...
    And on the question itself, I would look at property (land) here in Australia there are some amazing acres (hectares) to be enjoyed, I am constantly looking at it and thinking wow, that'd be great. Just a quick general comment. :)

    0Reply
  • Jimmy H.
    Lexington, KY · Member since 2010 · 315 posts · 133 votes
    15y
    Originally posted by Bradley Smotherman:

    Interest rates have to rise at some point, and then people will begin investing in bonds again which means equities will fall.


    I agree that interest rates will rise eventually, but I have always understood the bond/interest rate relationship to be an inverse one. It is time to get out of bonds (maybe your talking inflation indexed like TIPS or something) and into equities with your logic.

    Rich - I would do one of two things - either invest heavily in equities with a significant international expsoure - that is where the growth will be (could be a domestic firm with heavy international expsoure if your not comfortable with buying international equities). Solely domestic companies will struggle along with the American consumer.

    Or I would do exactly as Vikram mentioned and HML or make an equity investment with a flipper making high ROI's, that way you don't have any extra leg work involved with your investment and you are making a steady ROI, or are poised to benefit from the growth era that the world economy is entering (kinda hard to believe isn't it)

    For you in particular - I would invest in equities and give yourself a strong international exposure, you can afford to take a high risk with this "discretionary" chunk of capital. From other posts of yours that I have read, I sense a general sentiment that you are not fond of equities. But being that you seem to have a strong metals portfolio to hedge inflation, and obviously a significant real estate portfolio - you need greater expsoure to equities as an asset class and you need to diversify away from holding only dollar denominated assets. That is, both from a portfolio management perspective (my perception of your portfolio), as well as expsoing yourself to high growth areas of the 21st century I think international equities (developing nations to be more precise) is your best bet. Depending on your risk appetite you could invest in some international ETF's or even an actively managed developing growth fund.
    0Reply
  • Yan P.
    Lender · Chicago, IL · Member since 2010 · 84 posts · 23 votes
    15y

    Rich,

    I have an idea that is a little bit different than the rest. By the way you described the transaction in Ecuador it seems like you realized your real estate goals.

    Though it will take more than 200k to do, why not purchase a business? I worked in a bank before where we brokered a small manufacturer to a gentleman for his son to develop his management skills. Though I am still not sure if I approve, I was blown away.

    Multiples are fairly low in many industries now. Pick something that you have always wanted to do, purchase, increase revenue, hold or sell. Same as RE but more moving parts.

    Should be interesting and a new challenge for an accomplished individual such as yourself.

    0Reply
  • Scott R.
    Real Estate Investor · Amarillo, TX · Member since 2008 · 547 posts · 214 votes
    15y

    Rich-
    ever decide where the money is going!? My thoughts would be to faster grow your development in so Texas or into hard money. Personally i think hard money loans at 12 or 14 percent are hard to beat based on the work required, And tons of people looking for such loans, especially long term! I'm honestly suprised hard money is so hard to locate.. Maybe that's where the word hard come from.. Hard(to find) money loans..
    -Scott

    0Reply
  • Michael Bishop
    Residential Real Estate Agent · Buffalo, NY · Member since 2010 · 14 posts · 6 votes
    15y

    I see lots of interesting suggestions. I'm left with more questions; Is this a one time event? Do you care about growing your money? For me, it's real estate - because that's what i do. For others, it might be something else. In real estate, you can go for cash flow or appreciation. Money onlys knows how to do one thing, make more. Putting together a cash flow investment that feeds a philanthropic desire would create a long term "giving" where a one shot deal makes a nice splash, but then it's over. Doing this would cure the boredom, too - since overseeing the long term vision - and its net effect - would be very interesting.

    0Reply
  • Account Closed
    Rental Property Investor · Friendswood, TX · Member since 2010 · 663 posts · 508 votes
    15y

    In all seriousness, buy 39 tons of pennies from :
    http://www.portlandmint.com/investor_pennies.php

    Use the storage option until time permits and sell. You are buying an asset that has 50 % instant upside (once the melt ban is lifted). Per coinflation.com

    Also, the forecast for copper looks promising with even more upside.

    0Reply
  • Justin PiercePro Member
    Rental Property Investor · Woodbridge, VA · Member since 2008 · 543 posts · 121 votes
    15y

    Rich,

    The strategy right now is to use cash to buy cheap. The exit strategy is market dependent. Despite the overal economy there are some stable markets out there.

    Salk Lake City Utah area, where people from other more expensive states are moving has relativily low unemployement good tech sector growth and high demand for rentals. So there I'm buying at 50-60 cents on the dollar and hold as a rental making very good cap rates.

    In the D.C. area there is actually a mini real estate boom in progress. The BRAC is brining lots of jobs and anything priced well is flying off the inventory. Appreciation was up double digits last year in most D.C. Metro Counties. So I buy and flip there.

    If you want super stable there is Jacksonville N.C. Which is just outside of Camp Lejuene N.C. Home of the Unitied State Marine Corps 2nd Division. One of only 3 active duty Division bases for the Marine Corps. It's not going anywhere. Marines are good tenants. It is difficult to get 50 cents on the dollar there but you can expect a very slow and steady up tick in value. So there you buy and hold and are happy with a nice 8-12 cap rate.

    Pick you flavor. I stongly suggest all three.

    0Reply
  • Tom Hamilton
    Real Estate Investor · Member since 2010 · 49 posts · 7 votes
    15y

    Because I am in the business of investing large sums of money for clients, I tend to think much more info is needed to make any real recommendations for someone... but maybe many of you know Rich pretty well so you have a better idea what he's looking for than I would.

    That said, it's both the scariest AND most exciting time to be investing in the many years I've been doing this. Making a correct read on macroeconomics can make you rich! being wrong might kill you. Over-diversification is just a bunch of crap, IMO.

    $200k might limit you on some of the best alternative investment managers with higher minimums, but there are some good ones out there! All sorts and flavors, risk levels and potential returns. It just depends what you believe in and can trust.

    I have particular favorite investments in this climate, but I can't just go posting them in a forum, or even by email to folks I don't know. These fit MY macro thoughts on how interest rates, debt (public and private), domestic and foreign companies performance, etc.

    As I said, it's seems like a make or break type investment world right now, be it RE as discussed here, stocks, bons, whatever. Lots of fun!

    0Reply
  • WJ Dye
    Real Estate Investor · Laporte, CO · Member since 2010 · 1 post · 0 votes
    15y

    Hi, a good solution for the right person is a foreign insurance policy which can hold the real estate, and can have tax advantages and wealth preservation benefits. We like South American Farm land that is productive and has good cash flows right now, it seems to be the best investment we can find given the current enviroment, and to diversify if you are mostly in traditional dollar investments

    0Reply
  • Vincent Vomero
    Property Manager · Boston, MA · Member since 2010 · 15 posts · 2 votes
    15y

    I would look into investing in off campus student housing. High cash flows, low vacancy rates and resistance to drops in the market are ideal! Boston has a great off campus market with cap rates in the 8%+ range. The best deals can be found in off MLS listings from investors looking to liquidate.

    0Reply
  • Bobby Casey
    North Carolina · Member since 2009 · 24 posts · 15 votes
    15y

    I would seriously consider moving some of your investments offshore. You could do this many ways and even diversify the portfolio outside of the US.

    You could buy RE outside of the US either as a vacation property or residential rental. If you have a longer time horizon, maybe land.

    Also buy some precious metals stored outside of the US. Gold is the oldest form of money and will continue to be so. It is not necessarily an investment, but a hedge against inflation and a store of value.

    You could then consider investments in non-US equities. There are lots of investment options not available in the US, but can be utilized if done properly offshore.

    0Reply
  • Monica Brown
    Real Estate Investor · New York, NY · Member since 2010 · 9 posts · 4 votes
    15y

    Rich,

    1. A Bank (partial ownership).
    2. Triple Net Leases - you can hold the ground leases in trust to earn money for your family for generations to come. You earn money without having to do any of the work (maintenance, payroll, etc.),
    3. Private Investing either as angel investor or simply private lending as others are doing on BP.
    4. Or, if you want something truly interesting you might try independent film investing. Its very similar to real estate investing, they even have sales & leasebacks. There's always people who need the money and you will open your networks up to a host of characters from film makers, stars and entertainers to other financiers.

    5. An off-shoot would be mobile video production and syndication. Mobile phone use will only expand and video will drive that market for years to come. Get in on the ground floor now, with a young production or syndication company. So many corporate accounts want to create a visual presence on the mobile web, you have an endless market from hotels and restaurants, to education and government accounts, to fashion, arts and design. The possibilities are endless.

    Just a few ideas off the top of my head, your question was too open-ended to narrow down a response. Hope this helps.

    0Reply
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