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Updated about 9 years ago on . Most recent reply

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38
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6
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Samuel Hall
  • Real Estate Investor
  • Grand Junction, CO
6
Votes |
38
Posts

Should I use my 50% rule reserve money to invest in a security?

Samuel Hall
  • Real Estate Investor
  • Grand Junction, CO
Posted

Hey folks, NewB to the RE game here. I am currently studying for my RE License in Colorado and want to invest in rental properties. I have learned about the 50% rule (explained here https://www.biggerpockets.com/blogs/4454/32123-wha...

and was wondering if any seasoned investors saw a problem with using the saved funds in a highly liquid investment vehicle.

for example: 

I save 50% of my rental income in a separate account to compensate for maintenance and vacancies, and use that money to purchase dividend bearing stock. When a major expense occurs, I can easily sell the security and have cash to pay for the expense. 

Has anyone tried this strategy? how has it worked for you?

Thanks for the input, I hope to (L)earn much from BP.

Samuel Hall 

Most Popular Reply

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1,557
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1,142
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Jacob Sampson
  • Investor
  • Topeka, KS
1,142
Votes |
1,557
Posts
Jacob Sampson
  • Investor
  • Topeka, KS
Replied

You run the risk of forcing your self to sell stocks at the wrong time.  If you do the numbers, you will likely find the amount of potential money you could earn from the stock market is small enough that it probably isn't worth the risk.  Unless, like @Russell Brazil , you have a very large sum of money.  If your talking about something less than 30k then the risk isn't worth the reward. 

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