How do you show someone who is eternal pessimist the advantages of real estate investing??

Question

My mother in law is someone who has very deep pockets, cash of roughly 250-300k. She is very open about her finances and income. She is always the "Debby Downer" type, on everything. I would love to show her a couple deals that realtors and I have found, with plenty of meat on the bone, and easy areas to rent if the sale would fall through in the end. Would love to start small, maybe help with the down payment to get financing, or help with funding renovations. One benefit I see for her is she is extremely worried about her financial future, the company she works for is known for firing people who are months short of full pension benefits, which at this point for her would be about a $3k/ month, and I would love to show her how to we could give her the benefits tax breaks through the investments and growing a bigger nest egg before she retires.

Aaron Mazzrillo · Answer

All I read here is "My mother in law has money that I'm trying to get my hands on so I can be an investor, so please help me." Walk away son. Just walk away.

Jon Holdman · Answer

@Matt Markel Why in the world would you post such a statement on the internet? That's like an invitation to rob someone.

Scott W. · Answer

agree except for the comment on leverage does not produce good returns. this is an incorrect statement...leverage provides awesome returns and has made many rich. and the whole thing about that rentals are only good if held for 15-30 years is not always true as well and if you don't believe me, look at some of my posts. don't believe all the negative posts on here.

Ben Leybovich · Answer

Just walk away!!!

Matt Markel · Answer

@Jon Holdman @Robert Leonard @David C. @Jeremiah B. @Ben Leybovich @Marcus Johnson @Jeff S. By 250-300k cash, I mean walk into her house and open safe and there it is. She is 52 and no debt. I am the executor of her estate so I know how she has her financials arranged. Net worth of 3.5m. Assuming worst case, and I know she always does, would it be best to offer someone like this a partnership, or percentage on ROI or what? I haven't done quick flips, but have experience in total renovations on my personal home. As I was mowing someones lawn in my neighborhood, I was listening to BP podcasts about flipping while having a full-time job, with James Vemillion. I have always been good around the home, and originally thinking that buy and holds would be best due to time. Though listening to him, I think fix and flips would be best way to build capital to purchase properties for buy and holds. I work as a physical therapist doing home health so I set my own schedule and have plenty of free time to manage projects or contractors. Either way, I appreciate peoples input. As previously stated, I always see the good things, sometimes i need someone to pull my head out of the stars or another location...

Jeff S. · Answer

Show her worst case only. You should assume the worst too. Amazing how many black swans can appear when you least expect it. Saying she has 250k cash makes little sense when out of context. Maybe she has 250 in debt too. Investor material would be net worth closer to 1 million.

Marcus Johnson · Answer

Not to play devils advocate but one whose saved 200-300k in cash must have been doing something right, as in not spending foolishly or lavishly on material items. I'm just guessing this person has a low risk aversion, so I can understand her train of thought. What I believe she needs is someone who can help her invest that money in the market who is fee based and within ten years 300k based on the S&P500 average ROI would sum up to 650k and after 20 years she could have 1.3 million. Not sure of her age since you didn't mention it, but it seems as though real estate may appear risky in her eyes. I could be totally wrong. :)

David C. · Answer

Maybe I'm an optimist, but I read 'deep pockets' and 250k-300k in cash as: Net worth of $5,000,000, 250k-300k in CASH(checking/money markets). If the woman has only 250k-300k, she's not a suitable investor.

Ben Leybovich · Answer

I agree - $250k is very minimal for retirement. If it were me, I would convert it to CF. But, I would NEVER advise someone else to do it. She has to come to you, and then you likely should tell her NO. Besides, you should be able to find money without going to family. Good luck!

Jeremiah B. · Answer

@Jon Holdman hit the nail on the head. He always tends to be right when he agrees with me :) Do not try and convince her! Informing her is fine, but you have a conflict of interest in the discussion - and a relationship to manage to boot. At this point, I wouldn't even share any of my financials, and would just let it go. 300K cash with retirement in sight are NOT deep pockets!!! Even assuming she gets her full 3k/month pension she is on track to make a modest 48K/year in retirement (36K from pension, 12K from money at 4% withdrawal rate).