All Forum Posts by: Clayton W McGehee

Hi, I currently put 600-1000$ a month into a fairly safe 5% interest bearing account and I want to start putting about 100$ a month into something that is more high risk/high reward as well. I am considering doing this via 2 ways and just wanted opinions from people who may be more knowledgeable than me. 

1: Investing in Prosper Loans buying C and lower loans (25$ per loan to diversify)

2. Buying something like the AMLP ETF. It seems to have a yearly payout of roughly 8%. 

I would really like some opinions on these options or maybe other options. This is meant to be a long term investment so being liquid doesn't matter. 

On a side note the 600-1000$ I put away a month to my other account is to buy real estate in the near future. I will be able to buy a home completely outright with no loan whatsoever hopefully within the next 6 months. It will be a cheap home mind you, but luckily my father was a contractor and can help me fix it up very cheap. 

I actually spoke to the CEO of Worthy Bonds

Me: "Hello, I have been reading a lot that you have said on the internet! But down to business my greatest fear is me dropping a good chunk of money into Worthy and you guys going out of business I would be out of my money. I doubt I will ever have a fortune in there but I am looking to put roughly 10,000 dollars somewhere and let it grow while I look for the right rental property investment and then once I do find the right investment put the monthly rent and allow that to grow as well. 5% is not a huge amount of interest but it is much better than what you get in a savings account which is virtually nothing. Most other liquid investments offer 2% interest or so. What can you say to calm my fears of you closing the doors in 6 months?"

CEO: " Hello again. Glad you did some research and read things we said on the internet I totally understand your concern as we are a brand with which you are not familiar. What I can tell you is that we could essentially close our doors and it does not mean your investment goes with us! Meaning the money from bond sales does not go into our operating account. The bond sale proceeds go into a separate FDIC insured bank account until the funds are disbursed directly into our secured loans - so your money is either in the bond account at the bank or at work in a secured loan. If anything were to happen to us, a Trustee would be put in place to continue to service the loans as they worked to have the Worthy capital replaced by other lenders so all the lent capital could then be returned to our bondholders. That said, we certainly don't see Worthy going away as we are only growing!"

Me: " I really do appreciate the time you put into your responses. I'm just trying to decide what I think would be better for me. I'm not a long term investor I am just treating Betterment (or possibly your service) as a high yield savings account. What I like about your service is I do not have to worry about a 10% drop in the stock market and have to wait it out to get my money back and if I put in a year's worth of rental payments in your account I should get roughly half a payment extra because of the interest. You do seem very legit to me and I do not think you would lie to me. I am very likely to go ahead and move a small amount of money over to your service and see what i think and then take it from there."

ME: (again)." So you can absolutely guarantee that my money will either be sitting in a bank account or loaned out to a client? It wouldn't be used for operating costs?"

CEO:  " Hi Clayton. We are regulated by the Securities and Exchange Commission and are independently audited on an annual basis so must conduct our business strictly by the book so to speak...so yes, we are legit 😀 And yes, that is how our flow of funds work - bond sale proceeds go into their own account and then to our borrowers. But also it is important to note that the bonds are backed by our entire portfolio of secured loans, your money is not just going into one loan/client as you reference above. Again, thanks for your interest in Worthy."

I am convinced enough based on this to drop in a small amount. Just thought I would pass it along. I am sticking with Betterment for most of my money for the moment and will revisit the issue later. 

(All of my debt is low interest, not really much advantage to paying it off early) 

 I get that and I am OK with taking that risk with a company like Betterment or Wealthfront. It is very doubtful those companies are going anywhere and of they do I would still own assets. 

But Worthy Bonds is a small startup that is much more likely to go out of business and if they do all I own is a "worthy bond" that has no value elsewhere. 

If I can't find something liquid-y with around a 5% rate I will probably just stick with Betterment. I do appreciate your input though. 

Hi, I am currently looking for a home to buy to use as a rental property and that process may take a week or 6 months I am not rushing into anything when I see the right place I will know it.

Now on to the point of this thread. I have roughly 10,000$ saved up and I want somewhere to put it that is safe and liquid while making me a little money in the meantime. I have been using Betterment to store my money for a while and the money has always trended upwards when it has been in there and the money is pretty liquid (it takes 4 or 5 days to get it out) but I am afraid that there will end up being a huge loss on the market during the time I find the right house and will have 2 options either let the house go or accept the loss. 

So I am heavily considering putting my money in here instead. 5% interest is not to bad for a bond like this and the risk seems minimal. Worthy Bonds can be cashed out at any time, I am intending on calling them tomorrow to get a better feel for the time frame it takes to get money back.

https://worthybonds.com/index.html

I also intend on putting the rents I get from tenants in here so that can be growing a little while I wait to get enough to get another property (probably 1 year to 1.5 years).

Just seems to be a huge waste to let the money sit into a savings account and get virtually nothing for it when I can make a little. Just wanted to know what you guys thought or if you have any better ideas for a safe, liquid way to grow money. Thanks

@Account Closed

How do you screen tenants?

I was intending on using this for a background check. I was going to meet with them and get my feel and if I thought they were likely to be good tenants and decided I wanted to move them in I was going to do that as the very last step. If you have an opinion I would like to hear it.

https://www.tenantbackgroundsearch.com/index.cfm

I have discovered I am going to have to probably up my costs to around 14k for anyone interested. I was misled by a seller on a few 8K deals its some kind a wacky land deal they want to do. I have discovered a few trailers with land semi around me for around 12k but so far they are all a bit out of the range of how far I want them to be from me. I have also discovered that I can get a good bit more for rent than I was thinking. More like 550-600$. I have been busy the last few days getting more information and speaking with a family member I have that rents property.

@Account Closed

Yes please do. VERY INTERESTED

@Jamie Rose @Susan Maneck

Just figured out how to properly reply. 

What would you guys suggest for educating myself further? What is the best place to find properties in your opinion? I have had my best luck on Craigslist it seems. 

I am still working on the book and am enjoying it quite a bit to be honest I like how Brandon Turner writes.

I have a family member who did this for most of his life who I am going to be talking with about DOs and DONTs in the near future. He did it until he went legally blind and I believe he sold all his properties so he could retire at that point. I do not know him very well but he is close to my parents.

Thank you for your responses. Does anybody see anything I may be overlooking? For my first rental property I want it to go as smoothly as possible.

The only real scenario that I can think of that I would lose on this deal would be if I get renters and they just trash the place. As I mentioned I intend to run background checks on people before I let them in. I would assume that would substantially lower risk?

Hi, I am brand new to the idea of rental investing so please forgive any ignorance of standards. If I am way off base I apologize. I am from the Mississippi Gulf Coast (Ocean Springs MS.)

I have roughly 12000$ in cash that I can use when ever I am ready and I am thinking of buying a trailer/mobile home outright to use as a rental property. My father is a carpenter/electrician and is also a very good landscaper and will help me with any property I buy. It seems to me that if I buy a trailer for around 6500-7000$ and then spend 500-1000$ improving the property (new paint, landscaping, fix cosmetic issues etc.) to give it more curb appeal and intend to charge 350-400$ a month on rent that it would be difficult for me to lose on the deal as I would have my money back within 2 years. I intend to do background checks on the renters to limit my risk as much as possible. I am about half way through "The Book on Rental Property Investing" and everything in it (so far) seems it is aimed at much more expensive properties but after I post this I am going to continue reading the book. 

He mentions in there to make a plan. 

My plan (without a ton of knowledge yet which I am trying to gather)

1. Is buy a trailer and land outright for 6500-8000$

2. Invest an additional 500-1000$ in improving the property

3. Saving everything I get from renting it out and when I reach enough buy another similar trailer.

4. Repeat the process and buy a 3rd trailer.

5. Hopefully after a while of renting all 3 trailer buy a single-family house to rent out (maybe not totally outright but largely outright)

6. Buy a 2nd home 

7. Buy a 3rd home

8. Sell trailers and only deal with homes going forward. 

I realize this is going to be a long process and I will be saving money from my job as well as the money from renting properties. I want honest opinions on this plan and if I am incorrect somewhere please let me know. I want to be educated on this process. I am honestly not to keen on the idea of financing to much, I would prefer to grow slower with less risk but if you feel differently please let me know. Thanks for any and all advice and I hope to be guided in the right direction by people much more knowledgeable than myself on these matters.