Originally posted by Joe Papp:
- Yeah, sure...but any smart investor will tell you that income producing investments are work. This isn't the stock market -- you will have to manage properties/tenants/financials, or pay someone to do it all for you, and manage them. This is not a "set it and forget it" investment. I'd advise you to be prepared for this, or else put your money elsewhere.
I have definitely kept that in mind but one of the positive aspects of the SoCal market is that property management is relatively easy and consistent if you are not investing in a dump (I dont want to touch HUD). But maybe I could be totally wrong about it.
- Makes sense. I would say given your location, its going to be tough to fund projects with cash even if you're flush with it. And then things I would be concerned with, like COCR, may be awful in that area. You might be better off in investing in other areas of the country, assuming the numbers work out. Perhaps linking up with another investor who can be hands on while you provide the cash funding?
In an ideal world, yes, but going from paper to reality is the hard part. Trust is very hard to build and easy to break down.
- Whatever you decide, first determine what you want out of the investment. I say this at the end of every post and I'm sure if people are following my posts, they might get annoyed, but if your goal of investing doesn't match your investing vehicle, then it's probably not the right approach.
- If I had your available funds, I might consider a mix of investments including stocks, mutual funds, and perhaps REITs. Whatever you decide to do, determine your goal out of the investment(s) and if the vehicle gets you there. I want to invest in properties because I like the concept of putting little money down, using OPM to hit cash flow numbers, managing properties/tenants, and eventually (hopefully, within the next 10 years), I want to be able to quit my job and be a full time investor. I have to work because its just the type of person I am, but I'd rather manage properties and maybe coach youth soccer than work a 9-5 because that doesn't interest me.
- So as you can see, my goal, timeline, and vehicle is very specific. Things may change over time, but my analysis tells me this lines up. If you want the same for you, then great. You might be the type of person who can take $200,000 cash and put it in the market, and live off returns or something -- again, determine what you want to do and how you want to get there, and everything will become more clear!
- Good luck to you and keep us apprised!
Yes, this is the most important part of investing that I am still trying to work out myself. What are my goals? Do I have the drive to take risks and build something greater? Or am I better off living a rather normal life but with financial security and the ability to help out my community where I can? I'm beginning to realize that I do not even know that yet. :)
Originally posted by @Ari Bachrach:
I'll leave most of the questions to others, but I can help out with the finance aspect. How much money are you actually talking about? If it's over 1~2 million, then you have a lot of other options open to you beyond simple mortgages. First of all you should probably be looking for a financial adviser, and at the 1 million asset mark they're usually called wealth managers or private wealth managers.
If you have assets, amongst the easiest and cheapest ways to borrow is to borrow against securities. Basically your brokerage account (which should be invested in low cost index funds - don't let them push high priced junk on you), can be pledged against a line of credit. Then if you want to buy something, you just write a check or wire money straight from your line of credit. Interest rates will vary depending on a lot of factors, but are usually comparable or better than even primary home mortgage rates. Because the credit is based on your assets and not your income, it actually won't matter if you have verifiable income or not.
Also a final word of advice: you have assets. You worked hard to get them. Protect yourself. There's a vigorous debate on these forums about whether or not to get an LLC when you start investing. If you have assets then there's no question you need an LLC to limit your liability from lawsuits. Also it might be worth talking to a lawyer for an hour to make sure you're setting everything up in a manner that will limit your liability.
Thanks for the advice, I manage my brokerage accounts all myself and do mostly index funds. I have experience with business formation and already set up a LLC months ago as a holding company and I plan on making more as needed. As far as wealth management, I am not actively looking for someone like that but my ears are open if someone comes along and its through connections I trust. I basically have all the "book" knowledge needed to have a basic macro understanding of the stock market, index funds, futures,options, and even some complex investing strategies involved there. However, when it comes to anything that requires connections like lending, real estate, business, or VC, I am like a fish out of water, yeah.
