Dallas Tx · Member since 2021 · 112 posts · 31 votes
Hey guys, so I'm saving to invest in my first home here in the next 10 months, I was thinking putting my savings in the bank doesn't do me any good, maybe for liquidity and stability
However 10 months is a while and so I was wondering.
Dearborn, MI · Member since 2019 · 124 posts · 41 votes
4y
Hate to say it because i'm in the same position, but the right answer would be in a high yield savings account. HYS are probably around 1% if you're lucky. Since you need your money in ten months, think of inflation as your cost of safety. Inflation is what it's costing you to keep your money safe.
The worst thing that could happen would be to invest in index funds and they end up dropping more than inflation will be over those ten months period, which is a real likely possibility. ( not predicting the market will go down, but its very possible!
Rental Property Investor · Seattle · Member since 2018 · 134 posts · 100 votes
4y
@Juan Campos That's great you're looking to make a move on a first property! I assume the savings you are referring to will be used for the down payment for your purchase. Although 10 months may seem like a long time, and it's tempting to get a return on that money while you wait, my advice is to keep it in cash in a savings account.
CD's often require the money to be locked up for a year or more, and anything shorter really will not get you an appreciable return.
Putting it in index funds can be fairly liquid, and I would recommend that if your time horizon was longer 3-5 years. But for only 10 months, there's a good chance you won't get much appreciation and risk having less for your first deal. Passing on any gains over the next 10 months would be worth it in the long run if it meant you are able to get into your first property.
Dearborn, MI · Member since 2019 · 124 posts · 41 votes
4y
Hate to say it because i'm in the same position, but the right answer would be in a high yield savings account. HYS are probably around 1% if you're lucky. Since you need your money in ten months, think of inflation as your cost of safety. Inflation is what it's costing you to keep your money safe.
The worst thing that could happen would be to invest in index funds and they end up dropping more than inflation will be over those ten months period, which is a real likely possibility. ( not predicting the market will go down, but its very possible!
Rental Property Investor · Seattle · Member since 2018 · 134 posts · 100 votes
4y
One caveat to high yield savings accounts is sometimes they have a limit to the amount you can withdraw per month. For example, some accounts have a $10k limit withdraw per month, so you have to take that into consideration as you near the time when you need your funds. Be sure to check that before depositing your funds.
For real estate, I am in the Western Washington market (excluding Seattle proper).
For non real estate investing, I maintain a mix of total US and World stock market indices, REITs, short-term corporate bonds (~5% of portfolio), mid-term investment grade bonds (~5% of portfolio), and unsecured notes.
@Juan Campos I use comenity bank and it’s. High yield savings account - you can withdraw $50k per day. The rates are 0.60%, so not great, but better than a kick in the pants
Hey guys, so I'm saving to invest in my first home here in the next 10 months, I was thinking putting my savings in the bank doesn't do me any good, maybe for liquidity and stability
However 10 months is a while and so I was wondering.
Where do you guys park your savings?
Cd?
Bank?
Index funds ?
Thanks in advance
Alright, so just to clarify, you're investing in a "home", not a "rental property", correct? The former is not an investment. The down payment you put down is essentially an asset, but not by Robert Kiyosaki's definition which is what I follow.
Since we're talking about parking money to buy a home you'll live in, I agree with @Will Kenner. I will note that there's no stability with parking cash in the current environment, but like Robert says: savers are losers, but if you don't have the education to make your money grow, it's better than nothing.
Dallas Tx · Member since 2021 · 112 posts · 31 votes
4y
@Scott Johnson
It will be my primary residence for a year after that it will become my first rental, I'm educating myself reading books and lots of info, but I am lookin for the best place to park my savings because my situation is a bit tough working doubles every day working towards my vision.
So where would you park your money? Didn't really answer the question there
It will be my primary residence for a year after that it will become my first rental, I'm educating myself reading books and lots of info, but I am lookin for the best place to park my savings because my situation is a bit tough working doubles every day working towards my vision.
So where would you park your money? Didn't really answer the question there
After one year, make sure your lender allows you to rent out the property. Also, make sure you have a plan on where to move afterward and whether your property will cash flow.
The answer is that "I don't save", as it's understood in pop culture. Comparing what I do and what you do is like comparing apples and oranges, but I park my capital in less liquid assets including precious metals, one crypto, and real estate (my primary).
Rental Property Investor · Charlottesville, VA · Member since 2018 · 46 posts · 13 votes
4y
@Juan Campos
Juan, great question! My wife and I were in the same boat about a year ago, we chose a high interest savings account to put our money in. With this account we do not pay any fees and the money earns while we wait to find a multiplex in our range. If we had choose a business and money market account, we would have to maintain a minimum amount and pay fees. So, this may be option for you. Good luck.
Real Estate Syndicator · Phoenix, AZ · Member since 2018 · 903 posts · 1k+ votes
4y
@Juan Campos Sounds like liquidity and short term are important. So options that offer such, are your choices. I like lending my money when i'm not using it, especially for 8-10% promissory notes. Many flipping or short term partners who can easily turn or flip a property in 10 months. Plus you will probably learn a few things in the 10 months. We also do this with our short term rental projects and there is always interest.
If that's too much risk it for the bisquit, savings account, whole life insurance, index fund, high yield savings, short term bonds, etc.
Which Rents do you invest in if you don't mind me asking ?
Currently I have a mix of residential and commercial investments across the cities or Burien, Des Moines, Leavenworth, and Belfair. These areas have seen significant growth over the last several years so often the residential properties don't pass the general 1% rule, BRRRR strategy, or low down-payment options. (Unless of course they are approached with an FHA/owner occupier strategy in which case you can find properties that fit these metrics.) On the commercial side, it's a similar story in terms of cap rates (they are fairly compressed, but like any general rule, not the only basis on which to evaluate a property) however this is offset by having NNN leases so increased gen-op costs are shifted to the tenants, and value-add opportunities as a way to "force" appreciation as well as generate additional income.
Depending how much you currently have, have you considered private lending?
Hook up with some local investors who are doing well and have a good track record. Offer to your lend your funds on their projects at a rate you're comfortable with. For example, 1% per month is 12% per year, and so on. The term should be no more than six months unless you're comfortable with longer. When you're ready to acquire income property, they will remember their dealings with you and they may reciprocate.
Books are o.k., but remember: they can be out of date by the time they go into print.
Rental Property Investor · Member since 2019 · 33 posts · 78 votes
4y
@Juan Campos
Voyager crypto app pays 9% on USDC which is a very stable crypto. It's pegged directly to the value of the dollar so it doesn't bounce up and down like bitcoin.
Rental Property Investor · Charlottesville, VA · Member since 2018 · 46 posts · 13 votes
4y
We ended up with Marcus by Goldman Sachs. By the time their rates were higher than everyone else, however, today I'm not sure what others rates are. Just thoroughly look around if you choose this option. The one thing to remember is that it is a savings account, so you get no debit card. However, you can transfer to/from outside accounts and conduct wire transfers.
Real Estate Broker · Portland, OR · Member since 2020 · 6 posts · 8 votes
4y
For your timeframe, I would find a high yield savings account. The extra hassle of a cd, or the extra risk of the money not being there or up in 10 months in any other investment isn't worth the risk. It this situation, you just want a place to park it until you need it in a few months.
Voyager crypto app pays 9% on USDC which is a very stable crypto. It's pegged directly to the value of the dollar so it doesn't bounce up and down like bitcoin.