First time investor from Tech

[Austin Murphy]

Hi all - I’ve had a pretty serious windfall recently and had an exit from a startup and a new role at a major company with a pretty crazy compensation structure. 

I have about $500K cash and will additionally have about $75k every 3 months or so to invest.

My plan was to buy a rental property every 3 (50k from savings and $75k from quarterly RSUs = $125k) months until I have 10 properties, then save up and take stock, reassess, etc.

[Bruce D. Kowal]

No one asked me, but with that savings, you should consider medical school.  

[Melanie Marie Trinh]

Niceee! 

[Austin Murphy]

Quote from @Bruce D. Kowal:

No one asked me, but with that savings, you should consider medical school.  

Bruce - My tech offer was very very generous. I am not a young man, but live in the SF Bay Area where property I would live to purchase for myself isn’t within reach. I’m mostly a stock market investor.

[Nathan Gesner]

Quote from @Austin Murphy:

Hi all - I’ve had a pretty serious windfall recently and had an exit from a startup and a new role at a major company with a pretty crazy compensation structure. 

I have about $500K cash and will additionally have about $75k every 3 months or so to invest.

My plan was to buy a rental property every 3 (50k from savings and $75k from quarterly RSUs = $125k) months until I have 10 properties, then save up and take stock, reassess, etc.

Learn about self storage. Paul Moore has a good book in the bookstore, plus blogs and forum posts. Henry Clarke and a few others are very sharp in this market. Someone like Paul Moore has tried his hand at just about everything over the last 30+ years and he says self-storage is the only thing he's investing in now. I bought a small storage unit last year and manage it myself with 3-4 hours a week, no leaking toilets, nobody locked out on a Saturday night, no domestics, etc. It's the easiest gig and cash flows A LOT better than residential rentals.

[Nicholas L.]

@Austin Murphy congratulations.  Do you already own a primary?  Buy one, make sure you like being a landlord, and go from there.

[Jared Hottle]

This is a great situation to be in and glad you are looking at investing instead of just spending your new found money. You have a lot of options on the table which is exciting! I love the BRRR strategy and with your cash you should be able to fund the purchase and rehab with cash and be able to refi once the project is done. Obviously you have money coming in but the ability to get most or all of your money out of a deal will allow you to scale quickly use that money and your 75k each month to do a couple at a time. I think I would not set a number on how many to do. Just work your systems and make sure your systems and team have the bandwidth to scale up.

[Jordan Moorhead]

@Austin Murphy why can't you househack in the Bay Area? I know people who have done it

[Conner Olsen]

@Austin Murphy I'd look into getting into syndications or larger deals if you're ok being passive. With that amount of money you could really diversify throughout the country.

[Nick Riccio]

@Austin Murphy Congrats on the major win! That's great. 

I think a lot depends on where you are at currently. Do you already have the real estate knowledge? Or, would you be looking to learn as you go? If you're learning, my advice would be to start small with a house hack which will allow you to have hands-on experience and learn the ropes. As @Conner Olsen mentions, I'd simultaneously look into partnering with someone more advanced and provide capital in exchange for learning the ropes.

[Danny Webber]

That is a very generic plan. You need to sit down and run 5, 10 and 15 year investment goals. ROI, when, reinvestment, markets, etc...

[Paul Moore]

@Austin Murphy congratulations that is a wonderful windfall! Thanks for the shoutout above @Nathan Gesner

If I were you, I would seriously assess whether or not you want to be an active property manager. I’ve talked to about 2000 (my guess) prospective investors over the last decade and the vast majority who have great income and great jobs, or a great retirement, or a family, have found that it’s very hard, even grueling, to manage individual properties. Often the returns are far less than expected. I think you could potentially make just as much money with a hands-off approach by investing in syndications or funds. If you are interested in that path, you might want to check out @Whitney Sewell's podcast The Real Estate Syndication Show and @Brian Burke's excellent book The Hands-Off Investor. You may also want to check out Jim Pfeifer’s excellent community called Left Field Investors. Good luck and feel free to reach out if I can help further.