I know that the question about what to do with $100k has been asked with a 3 choice answer but I was curious as to what people recommend someone would do with that amount if they are just entering into the RE world. What would you do and why?
I am also interested as I will be entering a similar dilemma in the future.
Im new and just starting out. But I think the answer depends on your goals.
Ive been reading "The Unofficial Guide To REI" which does a good job at explaining how to build a plan around your goals.
The starting investment is only a part of the equation.
Do you want passive income and retire early or just something to supplement your social security? Do you want a big nest egg? Do you want a place to live for free? Do you want to buy a property and sell it in 10 years so your kids can go to college? There are a million reasons.
So what you do with the XX dollars you have depends on the outcome that will support your future goals.
It depends. If you have a job then you have limited time. So you want more passive income streams like turn key rentals, or private money lending through funds etc. If you dont have a job and want to create a business, you could get into flipping which can grow your investment faster than the passive income streams.
As @Anish Tolia pointed out, it really comes down to your investment objectives. You need to clearly define what your goals are before making any decision. If you're looking for a continuous cash flow stream, rental properties are one way to good. If you want something totally passive, you can invest in paper. There's an endless number of ways to invest. Decide what your goals are, how much time you want to spend on it and what your risk tolerance is first. That's my two cents.
I totally agree with the above, but would add that the skill set and experience that you bring also can effect how you pursue those goals.
If you're brand new and have never invested before, you need to obtain some knowledge first and foremost. Then put together a plan based on your goals. What do you want to achieve from your real estate endeavor? Someone told me a long time ago, people don't plan to fail, they just fail to plan. So put together a simple, doable business plan.
Now, a big part of the business plan is your marketing plan. If you want to build a sustainable real estate investment business, marketing is key. How do you intend to find great deals on a consistent basis?
Once you know this then its a matter of execution and follow thru. So your $100k will be used to fund your real estate investment business and cover education, marketing, operational costs, deposit & maybe even down payment for deals. If your initial plan has you focusing on wholesaling then you don't need to worry about down payments.
I think it's almost a handicap to have a sizable chunk of change to start.
Most every successful real estate investor that I know, including myself, started out with very little or no resources. Having to scrape to get by is not only part of the ritual most of us go through but part of the initiation and story-telling that investors tell each other, over the campfire so to speak.
I started soon after the death of my Father who left me $2,000 of PG&E stock that I parlayed into $1,800 after a year. So, stocks were not my expertise. I spent $300 (half borrowed) and took a one day seminar on buying foreclosures taught by Charlie Schuben and then another $500 one-on-one training with Ken Roberts, later of TWMPPM fame.
Ok, so what would I suggest to do with $100k? I wouldn't spend much of it. Perhaps budget some educational money, no more than a few hundred bucks to buy books, maybe a little more if you find a niche that you want yo pursue but no more than a couple of grand. I'd put the rest into something that you can't touch for 6 months to a year, like a hard money loan through and established broker.
Unless you have the education and knowledge, it's just too easy to spend money on stuff you really don't need, including education, because you don't know what tools you'll need when first starting. And then there's that old cautionary saying that I watch my probate heirs prove and re-prove:
"A fool and his money are soon parted."
Depends on your goals and what you want to accomplish.. I can name several different areas I would invest $100k but it will probably not match your goals, as some of the others have stated above.
PS: I should have put $100k on U-Con Men's Basketball to win the NCAA Championship.. 100 to 1 odds.. LOL!!!
Welcome. Time to build the foundation below first.
Check out the Start Here page http://www.biggerpockets.com/starthere
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Two Great reads, I bought both J. Scott The Book on Flipping Houses,The Book on Estimating ReHab Costshttp://www.biggerpockets.com/flippingbook
Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals and all the cash buyers (rehabbers) you will need.
You might consider Niche or Specialized Housing like student housing. Rents can be 2-4 times more. Remember you don't have to own a property to control it.
Download BP’s newest book here some good due diligence in Chapter 10. Real Estate Rewind Starting over
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