What would you do with $400,000 cash?
Member since 2025 · 3 posts · 8 votes
What would you do with $400,000 cash?
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1yQuote from @Damon Bruceo:
What would you do with $400,000 cash? My goal is to create passive income because my wife and I are in our 50's with no 401k savings.
What would you recommend for a passive income?
whatever you do, diversify. do not put all 400k into one investment, I would not do more than 100k in any investment if I had 400k cash.
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31 Replies
- Flipper/Rehabber · Bloomfield CT · Member since 2020 · 1k+ posts · 408 votes1y
Consider becoming a private money lender
- Member since 2025 · 3 posts · 8 votes1y
Investing with other long term renter's? Is that a private money lender?
- 1yMelissa JusticeBusiness MemberRental Property Investor · Phoenix, AZ · Member since 2024 · 518 posts · 1k+ votes
Hey there!
With $400K cash and a goal of passive income in your 50s, you have a strong opportunity to create financial security without needing a 401(k). Here's how many in your position are building passive income:
1. Turnkey Rental Properties (Midwest & Southeast)
Why: Immediate cash flow, property management in place, landlord-friendly states.
Expected returns: 8–10%+ cash-on-cash (after expenses), plus equity and appreciation.
Example strategy:
Buy 4–6 fully rehabbed, tenant-ready rentals for $130k-150k each.
Net ~$200–$500/mo per property = $1,400–$3,000/month passive.
2. Small Multifamily (BRRR or Buy & Hold)
Duplexes or quads in affordable markets can be held or refinanced to recycle capital.
Higher cash flow but more active if self-managed or if you oversee renovations.
If you're willing to be semi-passive, this could supercharge your returns.
3. Private Lending or Real Estate Notes
Lend to investors doing flips or BRRRs at 8–12% interest.
Passive and secured by real estate, but requires strong vetting.
Could generate $2,500–$4,000/month with $400K deployed.
Sample Plan for $400K:
$300K into 5–6 turnkey rentals in cash-flowing markets.
$50K reserved for emergencies/repairs.
$50K as a private lender to test that model.
Total passive income could be $2,000–$4,000/month depending on market and leverage.
Always happy to chat more about specific markets or run sample deals side by side.Best of luck!
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
Quote from @Damon Bruceo:
What would you do with $400,000 cash? My goal is to create passive income because my wife and I are in our 50's with no 401k savings.
What would you recommend for a passive income?
whatever you do, diversify. do not put all 400k into one investment, I would not do more than 100k in any investment if I had 400k cash.
7e investments53 Reviews- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes1y
Quote from @Chris Seveney:
Quote from @Damon Bruceo:
What would you do with $400,000 cash? My goal is to create passive income because my wife and I are in our 50's with no 401k savings.
What would you recommend for a passive income?
whatever you do, diversify. do not put all 400k into one investment, I would not do more than 100k in any investment if I had 400k cash.
I recently heard Kevin O. discussing his philosophy on investment portfolio structure which he learned from his mother, it was genius.
Never allocate more then 20% into any 1 sector, the ONLY exception is real estate where can go up-to 1/3 (33%).
Never have more then 5% in any 1 company/ bond/ stock.
When price action moves one above 5%, trim to stay in boundaries.
It's a brilliant dollar-cost-averaging modifier.
The problem with dollar-cost-averaging is buying at the highs. By being correctly diversified, the portfolio will signal when a position is into those highs (over 5% vs others) and trim to reap those boom returns, re-distribute portfolio wide allowing for buying in the lows.
When run the math, it bends the return curve upward. Brilliant.
Never remove the principle, ever. Can only ever remove dividend distributions, never principle.
So simple, so smart, wildly effective.
- 1yKerlous TadresBusiness MemberRealtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votesI would work with an investor-friendly agent who can help you generate passive income through multi-family and other great investment opportunities. There will be some great cash-flow oppurtinities out there
Quote from @Damon Bruceo:
What would you do with $400,000 cash? My goal is to create passive income because my wife and I are in our 50's with no 401k savings.
What would you recommend for a passive income?
Kerlous Tadres | Reafco Real Estate540 Reviews - New to Real Estate · Miami, FL · Member since 2024 · 1k+ posts · 463 votes1y
Damon, with $400K cash and no 401k, focus on stable, income-producing assets. Buying rental properties, either single-family or small multifamily in landlord-friendly markets can generate strong monthly cash flow. With smart leverage, you can scale beyond $400K while keeping risk manageable.
If you want hands-off income, DSCR rental loans or dividend-paying REITs are good options too.
- Lender · Santa Monica · Member since 2025 · 28 posts · 12 votes1y
Consider private lender funds. Look for those offering 9-10% annually, with your investment spread across hundreds of tangible real estate assets. Prioritize lenders with lower Loan-to-Value (LTVs) and conservative underwriting. They are out there you just need to some serious vetting. With reinvested gains, $400k could become $800k in about 7 years
- Durham, NC · Member since 2013 · 502 posts · 215 votes1y
@Damon Bruceo
Short duration T-Bills. Risk fre, totally passive 4.2% interest with no state income taxes. Hard to beat with real estate at the current price points
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
Quote from @Andreas W.:
@Damon Bruceo
Short duration T-Bills. Risk fre, totally passive 4.2% interest with no state income taxes. Hard to beat with real estate at the current price points
I agree, especially when the person did not specify if they had any real estate experience behind them. its impossible to tell someone what to do without knowing their experience, level of risk tolerance etc.
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- Republic, MO · Member since 2024 · 10 posts · 4 votes1y
If you find yourself interested in Self Storage as an investment, reach out to me.
- Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes1y
Depends on how long you have until you want or need to retire, how much you money do you need? What are your current and will be your living expenses? What is your current income will you be able to add to your savings? Do you currently have any debt? You should ask @Scott Trench.
- 1yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
Thanks, Eric - it's really hard to tell someone how to invest, as it depends on a ton of factors.
One useful tool for OP might be this:
Imagine I handed you "enough" money to meet all your financial goals. The midpoint for "enough" for BP Money listeners is $2.5M, for example. Suppose I handed you that $2.5M in cash, right now.
What kind of portfolio would you build?
This is not an instant reaction answer for most. Most people need to sit on this for a while, go over it with their spouse, and really commit it to paper and long-term thinking.
But, from there, we can begin to get very clear about answering questions like "what should I invest in?" and "What should I do with this large pile of cash I recently came into?"
The answer will be clear:
- If far away from your goal (less than 80% of the way - if the goal is $2.5M, and you have less than $2M, for example), then invest essentially all cash in the "aggressive" portion of the portfolio. Tweak this a little bit if you are nearing traditional retirement and need it to be more of a sliding scale.
- If you are close to your goal - 80% or less than 5 years, then it's time to add most/all additional cash to the diversification positions of the portfolio.
Tying this together - if my goal were a $2.5M portfolio by age 40 consisting of the following:
- $1.5M in a conservative retirement portfolio allowing me the ability to withdraw 5% ($75K per year)
- $1.0M in two paid off rentals generating $50K per year in conservative approximation of cash flow
Then, I would probably be buying the two rentals early in the journey, and committing all other cash to the stock portfolio until I rounded out the $2M mark - at which point I'd consider layering in the conservative pieces of the portfolio, and then paying down the debt on the rentals.
This is obviously a quick response, there's more to it, but should be a helpful framework to get going.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes1y
Quote from @Damon Bruceo:
What would you do with $400,000 cash? My goal is to create passive income because my wife and I are in our 50's with no 401k savings.
What would you recommend for a passive income?
"What would you do with $400,000 cash? My goal is to create passive income because my wife and I are in our 50's with no 401k savings.
What would you recommend for a passive income?"
For Passive......
I'd say listen to Buffet and get into a low-low cost ETF or Index fund pegged on the S&P 500.
Done.
Because here is the thing, Investment Real Estate is NOT passive.
Let me clarify, Investment Real Estate IS NOT PASSIVE.
Investment Real Estate can be done in ways that is less, or more ACTIVE. But it is never passive as in 100% hands-off.
Real Estate will require work, effort, decisions, resources.
Getting a PM to run things is NOT passive.
You need to find the PM, vet them, manage the managers, and take corrective and enforcement actions when they arise.
And yes, they WILL arise, eventually. If you do Real Estate enough, for long enough, things WILL happen, fact.
The only question is when, what, and how prepared one is.
Those of my clients who call it passive I correct, it's low impact, not passive. There is a very big difference between these 2.
How do we get too "low impact"?
It starts at the buy. We buy strategically.
Next; Proper Preparation Prevents Pizz Poor Performance.
Prepare, prepare, prepare........
If you want to win races you buy a race car. If you want cheap you get a Prius.
Don't expect to win races driving a Prius...... - Realtor · McAllen, TX · Member since 2025 · 141 posts · 58 votes1y
You could invest in rental properites. Investing in rentals is one good way to create passive income. However, there is a lot that goes into it. Some expamples are: finding a rental with a good rental history, keeping track of your expeneses, and managing the properties. Just to name a few. To which you can hire a good property manager.
However, I'm not a financial advisor, this is just my opinion on what I would do. I would consult a financial advisor and see what they say.
- Member since 2020 · 351 posts · 329 votes1y
There isn't enough information available to give good specific advice. So I'll give some banal, general advice.
1. Maximize Tax-Advantaged Accounts First
Real estate offers great tax advantages, but 401(k)s and IRAs often provide even better benefits with less risk and complexity. Max out contributions to these accounts, even if it means using part of your cash reserve.2. Invest in Yourself and Your Skills
The best ROI often comes from building your own business or side hustle. Ask: Can I leverage my skills to create something scalable or sustainable?3. Be Realistic About Real Estate Cash Flow
Current market conditions—high rates and inflated home prices—make it hard to find properties that cash flow. Covering expenses is often a win. With that said, real estate is still a GREAT long term investment.
3b. High-yield properties on paper may come with real-life headaches: vacancies, bad tenants, and higher maintenance costs. Be conservative in your projections.4. Diversify Across Asset Classes
Avoid putting all your eggs in one basket. My target allocation looks like:-
1/3 in real estate
-
1/3 in index funds (e.g., S&P 500)
-
1/3 in tech monopolies
Other asset classes could include: crypto, small local business, internet based business (ecom/blog), treasuries, private mortgage notes.
5. Invest Where You Have Local Knowledge
Only buy property in markets you understand. Don’t be swayed by marketers hyping up "hot" areas—you live with the outcome, not them.6. Don’t Obsess Over Optimizing Every Dollar
Trying to squeeze out every last bit of return can lead to stress and bad decisions. Optimize for simplicity, sustainability, and peace of mind.7. Plan for Downside Risk
Every investment should be survivable if it goes to zero. Exceptions are broad-market index funds (like the S&P 500), where you should expect and plan for temporary 50% drawdowns.
(Edited by chatgpt) -
- Residential Real Estate Broker · Paia, HI · Member since 2016 · 479 posts · 311 votes1y
Hard money lending.
- Member since 2024 · 18 posts · 8 votes1y
I'm in a similar situation but considering taking out some of my 401k for REI. The taxes we pay every year exceed $100,000 due to my W2 so real estate is a strong consideration for us. I could pull out up to 400k or so which makes me think multi family could be the way to go. Easier to manage 1-2 multi vs 10 SFH?
- Member since 2022 · 1k+ posts · 1k+ votes1y
If you're thinking of being a landlord it may be too late for you in your 50's. If you self manage it can be very stressful dealing with tenants, especially if you have no experience. Everything may start out great until its not, then what? If you hire property management there goes your profits. Know the laws and know how to screen a property manager or you'll be sorry. It's complicated and not for the squeamish. But if you're gung ho, you can find rentals that offer good returns in some parts of the country, (not in Seattle) that hopefully pay a nice rent while also appreciate into the stratosphere.. Like others said, diversify and don't spend all in one place. Money market funds, t-bills, low stress and easy. Also, research and find some stocks that pay a nice dividend. A little here, a little there.
- Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes1y50's isn't close to being old! After the passing of my husband, I was 63. I relocated from so cal (where we built spec builds) to Bend, Oregon and did a few fix/flips, and spec build. Then, relocated again to Redding, CA, and I'm now, at 72, focusing on working with buyers/sellers in real estate, and getting geared up to start building ADUS once rates come down and materials costs are lower. My son is doing the construction part. You're only old if you think you are.
Quote from @Henry T.:
If you're thinking of being a landlord it may be too late for you in your 50's. If you self manage it can be very stressful dealing with tenants, especially if you have no experience. Everything may start out great until its not, then what? If you hire property management there goes your profits. Know the laws and know how to screen a property manager or you'll be sorry. It's complicated and not for the squeamish. But if you're gung ho, you can find rentals that offer good returns in some parts of the country, (not in Seattle) that hopefully pay a nice rent while also appreciate into the stratosphere.. Like others said, diversify and don't spend all in one place. Money market funds, t-bills, low stress and easy. Also, research and find some stocks that pay a nice dividend. A little here, a little there.
- Member since 2022 · 1k+ posts · 1k+ votes1y
Quote from @Karen Margrave:
50's isn't close to being old! After the passing of my husband, I was 63. I relocated from so cal (where we built spec builds) to Bend, Oregon and did a few fix/flips, and spec build. Then, relocated again to Redding, CA, and I'm now, at 72, focusing on working with buyers/sellers in real estate, and getting geared up to start building ADUS once rates come down and materials costs are lower. My son is doing the construction part. You're only old if you think you are.Quote from @Henry T.:
If you're thinking of being a landlord it may be too late for you in your 50's. If you self manage it can be very stressful dealing with tenants, especially if you have no experience. Everything may start out great until its not, then what? If you hire property management there goes your profits. Know the laws and know how to screen a property manager or you'll be sorry. It's complicated and not for the squeamish. But if you're gung ho, you can find rentals that offer good returns in some parts of the country, (not in Seattle) that hopefully pay a nice rent while also appreciate into the stratosphere.. Like others said, diversify and don't spend all in one place. Money market funds, t-bills, low stress and easy. Also, research and find some stocks that pay a nice dividend. A little here, a little there.
True. Just saying that there may be better ways to get your passive income than dealing with tenants. The last thing I want in my old age is tenants. I don't care what anybody else says, that's just me from 40 years experience. I hope to be pounding nails at 100, building is always fun.
- Specialist · NJ · Member since 2022 · 1k+ posts · 653 votes1y
With 400k, I'd work in the 2nd tier, 3rd tier cities. places like Pitt, Indy, Des Moines Ia. These cities have the active markets, but they also have cheap entry points. Your money stretches. The end goal for you is to build a portfolio or RE that brings in what? 15k? 20k per month? But at the end of the process still have your 400k in cash. Traditionally speaking, when targeting those 70% - 75% project costs to ARV, your cashflow on a SFH like a 3/1.5 or a 4/2 even will only be a few hundred once all costs and fees come out for the PM. Your DSCR will be 1.1 - 1.3 maybe.
However, you're liquid enough to do advantage cash buying. You do need to build that kind of network for yourself but with 400k cash, you should never be taking a bridge loan for the purchase. You take them once you own the property.
A novice investor scours the market/MLS listings, and has their shiny pre-approval from their lender. They find an on market property they like and find out there's 7 other offers and their best and final is due in a day. An on market property, once all the numbers/costs are plugged into the spread sheet, it will never have a project cost under 70%. I shouldn't say never, but I mean it's a diamond if you find it that way. You go and find some 60% project cost investment and you're the only offer, God Bless you. Somehow it fell through the cracks and right into your lap. I guess this does happen every now and again. Never to me or one of my clients, but I guess it can.
But if you leave MLS/Wholesalers out of it and concentrate on direct from seller, auctions, foreclosures, and short-sales now all of a sudden you are shopping at the bottom rung price wise. In these 2nd and 3rd tier cities, you can buy a 3/1.5 or a 4/2 for 30k - 50k. It's worth 70k - 90k, but that's the edge of advantage cash buying. You're starting the flip or the BRRRR ahead of the game and under market. Now, for the flip you can be 15% off the ARV and you'll still win - the 75%ers will not. For a BRRRR, your mortgage payment will be 33% less than that of a 75% investor, which means instead of the 200 - 300 standard cashflow, yours is 500 - 700 on a SFH
I'll walk you through a sample project so you can see the process. I just recently bought a house at the Pitt auction in June for 39,500. I received the deed in mid July. A week after that I received an offer for 70k. I am taking that offer on this one as I want to build some cash and then start storing these away in a portfolio. I'm not as lucky as you to have 400k! Great job on saving. My wife and kids spend money we're playing Monopoly in real life. Anyway, I am taking my 77% return in 90 days and rolling it into another one.
But if I was in the portfolio building phase and I'd want to keep this house let's say. Once I had the deed, I'd go to my lender who will do bridge loans as small as 50k. I'd get into a delayed bridge loan and get like 80% back of my 39k plus get the 50k needed to make this a rental. I'd have a loan of about 81k and I'd have about 8k left in. I would manage the subs myself. Call the demo team, then take care of any mechanicals with a licensed pro, call some sheetrock/paint guys then floor guys and if I'm redoing the kitchen/baths a separate vendor for those. In about 75 days I get through the rehab and do a section 8 rental for 2k per month. That's what it is in this zip code. The house is now worth 180k. I go to a DSCR lender and only do a 50% LTV DSCR loan. The rate will be in the low 6s and the piti payment will only be 900 or so. Now, I have my money back, I have 90k of unrealized equity in the house, and cashflow of about 1k per month.
I'd do two at a time if I were you with that cash. You can have a portfolio of 20 houses in 2.5 years and still have your 400k and about a few million in equity in RE with about 15k - 20k coming in monthly.
The last thing you wanna do is sink the entire 400k into some luxury property and try to do something with it. Go where the money means something.
And remember, novices play the 70% - 75% project cost game and at times people get stuck, lose, and default on loans fishing in that pond.
Pros have project costs under 65%, sometimes damn near 50% cause they understand that if you are not starting ahead of the game, then you are already behind.
- Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes1y
Quote from @Damon Bruceo:
What would you do with $400,000 cash? My goal is to create passive income because my wife and I are in our 50's with no 401k savings.
What would you recommend for a passive income?
Not a private lender, way too much risk, and only experienced investors should consider lending money like that, there's too many things that can wrong, and unless you're in a position to right the ship if things go sideways, it's not a good idea. No matter how solid a project looks, there is always something that can go wrong.
- 1yJoseph AmicoPro MemberReal Estate Agent · Boston area · Member since 2024 · 10 posts · 5 votes
1) Buy a small multi family nearby.
2) Keep some cash in reserves.
3) Benefit from value-add, cash flow, and tax advantages - Investor · Reseda, CA · Member since 2019 · 297 posts · 150 votes1y
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- 1yRyan RomingerBusiness MemberReal Estate Broker · Indianapolis, IN · Member since 2018 · 340 posts · 144 votes
With $400K and a focus on passive income, I’d recommend starting with stable, low-maintenance assets. That could mean 2–3 cash-flowing rental properties in solid markets, ideally managed by a reliable property manager so you're not hands-on. Another option: diversify with a mix of real estate syndications or REITs for true passivity.
Intrigue Real Estate & Property Management4.6285 Reviews - 1yDenise SuppleeBusiness MemberRealtor · Willow Grove, PA · Member since 2017 · 984 posts · 643 votes
Hi @Damon Bruceo, nice to meet you. It’s great that you’re being intentional about building passive income, especially with $400K to work with. I completely agree with @Chris Seveney, diversification is key. Spreading your capital across a few different asset types can help reduce risk and create more stable income over time.
For passive income, you might consider a mix of real estate syndications, which allow you to invest in larger deals without being a landlord, and a few turnkey rental properties in solid cash-flow markets. You could also allocate a portion to REITs or dividend-paying stocks for more liquidity and truly hands-off income. The idea is to blend short-term cash flow with long-term growth and stability.
At this stage, consistent, reliable income matters most—so leaning into lower-risk, income-focused assets while keeping some flexibility is a smart move. You're in a strong spot to create a retirement plan that works for your timeline and lifestyle.
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