How would you invest $25,000 cash right now?

Member since 2017 · 8 posts · 26 votes

We have been sitting on a little over $25,000 in cash for a few months. I've yet to pull the trigger on where to invest it. What would you do to begin turning this $25,000 into early retirement?

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Eric Schultz

Investor · San Diego, CA · Member since 2016 · 265 posts · 305 votes

Here are some ideas on how to invest $25K in real estate: 1.) Invest in a syndication deal as a limited partner. There are proven general partner/sponsor/operators all around the country: A. If you are an accredited investor, you can participate in a SEC Reg D 506c offering as a limited partner. Some offerings have a minimum of $25K investment. B. If you are not accredited, you can participate as 1 of 35 non-accredited investors or “other purchasers” in SEC Reg D 506b offering as a limited partner. This option allows you to invest along side accredited investors. Some offerings have a minimum $25k investment. 2.) Buy another single family investment property. With a $100k purchase price, 20% down, 5% rate on 30-year fixed conventional, you will be right around $25K cash-to-close in several Midwest markets. Rehab costs and cash reserves being separate, of course. 3.) Invest the $25k in AHP Servicing (Google it) for a 10% preferred return while you make bigger plans for that $25k. With all of the paths you can go today, it can be tough to choose. Good luck!

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Shawn McenteerBusiness Member
Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
7y
My interest is buy and hold. Whats your interest in REI?
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Mark Fries
Contractor · Jacksonville, FL · Member since 2017 · 1k+ posts · 2k+ votes
7y
@Greg Gibson I would buy a bunch of bitcoin as soon as it hits 2k...
25 Reply
Greg Gibson
OP
Member since 2017 · 8 posts · 26 votes
7y
Originally posted by @Shawn Mcenteer:

My interest is buy and hold. Whats your interest in REI?
Shawn, we currently have 2 buy and holds that we do short-term rentals through AirBnB. That's the extent of my REI at this point. But I'm excited to learn more.
9 Reply
Shawn McenteerBusiness Member
Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
7y
How is it going for you? Why not continue with short term or buy long term?
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Greg Gibson
OP
Member since 2017 · 8 posts · 26 votes
7y
It's going good so far. That's definitely the lane I know the most, but I guess I'm wondering if anyone else has other advice concerning what they've learned in a different lane (whole selling, rehabbing, etc). Willing to try something new.
0 Reply
Dujon D. Blondel
Rental Property Investor · Arcata, CA · Member since 2019 · 7 posts · 9 votes
7y
I am currently in the same boat. I am sitting on $10,000 and I am looking to take my first step. I am leaning towards acquiring my first rental in the next the months.
7 Reply
Joel Pope
Norfolk, VA · Member since 2016 · 3 posts · 5 votes
7y
Hey Greg! I'm also fairly new to REI but I figured I'd just throw out a couple of ideas off the top of my head.
1. Pair your money with a hard money loan to pick up a house and use seller financing to make monthly returns through interest. I like this strategy bc it’s a monthly return that sort of hedges against a few of the issues with rentals. However, I would suggest reading more on the subject as this strategy can be a bit unethical in certain situations.
Also, I saw that had you mentioned early retirement. Returns through this strategy may come slower than you would like depending on the life of the mortgage you choose.
2. You mentioned wholesaling which requires very little startup money (earnest money, marketing). People like wholesaling in theory bc of the cheap startup costs but it can really be a tough grind depending on what kind of system you’re using to find deals. Wholesalers typically have to follow up on deals that often fall through. If you’re persistent and committed to learning the process, wholesaling is a good option.
3. I’m not familiar with your market but always keep a sharp eye out for rental properties that cash flow in an area with low vacancy rates. I realize that this is very general advice regarding rentals but there’s TONS of information on rental properties out there so just study as much as you can!
Hope this helps, good luck on your search!
5 Reply
Eric Schultz
Investor · San Diego, CA · Member since 2016 · 265 posts · 305 votes
7y
Here are some ideas on how to invest $25K in real estate: 1.) Invest in a syndication deal as a limited partner. There are proven general partner/sponsor/operators all around the country: A. If you are an accredited investor, you can participate in a SEC Reg D 506c offering as a limited partner. Some offerings have a minimum of $25K investment. B. If you are not accredited, you can participate as 1 of 35 non-accredited investors or “other purchasers” in SEC Reg D 506b offering as a limited partner. This option allows you to invest along side accredited investors. Some offerings have a minimum $25k investment. 2.) Buy another single family investment property. With a $100k purchase price, 20% down, 5% rate on 30-year fixed conventional, you will be right around $25K cash-to-close in several Midwest markets. Rehab costs and cash reserves being separate, of course. 3.) Invest the $25k in AHP Servicing (Google it) for a 10% preferred return while you make bigger plans for that $25k. With all of the paths you can go today, it can be tough to choose. Good luck!
26 Reply
Allison Nog
Rental Property Investor · Memphis · Member since 2018 · 15 posts · 16 votes
7y
@Greg Gibson buy a cheap house in Memphis, Rehab and rent it out! $600 monthly. There is no better ROI!
15 Reply
Ian IppolitoBusiness Member
Investor · Tampa, FL · Member since 2015 · 1k+ posts · 1k+ votes
7y
@Greg Gibson , I'm a conservative investor, so what I would do may or may not be what's best for you.

Personally I would diversify to protect in a downturn, rather than trying to maximize potential projected yield outside of one, since a conservative investor believes that protection of principal leads to better long-term returns.

You are already invested in 2 buy + holds that you rent through short-term rentals through air B&B. As you know, these are akin to hotels/lodging and you have significant cycle risk/exposure with short-term rentals (i.e. they are one of the first asset classes to suffer when there is a downturn, they are among the classes that go down the hardest, and they are among the ones that take the longest to come back afterwards).

If a recession hits, you could change your model to a standard multifamily/apartment. But if you've been smart and optimized your property location, structure etc. for short-term rentals, it will not be an optimal yield in that situation as if you had purchased one straight out for that.
So one option would be to purchase a standard multifamily which is a lower on the risk list in a recession. Or you could even diversify to anything lower on the risk list, like strip, net lease, self storage, student housing, mobile home parks, etc..
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Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
7y
I’d simply buy a distressed property with the 25k then I’d fix it up and rent it out .
12 Reply
Juan Restrepo
Miami Beach, FL · Member since 2015 · 33 posts · 13 votes
7y
@Allison Nog thank you!
0 Reply
Steve HodgdonPro Member
Investor · Novato, CA · Member since 2015 · 433 posts · 321 votes
7y
@Greg Gibson maybe a partial on a good note till you find a "hell yeah"?
3 Reply
Charles Royale
Rental Property Investor · Midwest USA · Member since 2018 · 24 posts · 15 votes
7y
@Greg Gibson have you looked into tax liens in your area?
0 Reply
Marisa R.
Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
7y
Originally posted by @Greg Gibson:

We have been sitting on a little over $25,000 in cash for a few months. I've yet to pull the trigger on where to invest it. What would you do to begin turning this $25,000 into early retirement?
Have you looked at Detroit market?
1 Reply
Karen O.
NYC, NY · Member since 2016 · 619 posts · 456 votes
7y
Pay down high interest debt.
3 Reply
Shawn McenteerBusiness Member
Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
7y
Originally posted by @Greg Gibson:
It's going good so far. That's definitely the lane I know the most, but I guess I'm wondering if anyone else has other advice concerning what they've learned in a different lane (whole selling, rehabbing, etc). Willing to try something new.
Whatever your process was for starting out with your shirt term rentals apply to your new lane. The process for all this is similar. Research, network, build team, keep learning, take action, continue to learn, and don't stop learning.
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1 Reply
Maureen Adams
Member since 2019 · 8 posts · 12 votes
7y
We flip houses in NE Ohio. We buy, design, fix, stage, and sell. We finance most of our projects. On occasion, we will partner with private investors such as yourself. Typical flips in our area is as follows:
35k-50k purchase price
70-100k rehab cost
150-200k sale price
5-10k closing costs
40k profit
2-3 month duration
25-35% return
You can partner with flippers like us in your area.
All the best!
Maureen
10 Reply
John Moore
Falmouth, KY · Member since 2018 · 24 posts · 5 votes
7y
@Greg Gibson joining BiggerPockets was your first good choice. Personally I would either look into possibly putting the brrrr method to action or maybe even start an adventure as a private lender in your area. It’s one of the better ways to invest and get a good return especially without having to deal with tenants or get your hands dirty. Just keep your terms adjusted in your favor and make sure you screen the people borrowing and the deal throughly. Either that or partner with the person so you get a cut from the rent or rehab without actually having to participate.
2 Reply
Richard Brisbois
Flipper/Rehabber · Metro Detroit · Member since 2018 · 3 posts · 1 vote
7y
@Dennis M. @ Greg Gibson
Yes! What Dennis says
1 Reply
Anthony Dooley
Investor · Columbus, GA · Member since 2014 · 2k+ posts · 1k+ votes
7y
@Greg Gibson that is a great question. I would apply the baby steps from Dave Ramsey. $1000 in the savings for small emergencies, then apply the rest to your smallest debts until it's gone. The payments that you are no longer making on credit cards, car, etc. will make it easier to save up another $25,000 much faster than before. Your return on investment is the interest that you are no longer paying on the debt and the increased cash flow of having less payments each month.
4 Reply
Lance Langenhoven
Real Estate Broker · The Woodlands, TX · Member since 2016 · 63 posts · 28 votes
7y
@Greg Gibson - I would go with what @Allison Nog is suggesting. Maybe explore a little more with her on how she's doing what she's doing. I wouldn't invest with 3rd-party operators, syndication deals, crowdfunding or whatever they want to call it. Do it yourself or maybe one 50/50 partner. Good luck!
0 Reply
Daniel Schiller
Rental Property Investor · Houston, TX · Member since 2014 · 91 posts · 76 votes
7y
@Mark Fries hope is not a strategy.
2 Reply
Daniel Schiller
Rental Property Investor · Houston, TX · Member since 2014 · 91 posts · 76 votes
7y
@Greg Gibson paying down your credit card debt is your best ROI. Househacking a duplex next; otherwise I'd buy a small fleet of Toyota Yaris and rent them on TURO until you build a reserve to buy something worth your time.
3 Reply
Benjamin Gallant
Investor · Pasadena, CA · Member since 2013 · 22 posts · 31 votes
7y
@Eric Schultz Eric, what’s the best way for a non accredited investor to find syndicators to invest in their LP? My goal is to eventually work as a GP and the best advice I’ve seen to get there is to invest as an LP first to get a few deals under your belt.
1 Reply

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