Love to get input from all BP members. I am just about at my goal of saving 100K (4 weeks away!) before I pull the trigger and buy an OOS rental property. That is the plan, to start building up my RE rental portfolio. My question: At this point, should I just continue to dump my funds (I save about 3K~4K monthly) into my Index funds? The YTD on my Index Fund portfolio has been 10.31%, 3 month at 21.50%, and last 6 month returns have been 34.92%. Pretty amazing! :)

Of course, everybody knows the market has made phenomenal gains over the last year due to the current administration. :) I am just in a quandary as to continue to funnel all my savings to my Index Fund portfolio with the amazing gains and hold off on buying my first OOS rental property, or pull the trigger and make that first purchase (?). 

What would you do?

Thank you in advance!

Daniel F. Harb, ARRT, RT(R)

I like the idea of diversifying. Putting money into an index fund is one way to do it, instead of putting all your money into a few stocks. I also think that having a few properties in your portfolio will give positive diversification. You already have enough money to start buying houses, so go for it. 

Sell your stocks before the market crashes and invest it in real estate in C class neighborhoods.

Invest in neighborhoods where the rent will not change much if there is a large drop in rents.

Your cash on cash return for a rental property out of state should be 15-20%.

Let me know if you need any help.

Thank you, @Soh Tanaka and @Antoine Martel for your input. 

I am not invested in individual stocks, my Index Funds captures the whole market. My Index portfolio is most definitely for the long term. I just know that I have to add RE to my portfolio. Including RE rentals along with my portfolio of Index funds, I believe is a solid start. As time goes on, I want to include Multi~Unit properties in my portfolio as well. 

Thanks Antoine!  You are right, Soh, diversification is key!  $$$

Daniel F. Harb

Do both. Long term that’s what you should do. You can’t expect the market to return this every year (although this year will likely be a lot like last year).

Thanks, @Caleb Heimsoth !  Good to hear from you.  :)

True, although I wish these were the returns every year! Ha!

Yes, both for sure. Hope your investing is going well!  $$$

Daniel F. Harb