What to do with CASH on hand

Question

Thank you in advance.  There are a lot of really smart and savvy people here.  I would like to ask you for advice.  So I have saved up a lot of cash in thinking that I will use it in 2021 with the upcoming foreclosures.  Now it seems that it won't really happen to the degree that people thought, with all the money being printed and just not enough housing to go around, someone can sell a house really fast in this market.  So what would you recommend to do with the Cash.  Stock Market at all time high, Bitcoin-not really sure as it is breaking new records, but many think it will crash again...what are your thoughts?

Alec Khlebopros · Answer

@John Morgan, thank you for the golden nugget, really smart

Mike L. · Answer

if you're getting outbid by all cash bidders and can't afford to buy without debt, may want to consider going to sellers direct. If you can build trust with them and offer a fair price that may be an easier path to winning a deal if it's a competitive market with lots of cash buyers.

John Morgan · Answer

@Alec Khlebopros

If the listing price is competitive, then you might have to come in at asking price. If your numbers work then be willing to pay whatever it takes to get it. I always go with the listing agent and they tell me how many offers are coming in etc. However, if you see one that just had a price reduction and it’s only been on the market for two weeks or less, then that tells me the seller is ready to dump it quick. That’s where I get my low offers accepted. I make offers and tell the listing agent I need an answer later that day because I’ve got another property I’m about to make an offer on. Put the sense of urgency in for the seller. But if it just hit the market, you may have to pay retail price. But the listing agent has always communicated with me about what kind of offers they’ve had if any. And how desperate the seller is. So that’s how I come up with my low ball or competitive offers.

Joshua D. · Answer

I just paid 20k over asking price for a property... but it was 60% of ARV so I keep buying properties right now. But it is hard for sure

John Morgan · Answer

@Ryan Copeland

Keep making offers. I know the feeling of getting outbid. It’s frustrating! I had to pay over asking price on one this year. I calculate the highest amount I’m willing to pay..even if it’s over asking price in this one circumstance. I ALWAYS use the listing agent. They seem to prioritize me because now they’ll get full commission. They usually tell me what kind of offers have already come in and how flexible or firm on the price the seller is. And more info about the seller which is helpful. Good luck!

Ryan Copeland · Answer

None of my offers have been accepted yet 😒. So in my short experience with about 4-5 offers NO.

I'm thinking of putting on an offer on a triplex now. The owner said he already has an offer at asking price.

Alec Khlebopros · Answer

@John Morgan, even in this low supply high demand environment people accept low offers? thank you @Ryan Copeland and @Canesha Edwards

John Morgan · Answer

@Alec Khlebopros

I would buy real estate with the cash. I’m 50% in stock market and the other half of my portfolio is in real estate. If it’s enough cash to pay for a house out right, I’d be making low ball offers. I’ve snagged a few that way. Otherwise, I’d use it to put 20% down on a single family house if the numbers work. Good luck!

Canesha Edwards · Answer

@Alec Khlebopros

Hey Alec-

If I were you- I would invest in real estate and stocks. Even if things don’t get as bad as people predicted...there will still be buying opportunities in the new year.   Set your property criteria and anything that falls within your buying parameters and risk tolerance I say go for it.

I definitely say buy stocks as well. Obviously, the market is too high to buy anything currently- but there is always a correction and you will be waiting ready to invest.  I like tech and marijuana companies. Digital healthcare is going to be another major player in the upcoming decades.

Best,

Canesha

Ryan Copeland · Answer

I closed out one of my taxable investment accounts by selling all of the stock.  I plan on taking that cash and using it to possibly buy deals all cash if the situation calls for it, or buy with a conventional loan and use the money for rehab expenses.  Either way, I'm using this cash strictly for REI.  A lot of the cash I have was built from long term stock investments.  I've been wanting to get into REI for over 10 years, it's time to move forward now.