what happens to 500k
Blackwood, NJ · Member since 2016 · 6 posts · 3 votes
what happens to 500k
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Investor · CA · Member since 2024 · 82 posts · 31 votes
1yHi Allen, that’s an exciting position to be in—$500k gives you a lot of options!
If you’re looking to make your money work harder, real estate can be a great way to go, especially with your solid 800 credit score. A turnkey multifamily property could give you steady cash flow and potential appreciation over time. Plus, real estate often has tax advantages that stocks don’t offer.
The S&P 500 is great for long-term growth, but real estate lets you leverage your money by borrowing and putting it to work in multiple ways. It really depends on your goals—do you want steady cash flow now, or are you okay waiting for growth over time?
And I totally get what you’re saying about finance people—they can make things feel so complicated! In real estate, it’s more straightforward: find a good deal, manage it well, and you can make it work for you.
Hope this helps, and happy to talk more if you want to explore it!
26 Replies
- Investor · CA · Member since 2024 · 82 posts · 31 votes1y
Hi Allen, that’s an exciting position to be in—$500k gives you a lot of options!
If you’re looking to make your money work harder, real estate can be a great way to go, especially with your solid 800 credit score. A turnkey multifamily property could give you steady cash flow and potential appreciation over time. Plus, real estate often has tax advantages that stocks don’t offer.
The S&P 500 is great for long-term growth, but real estate lets you leverage your money by borrowing and putting it to work in multiple ways. It really depends on your goals—do you want steady cash flow now, or are you okay waiting for growth over time?
And I totally get what you’re saying about finance people—they can make things feel so complicated! In real estate, it’s more straightforward: find a good deal, manage it well, and you can make it work for you.
Hope this helps, and happy to talk more if you want to explore it!
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
Do you want to be active or passive ? That's the first question as real estate is like another job and if you are upgrading properties it's like running a daycare.
also what experience do you have? That also plays a major role in what to do.
end of day stocks and real estate over time provide the same return on average - so it is really based on the individual, their experience and desire
7e investments53 Reviews - Investor · Tucson, AZ · Member since 2017 · 394 posts · 178 votes1y
@Allen Masry Congrats that is a heck of a gift! Just a heads up, there is really no turn-key in real estate. I have purchased turnkeys over the years and have had mixed results. Long story short, the properties were far from turn-key and required that I find an out-of-state contractor and property manager to complete renovations and find new tenants. There are reputable companies out there, however, but I would shy away from any company that mentions turn-key.
Long story short, real estate is very forgiving over time and these properties cash flow well and I was able to build a great team for future deals. The returns can be superior to the stock market, but will require more patience and hands- on effort.
There are more passive ways to invest in real estate than "turn-key" real estate and achieve those types of returns, but you will need vet the operators and get educated before jumping in. My opinion is to invest in the S&P unless you are willing to spend a substantial amount of time learning the space.
- Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes1y
11%? You plan to outperform the experts that do it for a living?
Obviously you jam it all in the stock market for 11%. Heck, you should mortgage your home to the hilt, and borrow every single dollar you can at 6-7% and crush it on the arbitrage. Heck. Sell your car and get a loan on a new car. Use that sales money to buy more stock.
In 6 years you’ll have $1m, in 12 years $2M, and you can withdraw $220k/yr. Forever. You’re set.
Or. if you can’t wait that long. Invest for 6 years and then you can withdraw $110k/yr forever. I don’t see any real estate competing with that. Especially after capex, vacancy, management fees, etc etc.
- Blackwood, NJ · Member since 2016 · 6 posts · 3 votes1y
Quote from @Bill B.:
11%? You plan to outperform the experts that do it for a living?
Obviously you jam it all in the stock market for 11%. Heck, you should mortgage your home to the hilt, and borrow every single dollar you can at 6-7% and crush it on the arbitrage. Heck. Sell your car and get a loan on a new car. Use that sales money to buy more stock.
In 6 years you’ll have $1m, in 12 years $2M, and you can withdraw $220k/yr. Forever. You’re set.
Or. if you can’t wait that long. Invest for 6 years and then you can withdraw $110k/yr forever. I don’t see any real estate competing with that. Especially after capex, vacancy, management fees, etc etc.
Hi,
Yes. So art my 401 k since 2010 was doing 11% to 12% (google,Microsoft, Meta, Amazon...etc). I know it might not seem true.
However, you bring a GREAT point which is the stocks wont keep like this.
- Blackwood, NJ · Member since 2016 · 6 posts · 3 votes1y
Quote from @Chris Seveney:
Do you want to be active or passive ? That's the first question as real estate is like another job and if you are upgrading properties it's like running a daycare.
also what experience do you have? That also plays a major role in what to do.
end of day stocks and real estate over time provide the same return on average - so it is really based on the individual, their experience and desire
Thank you. I think i want to be passive. I do like the tax benefits and leverage. I wont need to spend that money now. But it seems like 'nothing' comes for free.
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes1yCongratulations. I think the first thing to do is find out how much is left over after taxes and fees. Ask your CPA. Second, Don't spend it until the check clears. Third, put the money into an account temporarily for a few months, settle in, buy yourself a gallon of your favorite Ice Cream, pop on the boob tube and watch a couple of good movies. Let the dust settle before you start making major decisions.
Quote from @Allen Masry:
Hi, this is a little strange. I am just planning. It appears I may get 500,000 settlement in a few months. However, I was trying to think what is a good way to go with it. For example, if I do S/P top stocks, I could get around 11%.
but if I did real estate and I have a 800 credit score - could I do real estate and make it work harder doing turn key Multifamily. I do want to thank people for taking the time to answer this. What I like about real estate community you all are open about trials and tribulations. When you talk to finance people they act like they are lawyers. It is hard to figure out if I will make anything but VERY clear the fees (lol).
- 1yMatthew DrouinPro MemberDeveloper · Rochester, NY · Member since 2016 · 403 posts · 338 votes
@Allen Masry to echo everyone’s sentiments here, be patient, educate yourself because as quick as that money comes, it could go away just as quick if you make hasty decisions, especially on people giving advice on Internet forums like these.
That being said, settlements take much longer to come in than you might think. So you have plenty of time to educate yourself.How have you managed your own money so far? And how has that worked for you?
Also I'm not sure on the tax implications of settlements but work with a CPA on a strategy. If it's a structured settlement and you aren't getting a lump lum, you could contribute some of that to a Roth or Traditional IRA each year, or if you are self employed even more to a SEP IRA.
Also what’s your short term, mid term and long term objectives?
Also do you have any debt? If so what are the interest rates on those debts?
If you have a 10% interest rate on a car loan, then paying that off would give you a risk free 10% rate of return. Can’t beat that with a stick!
- 1yErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Allen Masry:
Hi, this is a little strange. I am just planning. It appears I may get 500,000 settlement in a few months. However, I was trying to think what is a good way to go with it. For example, if I do S/P top stocks, I could get around 11%.
but if I did real estate and I have a 800 credit score - could I do real estate and make it work harder doing turn key Multifamily. I do want to thank people for taking the time to answer this. What I like about real estate community you all are open about trials and tribulations. When you talk to finance people they act like they are lawyers. It is hard to figure out if I will make anything but VERY clear the fees (lol).
Hey Allen,
When you approach the finance people, are you being specific in your request? For example, are you asking for terms on a property you are looking to make an offer on or complete a refinance? Fees can range vastly depending on the type of loan, DSCR, Fico, LTV, and Loan Amount size.
If you provide specific information such as the address, property purchase price and value, credit, property rental income, taxes, insurance, experience, and Fico you should be able to get a term sheet detailing all the closing costs.
LuxePrivate Investments LLC 572 Reviews - Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
Quote from @Allen Masry:
Quote from @Chris Seveney:
Do you want to be active or passive ? That's the first question as real estate is like another job and if you are upgrading properties it's like running a daycare.
also what experience do you have? That also plays a major role in what to do.
end of day stocks and real estate over time provide the same return on average - so it is really based on the individual, their experience and desire
Thank you. I think i want to be passive. I do like the tax benefits and leverage. I wont need to spend that money now. But it seems like 'nothing' comes for free.
Being passive I would not recommend owning real estate. I would either stay in the stock market or diversify and invest in a fund/syndication/reit.
7e investments53 Reviews - Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
I doubt you'll make 11% with the S&P, but it is probably still your best bet. Making money in real estate requires experience and starting with no or little money makes you study harder.
As much as most of us probably wished for it, getting started with a lot of money in your pocket is a recipe for disaster: the temptation is to make the deal work by throwing money at it.
If you want to go into real estate go with a syndicator with a good track record. You will have to interview several. And maybe diversify a little, invest half in a low cost S&P500 fund like VOO and the split the rest across 2 or 3 syndications.
- Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes1y
Quote from @Allen Masry:
Hi, this is a little strange. I am just planning. It appears I may get 500,000 settlement in a few months. However, I was trying to think what is a good way to go with it. For example, if I do S/P top stocks, I could get around 11%.
but if I did real estate and I have a 800 credit score - could I do real estate and make it work harder doing turn key Multifamily. I do want to thank people for taking the time to answer this. What I like about real estate community you all are open about trials and tribulations. When you talk to finance people they act like they are lawyers. It is hard to figure out if I will make anything but VERY clear the fees (lol).
More importantly, how much experience do you have with real estate? Will you go it on your own, or would you hire a PM? Where do you want to invest? NJ? Do you know the laws of the land? Some of NJ's laws are worse than NYC or Cali.
- Blackwood, NJ · Member since 2016 · 6 posts · 3 votes1yHi,
Quote from @Marcus Auerbach:
I doubt you'll make 11% with the S&P, but it is probably still your best bet. Making money in real estate requires experience and starting with no or little money makes you study harder.
As much as most of us probably wished for it, getting started with a lot of money in your pocket is a recipe for disaster: the temptation is to make the deal work by throwing money at it.
If you want to go into real estate go with a syndicator with a good track record. You will have to interview several. And maybe diversify a little, invest half in a low cost S&P500 fund like VOO and the split the rest across 2 or 3 syndications.
yes i thinnk the future for S/P is not going to be the high returns of before. So I will start interviewing syndicates and such. Thank you so much for all your help. - Blackwood, NJ · Member since 2016 · 6 posts · 3 votes1yYes,
Quote from @Calvin Thomas:
Quote from @Allen Masry:
Hi, this is a little strange. I am just planning. It appears I may get 500,000 settlement in a few months. However, I was trying to think what is a good way to go with it. For example, if I do S/P top stocks, I could get around 11%.
but if I did real estate and I have a 800 credit score - could I do real estate and make it work harder doing turn key Multifamily. I do want to thank people for taking the time to answer this. What I like about real estate community you all are open about trials and tribulations. When you talk to finance people they act like they are lawyers. It is hard to figure out if I will make anything but VERY clear the fees (lol).
More importantly, how much experience do you have with real estate? Will you go it on your own, or would you hire a PM? Where do you want to invest? NJ? Do you know the laws of the land? Some of NJ's laws are worse than NYC or Cali.
NJ laws suck. the only thing going for NJ most dense pop state in Nation. I was thinking ohio / MI. Maybe PA. But it looks like I will need to work on this much more.
I will join some local real estate groups (act poor) and see what I learn. Hopefully i can give back as well. - Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes1y
Quote from @Allen Masry:
Yes,Quote from @Calvin Thomas:
Quote from @Allen Masry:
Hi, this is a little strange. I am just planning. It appears I may get 500,000 settlement in a few months. However, I was trying to think what is a good way to go with it. For example, if I do S/P top stocks, I could get around 11%.
but if I did real estate and I have a 800 credit score - could I do real estate and make it work harder doing turn key Multifamily. I do want to thank people for taking the time to answer this. What I like about real estate community you all are open about trials and tribulations. When you talk to finance people they act like they are lawyers. It is hard to figure out if I will make anything but VERY clear the fees (lol).
More importantly, how much experience do you have with real estate? Will you go it on your own, or would you hire a PM? Where do you want to invest? NJ? Do you know the laws of the land? Some of NJ's laws are worse than NYC or Cali.
NJ laws suck. the only thing going for NJ most dense pop state in Nation. I was thinking ohio / MI. Maybe PA. But it looks like I will need to work on this much more.
I will join some local real estate groups (act poor) and see what I learn. Hopefully i can give back as well.As long as you are in a decent area and do proper screening, you will be fine in NJ. South Jersey more landlord friendly than North Jersey, but you have more appreciation in North Jersey. Stay away from Philly as their laws are as tricky as NYC's.
I would strongly recommend you purchase something within an hours drive from you so you can learn on the job as a landlord. Over time, you may want to hire a property management company as tenants can be headaches at times. You need to be responsible, but firm.
- Member since 2019 · 60 posts · 31 votes1y
If I have a skill, knowledge, the right contacts or or a passion that can be leveraged into potential gains, that is where my money is applied. Otherwise the money can just go into the market. Right now for me, the focus is on flipping but only because I have the right agent and contractor, I could not be successful alone. If you try flipping make sure you buy right, know your numbers, have the help you need and having multiple exit strategies is recommended. I haven't found anything lately that makes sense to hold for cash flow but I will keep trying.
- Member since 2020 · 351 posts · 329 votes1y
At a high level, real estate will make you about 9-10% (a 6% cap rate plus 3-4% in appreciation). Some areas will have lower cap rate but higher appreciation and some will have higher cash flow but lower appreciation. But that's about what you can expect to see with a cash purchase.
Most people boost their rates with leverage. Assuming 20% down and a 7.5% rate (which is about market) you'll go from 9-10% to 15-20%, nominally. This doesn't account for transaction costs and reduction in leverage as you pay down the mortgage which accounts for closer to 2-3% less, so you 12-18%. We'll say, then, your expected deal will return close to 15%. (I think in the current market getting 15% would be pretty good to be honest). Note that at these cap rates, you will see close to zero cash flow. I also think most markets won't see anywhere close 6% cap rates (for single family homes which is what I personally invest in).
The questions you get to ask are then:
Is the extra 4% worth the hassle of management and lack of liquidity.
Do I have skills to add value so instead of getting 15% on deals, I can get 18% (self-maintenance, self-management, rehab).
Is the time spent learning real estate and finding deals more profitable elsewhere?Personally, I would probably invest in 1/2 in the S&P 500, 1/3 in the tech monopolies, and 1/6 in real estate. But I like stocks more than the average bear on this site, especially the tech monopolies which I expect to return 15-20% (so outperform real estate in current market conditions).
- 1yAlan AsriantsBusiness MemberReal Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
Hey Allen, most of us here will certainly be biased RE wise. Just make sure that anything that earn for this settlement is not subject to tax and if it is - allocate properly.
Certain locations will have better results than others. In your market it is difficult to find mulit family RE that was recently built and reasonably priced.
However going into another state/territory you can find yourself reaching better results. This doesn't mean you should because out of state investing for a newbie is difficult and if you listen to the wrong people can really burn a whole in your pocket.
That being said, if I were you, I would likely diversify my assets. But everyone's skills are different.
So I can't 100% speak for you, but I can speak for myself. So I'll tell you what I would do
I would likely use part of that money ($100k) to pay off one of my duplexes that is at a very high rate and refinance. This would greatly increase cash flow and create equity. Also get me out of more debt/risk.
I would put 100-150k into savings for a primary home for my family
then i would put 300k into Bitcoin...
just kidding
The rest of the money I would likely want to "work with". This would include doing mainly flips so i can get a solid return from that money or possibly even doing private money lending.
In the meantime, if a solid investment came my way and it was in a great area for a LTR. I would gladly invest into it and put a considerable downpayment in todays market - ensuring solid cash flow. I would like to beat the CD market with it.
Hope this helps. Everyone's situation is different. Who knows, maybe you use that money and invest into a new type of toothpaste that blows any RE investment out of the water. Then we'll be asking you the question on what to do with our 500k :)
Good luck!
Alan Asriants - New Century Real Estate 590 Reviews - Investor · Saint Paul, MN · Member since 2024 · 28 posts · 16 votes1y
Put it in a short term treasury fund while you take a few months to read a dozen books from both the biggerpockets.com and bogleheads.org websites. You may lose 1% (in expectation) from being out of the stock and/or RE markets for those few months, but that's less than you are going to lose making a hasty decision.
- 1yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
@Allen Masry you stated you want to invest passively, so real estate is out, except for REITs, which are part of the stock market.
You might be tempted to invest in a syndication, but those are high risk and you really need to research and then monitor them. So, not really passive.
Investing in rReal estate offers a lot more control than investing in stocks, but it also requires an investment of time to do well.
Logical Property Management4.9451 Reviews - Lender · Newark, NJ · Member since 2016 · 695 posts · 252 votes1y
congrats!! i would do self evaluation to see if you want to be active or passive on deals and that can help you in the right direction.
- Real Estate Agent · Long Island · Member since 2018 · 88 posts · 38 votes1y
Hi Allen, I have thought about this myself extensively over the years. I always ask the question, why not do both? The stock market can be volatile in terms of percent returns year over year. We've been fortunate that it has been outperforming the expected 7% year over year. I follow J.L. Collins who favors VTSAX stock, which I particularly enjoy. I would suggest if you had not already to put some of your money into a ROTH IRA (maximum is $7,000 per individual) and invest in VTSAX. It is Vanguards total stock market index and consistently outperforms most ETF funds year over year. Then, put the rest to work in Real Estate. There are so many benefits. Depending on the market you invest in, you may have enough to go all cash on the first deal and refinance to put money in the second deal. You will also have tax benefits as well. I believe it is 27 years of depreciation that you hedge against any cash flow you received. Then, you have the long-term appreciation. Your success in this space will also translate to different type of business relationships. Investing could take your career in new directions. It has for myself and I've appreciate the new friendships that I formed after starting.
- 1yBasit SiddiqiBusiness MemberAccountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
If you can continue to get an 11% return, I would stick with stocks.
$500,000 will turn into $1,000,000 in less than 7 years.
Great return and little to no work.
You may want to consider spending $400,000 on stocks and $100,000 on a rental property.
Take the $100,000 towards a property and see if you can make a return and handle the work involved.
Best of luck!
Basit Siddiqi CPA4.979 Reviews - Investor · Jacksonville, FL · Member since 2025 · 30 posts · 13 votes1y
Could you buy a multifamily property on your own? Maybe in the midwest?
- Residential Real Estate Agent · Atlanta, GA · Member since 2009 · 381 posts · 134 votes1y
Allen, go out of your local area to invest. New Jersey is high. You can get a much better return on your investment elsewhere and with $500k you can buy 3 homes or a 4 unit. Real Estate is always the best investment. Everyone has to live somewhere.
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