Where to invest my capital

Question

Question team,

I am building capital, I have also listen to a million podcast, read the books, and have one rental. Right now my problem is time. I want to invest in either small businesses, real estate, or just the market. A mixture makes the most sense, but I would like your alls opinion. And specifically on REI what do you all think about using something like Rent to Retirement until I get more free time. Or should I just keep saving my capital?

What do you all think?

Thanks!

Grant McMillan · Answer

Hi @Jorge Barboza Jr.! Glad to hear that you're diving into the real estate journey!

You're doing it right by working on building capital and listening to podcasts. Outside of investing in real estate, educating yourself in real estate is the next best thing so great job on doing that. There are dozens of great podcasts out there that you can learn a ton from so I would encourage you to continue to do so.

Also, congrats on having a rental as well. That was one of the biggest landmark decisions my wife and I ever made when we decided to purchase our first rental property. That's a huge accomplishment and it sounds like you're hungry for more.

I'd recommend that you take a look at where you want to be in 6 months, 1 year, and 5 years when crafting your investing strategy. That's always a good approach regardless if you're wanting to invest in real estate, stock market, or other businesses. Once you have those goals in mind, then you can really figure out what makes the most sense based on your risk tolerance.

At Rent to Retirement, we do a lot of the heavy lifting for you whether it's your 1st property or 50th property. We have clients that are all across the spectrum when it comes to their investing knowledge and the stage of their journey. I think that's one of the things that sets us apart in this space. You can read more about us on this forum and many other blog sites. We're happy to help you in your journey and look forward to connecting with you soon!

Here's some resources for you regarding turnkey investing, Rent to Retirement, and the markets that we invest:

https://www.biggerpockets.com/forums/92/topics/765347-rent-to-retirement-review

https://www.biggerpockets.com/forums/92/topics/1116050-a-huge-win-with-cori-from-rent-to-retirement

https://www.biggerpockets.com/forums/44/topics/1058814-first-time-with-new-construction-cape-coral-fl?highlight_post=6055029&page=1

https://www.biggerpockets.com/forums/850/topics/895660-my-first-investment-property-an-out-of-state-deal

https://www.biggerpockets.com/forums/88/topics/1047543-big-profits-from-new-construction-sfr-build-in-cape-coral-fl

https://www.biggerpockets.com/forums/92/topics/983659-first-investment-property-with-rent-to-retirement?highlight_post=5677176&page=1#p5677176

https://www.biggerpockets.com/forums/12/topics/1122318-quality-turnkey-companies?highlight_post=6413855&page=1

https://www.biggerpockets.com/co/RentToRetirement

https://www.biggerpockets.com/forums/92/topics/929410-rent-to-retirement-updates?highlight_post=5508807&page=1#p5508807

https://www.biggerpockets.com/forums/92/topics/893621-rent-to-retirement-review?highlight_post=5222888&page=1#p5222888

https://www.biggerpockets.com/forums/311/topics/915728-experience-with-rent-to-retirement-turnkey?page=1#p5345200

https://www.biggerpockets.com/forums/92/topics/808479-rent-to-retirement-experiences

https://www.biggerpockets.com/forums/92/topics/518583-feedback-on-renttoretirement-and-zach-lemaster?highlight_post=6192149&page=4&utm_source=Iterable&utm_medium=email&utm_campaign=Transactional:%20topic_notification_V2&utm_channel=28426&utm_content=Marketing

https://www.biggerpockets.com/forums/67/topics/952977-turnkey-in-indianapolis-through-rtr-case-study

https://www.biggerpockets.com/forums/12/topics/997350-lessons-learned-from-buying-my-first-rental-property?highlight_post=5748036&page=1#p574803

V.G Jason · Answer

Ok, so your timeline is 6 years to match your income for 2024, yet you assume your costs are going to remain the same?Would your 2018 income make sense for 2024?Just like too many on this board, you're not going to replace your W2 overnight and this is almost overnight. Not without some extreme luck. You should look to build a portfolio that can hit at all angles, depending upon the capital you can employ. Not have fixated timelines like 2030 because they mean nothing and will force you to make impulsive decisions, leading to far slower and likely arduous decisions later. You'll also get very stressed, and likely depressed with the route you took. Every 10-15 years, you'll need 40-50% more so please do the math appropriately and if you ever go full nonW2 there's so many more costs to assume(retirement contribution, health, dependents, etc.)Let's first focus on reducing all the personal debt you have, outside of a primary mortgage. If that's done, look at investments that fit for your 2024 barrier of entry but have the risk tolerance to hold for the next 15 years +. If you find multiple--great--if you can't afford multiple I would recommend swinging on the big rocks first. RTR are what they are, I would recommend if you're truly going to invest in physical RE to do it at your level. For turnkey, you're paying the premium today instead of realizing it later. And with physical RE, there's a high likelihood your expenses on top of the premium are going to be realized a lot sooner than true cash flow. Remember fast solutions, have slow problems.

Zach Lemaster · Answer

@Jorge Barboza Jr.

Congrats on the first rental!  The first rental is always the hardest to get under your belt.  I personally invested in both REI heavily and small business for many years.   There are different ways to invest in business.  Usually those all come with much higher risk dependent on the business success, which has many variables.  That is why I like residential RE!  It's predictable & generally safe way to invest capital for a reasonable return if you are investing in a good location with strong fundamentals.  I certainly wouldn't recommend just saving money as that is not only going to achieve the lowest return (assuming you are putting capital into a "high" interest account), but it also will delay your knowledge/experience that will allow you to progress your investing goals over time.  So my recommendation is to find an investment strategy that works for you based on your goals & simply take action.  Since you mentioned time is a limiting factor, then there are many passive ways to invest in REI.  Turnkey can be a great way to expand & diversify your portfolio to growing markets throughout the US.  It is also on the more passive end of the spectrum if time is a limitation.  That is our area of expertise, so please let me know if you have any questions.  The most important thing you can do is continue to learn by actually doing, applying the knowledge you have heard from the million of podcasts you are listening to.

Best of luck to you in whatever area you choose to get started with.

Chris Seveney · Answer

So many options out there, and all dependent on risk profile you want to take on and capital you want to invest. I always recommend to people never put more than 20% of your money into one investment. You want to diversify.

Chris Clothier · Answer

Jorge,

Please forgive my directness, but based on what you've shared, no one can give you any real advice and asking a question like this with so little info, is akin to standing on a street corner and asking passerby's if they have any ideas for retirement income.  You have no idea if you are going to get any advice that actually fits what you need.  It's just noise right now.

You are in Yorba Linda, CA.  You are within a quick drive to one of the few areas of California that you can invest in rentals and have reasonable expectations to make a profit in yearly income and get appreciation.  Riverside, Beaumont, Hemet, San Jacinto, etc...You're right next to the Inland Empire.  That is fertile ground for a lot of commentators here on BP.

Plus, if you create a thread asking who is near Yorba Linda and invests actively or passively, you will get a ton of people respond.  Ask if there are REIA groups in the area (hint: there are many) and then go to them.

When you find local investors ask them if you can buy them lunch, coffee, a beer - whatever and pick their brain.  Don't give everyone everything, but find a mentor or an experienced investor you can talk to face to face and that is who you share the details with and ask for advice.

The good thing is you are in the land of the investor and a huge majority invest passively.  But there are plenty who invest right there in state and some actively and they are the ones quickly replacing their w-2 incomes.  Why?

Because it is very hard to replace active income with passive activity.  It rarely if ever happens.  It takes work and planning to be good at real estate investing - even investing passively out of state.  I have many California clients and I am literally telling you to look locally before buying out of state.  That's not to say don't talk to or explore RTR as they may be your best passive and out of state option, but you listed several different investing strategies and questions and in the end you want to be clear and intentional.  What you have stated as a goal is very difficult, takes time and those that succeed often had the hand of luck on their side.

Passive income is something that is meant to grow AT THE SAME TIME that you are earning active income - especially when you are in your best earning years.  My advice is to be patient and not go on the forums asking for advice on what to do to replace your income unless you are prepared to get naked and share it all.  Otherwise, no one can actually help you and you are liable to get as many disparate ideas as there are commenters.  You are blessed to live where you live and it sounds like you have a done a great job getting one property and setting yourself up to invest more.  I promise there are investors right here on BP who will meet with you one on one and gladly share their guidance.  If you are patient, the answers will come sooner than you think as will clarity from all the podcasts and books.  Let someone who has achieved what you want to achieve help clear the picture for you and you can then possibly follow in their footsteps.

Best of luck!

Jason Crowe · Answer

rehab not new builds

Brian G. · Answer

@Jason Crowe are you referring to build to rent or executing a brrrr or?

Justin Sherman · Answer

I've been creeping on this thread since I am in a very similar situation.  This post was really great and makes a lot of sense.  When you first read all the fun books that get you fired up about REI, theres a sense of FOMO and a "i need to catch up" feeling (speaking for myself).  This reply kind of sets that at ease and is a reminder to work methodically and intentionally, play the long game.

Jason Crowe · Answer

Grab a rental in Jacksonville.  I have many.  Appreciation, Rent above 1% rule, and BRRR with no money in.

David M. · Answer

@Jorge Barboza Jr.

With the macroenvironment, don't just pass over the public markets.  Of course, this is a real estate forum so answer will be about real estate.  Although, we've had a number of threads recently about how real estate is the "cash cow" or "money maker" that some "sell" you on.

Just like one can educate oneself on real estate, look seriously into the public markets as well.  If anything, they go hand in hand.  Even real estate isn't just holding a long term rental.  There are plenty of other investment opportunities without going to the public markets.

So, since you asked, "yes."  But, investigate them properly.  Good luck.

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