What to do with 5K?

Question

My father-in-law is 61 years old and just received $5,000 from his father.  He is planning to retire in December this year and wants to know what he should do with his little windfall.  He lives in Idaho. Any suggestions from the BP community?

Derek T. · Answer

Yeah not much you can do with $5k in my market..... Not sure about yours.   If you were in my market I would say put it into direct marketing and find an off the market deal.   Once you get a deal try to partner with someone who will bring the cash and split proceeds somehow.  If no one will partner up,  wholesale the deal.   Rinse and repeat until you can start buying flips or rentals.   Then rinse and repeat with flips or rentals.

Joe Villeneuve · Answer

Do Sandwich Lease Options or wholesale until you've built up that $5k to where you can put it into deals.

Joe

Account Closed · Answer

im selling partnerships in a bridge in Brooklyn, the tolls alone should produce a near infinite residual income for the partners. the address to send the money to is...............

Eric Jackson · Answer

My father-in-law may be open to a REIT investment. He is not a hands on kind of guy for real estate investing.  He and his wife are also in process of selling a rental property they own in Las Vegas for around $100K. (bought for $55K 4 years ago) I will try to convince them to put the proceeds from the sale plus the $5K into a passive investment plan to supplement their retirement income going forward.  Thanks again BP!

Kevin Yoo · Answer

@Eric Jackson

Eric,

This sort of post of how to invest a small amount of money in real estate is not an uncommon question. I take other people's money and invest for them. That is my business model. And I agree with all others who have humorously responded to you that $5K is too little to do anything with. Even if I gave your father 100% return, that would be $10K and then what would he do with that? Invest it again for another 100% return. Even then, it would take a long long time for it to come to an amount that would help him in retirement.

The more important question is how active will he be in working this $5K. If he wants to be totally passive, buying shares in a good REIT is probably the safest way to invest in real estate. If he can be very active, then he should invest in more risky real estate investments but be prepared to kiss it good bye instead of relying on that for retirement. Since he is retiring, he should have a lot of time to be very active with this money which is what I would do. But it does take work and that may defeat the idea of retiring.

Lew Payne · Answer

I live in Idaho (Boise), and have seen "flippers" come and go in this state.  It is a tough state to find deep-discount property deals in, and it's a poor state for rental income.  By poor, I mean that a better ROI can be had elsewhere.  That's why, so far, all my property flips have been in FL, IN, and (as of this week) TX.

There are many mobile home parks in Idaho.  I have, as an aside (in other words - I did not intend to) flipped a mobile home.  Use $2,000 as a down payment on a mobile home that needs work, another $2,000 for repairs and remodel, and the $1,000 for carrying costs and incidentals.  Flip the mobile home, and make some money.  I paid $18,000 for a mobile home that I flipped for $35,000 (in Florida).

If he is not actively involved in real estate, then I suggest he steer clear of it.  Instead, he can put his money in an index fund, such as the SPX (S&P 500), especially now that it is down due to the Greek crisis and (less so due to) China's stock market collapse.  Use a self-serve brokerage, such as OptionsXpress.

What to do with 5K?

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