Investor · Atascadero, CA · Member since 2016 · 4 posts · 0 votes
Hello all,
I wanted to get a sense of where folks park their cash or borrowed funds while waiting for the next reasonable deal they can find (a couple 100K). Im in CA, and things are looking pretty frothy again, but we want to be set to buy locally if it drops in a few years. We are willing to try to grow our nestegg a bit, with the risk of losing some of it ( up to say 10%) over a few years. We have other relatively stable sources of income (state jobs) and savings.
Id love to hear from other investors regarding their preferred vehicles and why-
I'm currently putting my cash for my next DP in my savings account making virtually nothing. The reason I'm doing so is that it guarentees I'll have no more and no less. The only way to make absolutely sure my savings will not end up in a loss is to take a conservative approach. Worked for me last time, it will work again.
One thing to consider would be parking your capital with hard money lender. We have a lot of investors in CA who's cash we are putting to work. Many of them are waiting for prices to drop as you said so in the meantime we are lending it out here in the DC area. In terms of returns, you are probably looking at 8%-12%. Hardly as good as investing it yourself but it sure beats leaving it in a bank or stock market (market is looking awfully volatile to me at the moment).
I usually put maybe 30% in the market into beaten down stocks like sketchers or Halliburton for example and ride it up until I make a decent return and sell. The rest I just park in money market until I find a deal or ride out the froth. I agree the Realestate market has gotten ahead of itself but I see things coming down in my area because of high inventory all of a sudden. Just waiting in the weeds to pull the trigger on the next deal!
I'm currently putting my cash for my next DP in my savings account making virtually nothing. The reason I'm doing so is that it guarentees I'll have no more and no less. The only way to make absolutely sure my savings will not end up in a loss is to take a conservative approach. Worked for me last time, it will work again.
If you want your cash to be liquid and immediately available when the next deal comes along, you really don't have a lot of choices. Savings accounts or money market accounts. Ally bank pays 1% on savings accounts and your funds are available immediately.
If your funds are in some investment, you'll likely create a taxable event when you pull it out, and you also run the risk of not being able to close quickly on your next deal if you have trouble getting your money out quickly.
@Andres Needles I am curious. What did you decide to do? You also indicated that prices may come down in our area. I am not seeing that but I do not know how they could go any higher. Prices in SLO are ridiculous. I am buying out of state for this very reason but have just started looking at the central valley to possibly invest.