Rental Property Investor · Gilbert, AZ · Member since 2017 · 69 posts · 64 votes
A common way to kick-start a real estate investment is to wire the funds to wherever they need to be. Maybe it's $25k, or $50k, or $100k. It's money that you have in an account that is then transferred to somewhere else.
My question is: where do you keep that money prior to the time it needs to be wired?
In my case, the money tends to be either in very liquid form in simple savings accounts (up to maybe $50k for a few months) or it's in the stock market and I simply sell some shares in advance of the cash demand; transfer that to a bank account; and transfer it from there.
It seems like there should be a better way of handling these funds in the short term.
So yeah... you have a funding call in two weeks (or three months) -- where is that money now?
Investor · Port Hueneme, CA · Member since 2018 · 23 posts · 9 votes
4y
I am currently setting aside cash in a savings account, with the rest of the required capital likely coming in the form of a margin loan from my taxable brokerage account so that I don't have to sell the stocks. What are you currently doing? I see this was posted several years ago.
Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
4y
I keep my funds in stocks with a pretty simple ratio...
10% QQQ
45% VOO
45% SCHD
The risks are of course if you have to pull capital out while the markets down. If you have $50k and need to pull $50k this is an issue but if you have a few hundred thousand need to pull $50k out when its down from ATH it's not as big of a deal on total portfolio performance. I also have HELOCS and portfolio backed lines of credits so if market was 50% down in a rare stockmarket crash I could pull cash out without actually selling any stocks.
I am currently setting aside cash in a savings account, with the rest of the required capital likely coming in the form of a margin loan from my taxable brokerage account so that I don't have to sell the stocks. What are you currently doing? I see this was posted several years ago.
I've ended up mostly just keeping the "pending" cash in a saving account. My original question was hinged on the idea that the money would be sitting for a good amount of time and thus not earning on it would be noticeable... but as it's turned out, I have a big enough pipeline of potential deals that the cash isn't sitting for long enough to make an appreciable difference. And I realize that I like the flexibility of having purely liquid cash. That definitely helped when I invested in one deal the last week of 2021 -- if it was in stocks, there would have been no way of funding the account until after the new year and I would have missed out on 2021's passive losses.
Investor · Bethlehem, PA · Member since 2016 · 929 posts · 951 votes
4y
@Kurt Granroth checking account in my business operating account.
I'm sure you can find alternative options to earn 0.5% on your money while it "sits," but for me it's not worth the trouble. I'm trying to find good deals as quickly as possible so large sums of money sit for 2-4 months at most. It's not worth transferring funds or the potential negative downside of stocks to earn an extra $500...
If you believe in real estate then go all in on real estate. If you believe in stocks then go all in on the stock market. Don't mix business with pleasure : )
I keep my funds in stocks with a pretty simple ratio...
10% QQQ
45% VOO
45% SCHD
The risks are of course if you have to pull capital out while the markets down. If you have $50k and need to pull $50k this is an issue but if you have a few hundred thousand need to pull $50k out when its down from ATH it's not as big of a deal on total portfolio performance. I also have HELOCS and portfolio backed lines of credits so if market was 50% down in a rare stockmarket crash I could pull cash out without actually selling any stocks.
Hi Henry,
Are your portfolio backed lines of credit through the institution that you invest with? Or is this a separate product you can get from a bank as well?