Am I holding too much liquid?

1 Reply

Summary of my situation:

Wife and I live off just her income. Tithing, Investing, Saving comes from my income and after our tithing, 401k/IRA contributions, our W2s put about $2,000-$4000/month toward saving/investing. I'm in sales so commissions makes it fluctuate.

5 Single Family Homes:

• 2 Stabilized cash flowing, 1 owned free and clear

• 3 In middle of renovating for BRRRR using OPM. I'll end up leaving about 5-10% in each of these deals after I refinance/stabilize.

• Current Cash Flow is $1350, once 5 total stabilized I’ll be around $2,550 cash flow.

Cash: $35,000

• $10,000 - personal 3 months emergency

• $5,000/door

HELOC: $99,200

• Held In first Position at 4.75% on my rental owned free and clear. $0 drawn down.

Stocks: ~$15,000

My question is "am too liquid?" I'm using that HELOC as a way to come up with the 5-10% gaps at the BRRRR refinance and show lenders I have reserves. But I keep thinking about it more and more and realizing I'm nearly $150k liquid.

Would you invest more aggressively? If so, how? I’m 28 now, Goal is to “retire” from my W2 by the time I’m 30. 23 months to go!

Everyone is different.  From the sounds of it the only money you have are the $15K in stocks.  The $35K in cash is for a dedicated purpose (and a good one).  The heloc is equity in your home and while you could use it for something, you have 3 renos going on right now in 3 of your rentals and I'm guessing they are not rented as you are working on them.

One thing about pulling all of your money out is your cash flow will probably go down as your mortgage payments go up.  If you plan on 'retiring' soon and depending on the cash flow, you want to maximize that.  I have rentals and am less than 10 years from retiring (I also want to retire early-not as early as you!).  My plan is to let me tenants keep paying down the mortgages and I should have a few paid off at that point which will increase the cash flow.  It also means I can sell one at a time and have that money if I want/need it.

I think there is a balance.  Some may want 20 houses each with $100 cash flow a month and that is better than 1 house with $100 a month, but then you have 20x the costs and chances are you will always have something major at one (a roof, furnace, hot water tank).  Somewhere in between lies a happy medium.

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