So where else are you putting your money besides real estate?

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So where else are you putting your money besides real estate?

John M.
Investor · Fairfax, VA · Member since 2015 · 1k+ posts · 803 votes

A lot of us our sitting on the sidelines as the market has peaked and interest rates are driving us crazy.  Personally I'm still hunting for deals but realize this is going to be a difficult year to invest to make the numbers work.  I'm transferring capital into a 3 month CD for now as I continue to look at all asset types including non real estate assets.  

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Gary L Wallman
Rental Property Investor · Beavercreek OH · Member since 2018 · 422 posts · 970 votes
3y
Quote from @John M.:

A lot of us our sitting on the sidelines as the market has peaked and interest rates are driving us crazy.  Personally I'm still hunting for deals but realize this is going to be a difficult year to invest to make the numbers work.  I'm transferring capital into a 3 month CD for now as I continue to look at all asset types including non real estate assets.  


I'm an investor with a 154 paid for doors, primarily SFH's, two of which I closed on this week.

At current market levels, even though I'm a cash buyer, deals are starting to not make sense. Even the 1 percent rule, which now is nearly impossible to find, doesn't replicate the net yield of many passive stock market investments. Financing your purchases with mortgage rates in the 7 percent range makes it even more difficult.

With BDC's and REIT's yielding 10 percent plus and Index funds that do covered calls yielding 12 percent it's hard to justify real estate purchases in this environment. Sure, some market risk but no hot water heaters and HVAC systems failing and definitely no new roofs required.

Gary

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y
    Quote from @John M.:

    A lot of us our sitting on the sidelines as the market has peaked and interest rates are driving us crazy.  Personally I'm still hunting for deals but realize this is going to be a difficult year to invest to make the numbers work.  I'm transferring capital into a 3 month CD for now as I continue to look at all asset types including non real estate assets.  


    fidelity investments has a 4.35 rate on money you can access anytime. No lock up.
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    8Reply
  • Michael C.
    New to Real Estate · Denver · Member since 2020 · 75 posts · 81 votes
    3y

    I put a good sum of money in phoenix capital group. They purchase mineral rights and oil fields. Based out of Denver. 
    Bond offerings range from 8-12%.
    Offers monthly dividend or compounding interest.

    3Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    3y
    Quote from @John M.:

    A lot of us our sitting on the sidelines as the market has peaked and interest rates are driving us crazy.  Personally I'm still hunting for deals but realize this is going to be a difficult year to invest to make the numbers work.  I'm transferring capital into a 3 month CD for now as I continue to look at all asset types including non real estate assets.  


     I have portfolio of hundred of high dividend funds/BDC over 6% @M1. Never dropped in value even in 2022.

    best asset class now is actually bond.

    3Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    3y
    Quote from @John M.:

    A lot of us our sitting on the sidelines as the market has peaked and interest rates are driving us crazy.  Personally I'm still hunting for deals but realize this is going to be a difficult year to invest to make the numbers work.  I'm transferring capital into a 3 month CD for now as I continue to look at all asset types including non real estate assets.  


     I've seen local market has two distinct trajectory, good house with good neighborhood is selling over the top.
    But not so good house even in good neighborhood doesnt receive much bid, this is actually opportunity that I'm chasing. 

    Once interest rate is normalized, then even the not-so-beautiful house is receiving bid as well.

    1Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    3y

    Specific stocks and reits paying abnormally high dividends due to being in my opinion oversold.

    T-bills up to 8 weeks are pretty good at 4.7% ish.  Or debt paydown if above a 5% rate. 

    3Reply
  • Karl B.
    Rental Property Investor · Erie, PA · Member since 2015 · 1k+ posts · 2k+ votes
    3y

    I have most of my money in CDs (9 month and 12 month). I still have some cash in the bank for RE deals. I also buy dividend and mining stocks when I see something I like but most of those investments are on a small scale. 

    3Reply
  • Gary L Wallman
    Rental Property Investor · Beavercreek OH · Member since 2018 · 422 posts · 970 votes
    3y
    Quote from @John M.:

    A lot of us our sitting on the sidelines as the market has peaked and interest rates are driving us crazy.  Personally I'm still hunting for deals but realize this is going to be a difficult year to invest to make the numbers work.  I'm transferring capital into a 3 month CD for now as I continue to look at all asset types including non real estate assets.  


    I'm an investor with a 154 paid for doors, primarily SFH's, two of which I closed on this week.

    At current market levels, even though I'm a cash buyer, deals are starting to not make sense. Even the 1 percent rule, which now is nearly impossible to find, doesn't replicate the net yield of many passive stock market investments. Financing your purchases with mortgage rates in the 7 percent range makes it even more difficult.

    With BDC's and REIT's yielding 10 percent plus and Index funds that do covered calls yielding 12 percent it's hard to justify real estate purchases in this environment. Sure, some market risk but no hot water heaters and HVAC systems failing and definitely no new roofs required.

    Gary

    13Reply
  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    3y

    Church plant… 

    PS I know that wasn’t what you was really asking so thanks for tolerating. 😊

    3Reply
  • John M.
    OP
    Investor · Fairfax, VA · Member since 2015 · 1k+ posts · 803 votes
    3y

    @Gary L Wallman I have a lot of respect for someone who can manage 154 SFH's. How do you do it? Is it time to cash some of those out and deploy your equity elsewhere?

    1Reply
  • Adam Laurenzo
    Member since 2018 · 39 posts · 16 votes
    3y

    Index funds.

    1Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    3y

    John, thanks for starting this thread...a lot of well respected members replied.  It's good to see a thread with replies from active investors rather than the sales pitches that opportunities are everywhere and that interest rates don't matter.

    I'll bite on replying because it can lead to challenging my dogma.  I am building a 76 unit hybrid apartment/hotel community in Phoenix with automated service (check in/out, locks, communication, smart TVs) along with a resident manager (and small staff) for added coverage.  All in cost to build (including contingency and interest reserve) is $177k per unit for 500 square foot units with separate bedroom, full kitchen, and living area, with a pool, gym, laundry, outdoor courtyard, and grilling station.  Proforma revenue per unit of ~$2,900...proforma return on cost well above interest rates...and built in value upside.  The property is adjacent to Arrowhead Towne Center in Phoenix, near shopping, restaurants, transportation corridors, corporate headquarters, three hospitals, sports venues (MLB spring training, State Farm Stadium, others), and snowbird housing from Oct-Mar.  The city has provided unofficial approval for the project and the entitlement process is moving along fine.  Nothing is certain though until the land acquisition closes and construction starts.  Part of my posting publicly is to put pressure on myself to execute.  Hopefully, I don't have to eat crow...time will tell. 

    11Reply
  • Gary L Wallman
    Rental Property Investor · Beavercreek OH · Member since 2018 · 422 posts · 970 votes
    3y
    Quote from @John M.:

    @Gary L Wallman I have a lot of respect for someone who can manage 154 SFH's. How do you do it? Is it time to cash some of those out and deploy your equity elsewhere?


     John,

    I employ a full time person to manage my properties (she's an amazing lady) and 3 full time maintenance men. Have a small crew of 4 and some subs for reno work. 

    I'm also a car dealer and my son's manage that business and also help oversee the rentals. I'll be 68 in a few weeks and am trying to work only 2 or 3 days a week. Tried going to Florida half the year but nearly went nuts. Now back at it a bit.

    Gary

    6Reply
  • John M.
    OP
    Investor · Fairfax, VA · Member since 2015 · 1k+ posts · 803 votes
    3y

    @Gary L Wallman Great to have a well oiled machine with some legacy in place.  You sound like me as I can't stand sitting on the sidelines.  I will have to come out of my own comfort zone and do some value ad projects like @Mike Dymski

    2Reply
  • Henry ClarkPro Member
    Developer · Member since 2020 · 4k+ posts · 4k+ votes
    3y

    We refinanced across all of our properties a year ago and are in a strong debt term position 7 year balloon on 20 year amort or SBA fixed 20 year.  So interest rates and inflation can go up and we are fine on existing investments.

    We sold several properties and paid down debt and also ended with strong cash positions.  
    .     
    The above allows us to do the following.  

    Bought 5 acres in a great location in the middle of the city.   Will do Office or contractor complex on the Main Street and self storage on the backside.  Vehicles per day 17,000 at 35 mph with two 2 way cross turn ins.  Put a good portion of cash into a CD with the lender in this property.  Get the CD return, but since they control the CD they charge less interest on the note.  

    Bought at auction 75 acres.  Doing a country subdivision like we have already down.  Lots will be 2 to 10 acres.  20 lots.  Will list at $80,000 to $130,000.  Did most of entrances and roads last fall.  Finish this spring.  Need to put 4 ponds in.  Normally bad time to start a subdivision but we only need to sell 10 lots to break even. Shortage of houses in our area.  People dying to move to the country.  Top 10% school in the state, 3 schools to choose from within 10 miles each, 20 miles to two large metro areas, mature trees, ponds, walk out basements, views galore.  These buyers have the cash no matter the stock market or interest rate.   Sold our other subdivision out in 15 months.  Similar setup.  Also deposited money into cd at the lender and got reduced interest rate.       

    Existing storage location we are finishing the engineering plans next week.  Submit for city approval.  This is for Contractor bays.  Will be about 6 months before we put any cash out.  Existing equity in this property should keep us from needing a downpayment.  Trying to keep cash around us.     

    Auction coming up. 4 properties we would like to get to do quick subdivide and splits. Won’t wait 12 months for capital gain. Pay personal tax rate.  Take the cash and hold.  Will put some of our cash into these properties if we get them.  

    Have one of our other storage locations where we are full turning about 5 people away every week. No land to expand. Got a call from one of our contractors there to buy 12 acres from him. Will do subject to zoning offer. If we get, we will park money there. Start the build process once we fill the economy has leveled out. Called our banker and gave him an all in estimate. He looked across all of our loans and investment with them. We have enough LTV% we don't need to put any downpayment down. They can float the entire package if needed.

    Basically we are positioning with land purchases, but holding building for now.  .    

    Using high cash levels to purchase or cd invest and use as collateral to get lower interest rates.     

    Doing permitting work to stage for building.     

    Setting up to do easy subdivision lot flips for more quick cash with a little surveying and bulldozer work.  Just selling lots.  

    The above is possible due to our high cash and equity positions.  

    Forgot.  Making offer on more teak plantation ground in Belize with 14 year old trees and great secondary Residential site in the future with great local, running stream, beautiful hilltop view.  

    Plus buying dog food for our new rott.     Takes a lot of cash.

    4Reply
  • Conrad Cortes
    Real Estate Agent · Houston, TX · Member since 2020 · 56 posts · 34 votes
    3y

    @John McKee I have most of my liquid cash sitting in Robinhood since they pay 4.15%

    2Reply
  • Bryan MartinBusiness Member
    Accountant · Springfield, IL · Member since 2022 · 190 posts · 100 votes
    3y
    Quote from @John M.:

    A lot of us our sitting on the sidelines as the market has peaked and interest rates are driving us crazy.  Personally I'm still hunting for deals but realize this is going to be a difficult year to invest to make the numbers work.  I'm transferring capital into a 3 month CD for now as I continue to look at all asset types including non real estate assets.  

    I left my W-2 and bought a small business last year.  
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  • Jay C.
    Walnut Creek, CA · Member since 2018 · 40 posts · 29 votes
    3y

    3 month CD’s. Angel investing.

    1Reply
  • Mark S.
    Real Estate Investor · Saint Paul, MN · Member since 2017 · 543 posts · 475 votes
    3y

    @Gary L Wallman just curious – which REITS are paying 10% currently?

    0Reply
  • Gary L Wallman
    Rental Property Investor · Beavercreek OH · Member since 2018 · 422 posts · 970 votes
    3y
    Quote from @Mark S.:

    @Gary L Wallman just curious – which REITS are paying 10% currently?


     Not condoning any investment or giving investment advice, just a cut and paste from Yahoo finance of top yielders:

    Company

    Ticker

    Dividend Yield

    How Much You Must Own To Yield $100/mo

    Chimera Investment

    CIM

    16.45%

    $7,317

    Annaly Capital

    NLY

    15.84%

    $7,594

    New York Mortgage

    NYMT

    13.31%

    $9,022

    Ellington Financial

    EFC

    13.12%

    $9,160

    Necessity Retail

    RTL

    13.11%

    $9,160

    2Reply
  • Mark S.
    Real Estate Investor · Saint Paul, MN · Member since 2017 · 543 posts · 475 votes
    3y

    @Gary L Wallman. OK, CMO’s. Yeah they can kick off big dividends. If you’re willing to take the risk.

    0Reply
  • Eric Gerakos
    Investor · Costa Mesa, CA · Member since 2016 · 1k+ posts · 1k+ votes
    3y

    Have my cash in first trust deeds at 8.75%.

    1Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    3y

    Way more deals to be had now than the past 3 years specifically because rates are higher now.

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  • James Hamling
    Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
    3y
    Quote from @Steve Vaughan:

    Specific stocks and reits paying abnormally high dividends due to being in my opinion oversold.

    T-bills up to 8 weeks are pretty good at 4.7% ish.  Or debt paydown if above a 5% rate. 


     Who are you considering "oversold" today? 

    I jumped in and took position on ATT when that tanked. The sell-off never made any sense, was an easy call. Especially given dividend. 

    0Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    3y
    Quote from @James Hamling:
    Quote from @Steve Vaughan:

    Specific stocks and reits paying abnormally high dividends due to being in my opinion oversold.

    T-bills up to 8 weeks are pretty good at 4.7% ish.  Or debt paydown if above a 5% rate. 


     Who are you considering "oversold" today? 

    I jumped in and took position on ATT when that tanked. The sell-off never made any sense, was an easy call. Especially given dividend. 

    PMT and MPW are paying 11-12% if payouts hold.    VZ also on my radar. 
    1Reply
  • Paul Sofia
    Lender · Charlotte, NC · Member since 2016 · 376 posts · 172 votes
    3y

    Physical silver

    3Reply
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