Where to 'park' excess cash while waiting to invest

Question

I'm thinking of doing a cash out refi on my home to use for investing in property. I think I can cash out upto 600K or so with the purpose of using that amount to start down paying for my investments. However I'm unlikely to use all of that amount right away. Any suggestions on how / where to 'park' any excess money while I wait for those investments to gradually materialize?

Jimmy Lieu · Answer

I would recommend looking into cryptocurrency decentralized finance. I convert my USD to stable coins that match my US dollar 1:1 and I lend it out to defi. I get around 8-12% APY on all of my capital and I can convert it back to USD at any time.

I don't put my capital into savings or checking accounts because you're losing money value faster than inflation and .05% APY is not worth it for me.

Brian Kantor · Answer

There is no shame keeping some cash for short periods of time. Cash is king. Plop it into an Ally, Marcus, or other high yield savings account. Earn 0.8% interest and be certain that you'll have it ready in full to quickly act when you find your next property.

Everything else carries some risk, and that means that you may find an amazing property, but can't act on it because your principal dropped below the amount you need.

You're a savvy enough investor to be purchasing real estate in the first place. I assume you have a stock portfolio as well. Ally and Marcus are only bad moves when the bulk of your savings is there; not when you're saving up some powder to shoot for an amazing investment.

Think of it this way: Would you be more upset if your excess $500k was only earning 0.8% APY or if your $500k became $400k, and you couldn't buy that next property?

Chris DeMello · Answer

Have you considered doing a 1st or 2nd position HELOC instead of refi?

David New · Answer

@Jimmy Lieu. I am using a mixture of worthy bonds and USDC stablecoin keeping it with BlockFI. It’s been great consistent returns so far. What platform do you use? I’m still new and looking at all my options.

Account Closed · Answer

lots of good info in this one. thank you all for sharing

Carlos Feliciano II · Answer

@Jimmy Lieu hey. What do you find the most efficient way to get fiat current converted and sent over places like BlockFi, crypto.com, etc?

Hal Davis · Answer

Edward Jones has a money market account that returns 3-4% but has a $100k minimum. Maybe something to look into.

Lynn McGeein · Answer

It's been a while, but our first few investment properties were bought from a HELOC of our primary residence. We would buy as a cash deal -- which also helped competitively plus we could buy things that wouldn't normally qualify for a standard loan -- fixed them up, took out a loan on the property, itself, or sold the home, then paid back the HELOC & started over. Never had to worry about where we stored our money between deals as it just went back to 0 balance on the line of credit. Worked really well. In a recession, banks do tend to freeze them or lower the limit, so read the fine print to know the rules you're working under, but as long as you understand them, it may be your best option.

If not a HELOC (we sold that house), we've discovered that any money we want to use for real estate within the next 2 years, including our emergency fund for our rentals, is better off in a higher interest savings account, even though right now it's almost no interest at all. In hindsight, we could have made a lot of folks rich letting them know when the stock market would tank because it seemed directly correlated to when we needed to pull out money from stock accounts for a purchase.

Mitch Miller · Answer

@David New Celsius pays out weekly at an 11.55 apy so to answer your question a week? They do give themselves the option to change the rates every week. The good thing about Celsius is that they allow unlimited withdrawals so you can move money if they make a change that doesn’t fit your goals.

Where to 'park' excess cash while waiting to invest

Where to 'park' excess cash while waiting to invest

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