Starting off with a 500k trust & Hello! (help)

35 Replies

Hello everyone, I am lucky to have a 500k after taxes inheritance to spend (I am 20 w 0 debt) I have done a lot of following with Grant Cardone, Graham Stephen, Meet Kevin and Matt McKeever. Right now I am currently looking for a type of personal mentor ship. I am going to two real estate conventions in my area this upcoming month. Does anyone have any tips for my first investment?

Thanks!

Don't buy any classes at these conventions as they are likely ripoffs, For someone in your position I'd probably start with a rental and see if you even like real estate and then you can decide where to go from there.

Originally posted by @Aaron K. :

Don't buy any classes at these conventions as they are likely ripoffs, For someone in your position I'd probably start with a rental and see if you even like real estate and then you can decide where to go from there.

Thank you, 

Some of the conventions are free and some are 25-50 bucks. I bought and will attend some to get to know other real estate like minded individuals that are local. I have watched over a thousand hours of content in real estate. Its my time to shine. :)

 

@Robert Chambers

I second the not spending money on classes.

You want to learn how to invest then buy a duplex, live in one side, and start small. I’d buy on the cheaper side and not blow your money. What if you end up not liking real estate and you spent all your money? Oops. Good luck man!

Im not sure where everyone is getting the idea of me buying classes. That was not listed. Just going to conventions. Real estate is an investment. I like money. I like real estate and once again I like real estate. Sounds like I wouldn't be leveraging any money @Nick Rutkowski which is an important part.

@Robert Chambers 

Welcome to Bigger Pockets. 

Have you thought about hiring a fee-only financial planner who can help you put a plan together and help manage your assets? Look for someone that doesn't get paid by commission and is a fiduciary. 

@Bill Hampton

Considering I haven't heard of a fee-only financial planner nor a fiduciary, I have not taken this into account. I'm not sure if I would be better off investing the 500k in multiple funds hopefully receive 6%+ profit and use a portion of that money to invest into real estate Since I have no expenses at the moment. This method would be the safest I believe. The investments would be single family home rental properties then hopefully a large multi-family complex.

Fiduciary means the financial planner is obligated to do what is in your best interest, not his.

Fee-only means that he only charges you a flat fee or hourly fee for his services and does not get a commission for selling you a stock, bond, or mutual fund. 

I'm not saying mutant funds are better or worse than real estate, I'm recommending that you have a plan whatever you decide to do, and don't put all your eggs in one basket. 

Good luck and feel free to message me if you have any questions. 

Uff, it takes me quite some time to get 500k :-)

Here in Czech Republic, you can get a private banker for that amount, he/she will then advise how to make that money last... And you'll get "free" airport lounge access to make your flights more comfortble :D

Anyways, aAlthough I would have a slight idea what to do with $500k, you may have different ideas/preferences/etc.
I'd just try out a few things, and stick to whatever you like to do (dip your toe). Just make sure you're not doing anything "silly" (which may be many people's traps)

Don't forget to enjoy too!

@Robert Chambers

Don’t invest it yourself...at least not all of it. Put $50k in 7-8 different syndication projects with GOOD syndicators and then invest the rest of it yourself.

I’d really just put it all in good syndication deals honestly. You should roughly double your money in 5 years and 4x it in 10. By age 30 you’ll have a much better grasp on what you want from life than you do now and you’ll have $2m to go forward with those new and more refined goals.

Tip toe into a small rental ,grab a realtor and jump in .I would never mention how much money you have, keep that to yourself .

Updated almost 1 year ago

For me it's all about location ,the ability to rent or sale is much easier

Congratulations on the Inheritance.  It was a major blessing that your loved one planned ahead and left such a generous gift to change his/her family tree. Don't feel rushed to do anything.  If you get in a hurry that money will start disappearing.  It's great that you are consuming a lot of content on investing and that we live in a world where that information is readily available.

There are many different ways to invest and locating a niche that you are passionate about is a good first step to determine if flipping, renting apartment buildings, renting single family homes, renting commercial, airbnb, or any other option is where you want to be. Then see if you want to self manage or hire a property manager. Within each of these classes are different subsets.

I would physically start by either A, getting a job working for a property management company, or B, buying a low cost house and diving in.  My first house was $6K at a tax auction.  Low dollar houses are a great way to learn.   Either way you would have inexpensive hands on learning.  Learning how to repair / replace almost everything in a house takes a long time to learn and is invaluable in the long run, even if you don't plan on always doing to work yourself.  Knowing how to do the work, how long it takes, and what it actually costs, will make you a better real estate investor.  From a property management company you can learn in depth the screening/leasing process and the eviction process in your area.  

Treat this money like each $100 is your child.  Someone worked like hell to build that wealth over decades.  Each $100 needs to be fiercely protected. I have a friend who inherited $250K really young and by the time he was 32 it was all gone.

I would today, keep $25K in cash at all times. Then invest $100,000 into stock market index funds in a taxable account and each year use gains from this to fully fund a Roth IRA or better yet a solo 401K if you go the self employed route. These 2 moves hedge you from running out of money. $100K at 20 invested in index funds earning 7% at 65 will be roughly $2.2M.

Then use the remaining $375K towards Real estate investing, which is more than enough to get started. I like the sub30K market myself, but its certainly not for everyone. I personally would only do 1 low cost house to get started.   

@Robert Chambers

What real estate experience do you have? What investment experience do you have? Who do you know that is doing what you would like to do? Take your time- there is no rush. Return on your money is important -return

OF your money is more important.

@Robert Chambers People are telling you not to buy classes because you are young and may not have figured out that those free real estate conventions are sales pitches for bigger, more expensive courses. I'm not saying they have no value and you shouldn't go, but I am saying to be careful and DO NOT fall for the sales pitch.  Everything they will teach you, you can learn here for free.

As far as the money goes, if you don't own your personal home, I would buy one, maybe house hacking it to roommates or buy a small multi-family and rent out the other units. If you like doing that, you can buy additional properties. You can diversify by investing in syndications, notes, flips or index funds as well.  There are sooooo many avenues you can take, so I recommend just going out there and trying a few things.

@Brandon Hall

Hey thanks for your reply!

Yes, spreading it out through multiple syndication's was an original idea. Investing the majority of it and then using the investments return to invest into stuff myself.  But time is also money, and 10 years of my life to 4x my money could be done quicker through getting that personal experience in ASAP! I think a good balance would be great here. 

@Billy Smith

Thanks for your advice!

This is what I am mostly looking into. I want to grab two properties  hopefully 4/2's and househack one and completely rent out the other after some renovations. I know I shouldn't dive into a 32 unit deal because I just lack the experience. I will be going to a convention soon to find people with more experience than me and maybe they will have words of advice.

@John Crabtree

Thanks for your thought out post!

Thats awesome getting your first place at 6k. I am hoping to purchase 2 single family homes and do renovations in each. I am very knowledgeable of money and already have those savings/retirement accounts in place. I budget everything. 1% of profits can go a long way! 

Thanks for your advice. I hope to share my story throughout the years.

@Carl Fischer

Hey thanks for replying!

The real estate experience that I have is hours of content from youtube and books. I have always invested my money since before I was given this trust. I successfully saved and invested 10k till I was 18. With of course some losses here and there. I now have that in a syndication earning 8%+ a year. I don't know many people who like doing what I want to do except for all the youtubers that I watch. 

Thanks for your words of wisdom. I wonder how to get financing with 0 income :)

@Robert Chambers

Fair enough. All I'm saying is don't waste all your money until you know you want to be an investor. It's not a foolish thing to say to buy a cheaper duplex, say for 100k, rent one side and live in the other. You're looking to gain experience and a better insight on what you want. Take 20k out of your 500k and get a loan. There's your leverage and all your money isn't wasted.

@Nick Rutkowski

Thank you for all your information brother!

I think I am going to invest 400k in with a professional manager and a diversified portfolio, and use the income and dividends to make my own real estate investments and keep a 100k cash reserve for fixing!

How does that sound?

@Robert Chambers

It’s your money man, I think however you want to invest it works for me. I just want you to be successful and happy with your decisions. Good luck man, if you are in NY, get in touch with me.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you