$200,000... Invest in RE or school?

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$200,000... Invest in RE or school?

N/A N/A
Member since 2008 · 5 posts · 0 votes

Hi everyone. I've browsed this site for awhile, but finally joined/posted, and would like some advice. Here is my senerio. I'm 23 and have been in a rut lately, I have an AA degree, and a computer networking degree, I dont have a bachelors/masters. I have great credit and purchsed a 4plex last year which has done great. There is no place to move up in my current job, and sometimes feel like I wish I had that piece of paper(bachelors/masters) to get a better job. I make about 40k a year. (not counting my rental) Anyways, I have over 200k in a trust that I'm ready to start putting toward good use. (...finally) my question for you guys, would you use that money toward schooling? even though a degree doesn't always mean good money. Or invest that money into more rentals/commercial realestate? My best friend invests fulltime and tells me to stick with realestate. My only problem if it doesn't work out, I don't want to look back in 4-6 years and have wished I would have went to school. If I start investing and no school I would probably start to sell RE so I can do my own deals.

Any advice or opinions appreciated.

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  • Jon Doeing
    Member since 2008 · 15 posts · 0 votes
    19y

    nosrednehm,

    Invest in RE; it's a better use of your money. Not knocking degrees, ( I have a BS, a Master's + a graduate certificate) but you're comparing apples to oranges. You'll never learn RE investing in any traditional school. Besides, your full time job is in the computer field; as a CTO, I can tell you that for the most part, outside of management, degrees don't measure up to certifications and experience.

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  • Ken Hicks
    Boonies, PA · Member since 2008 · 333 posts · 15 votes
    19y

    I won't spend a dime on training material, or classes until you go to your local real estate investment club. I would network with others and ask questions and be honest these guys will know if your a newbie, or not. Usually they have classes you can take at the club.

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  • Les Williams
    Real Estate Consultant · Phoenix, AZ · Member since 2008 · 223 posts · 1 vote
    19y

    It looks like you are doing well with your present income. you need to
    stock pile$$$$. Dont second guess your self. You bought the quad
    and your still doing well. You have excellent credit so your next quad will be a investment loan. Find one that has tenants and doesnt need a lot of work. it doesnt have to be a quad. It can be a Duplex or Triplex. with your loan Get the highest LTV your credit will allow. Although the lower the LTV the better the rate and payments. You have money. there are some people out there who would love to be in your shoes. Just make sure you are always in charge no matter what you decide. Sititng on $200k is not a bad thing.

    Les. 8)

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  • Ryan Webber
    Wholesaler · Amarillo, TX · Member since 2008 · 1k+ posts · 659 votes
    19y

    There are no guarantees in life, except taxes and death. Even with a masters or doctorate and a well paying job, you aren't guaranteed anything. You could spend the next 20 years working up the corporate ladder only to find yourself downsized or younger sized by someone like yourself right now. The beauty of real estate investments is that you are in control. There is no manager or board to brown nose so that you can get a promotion, or worse, to keep from being fired. There is also no one telling you what you are worth. You and you alone determine your worth in this business by your own vision and determination.

    If I was in your shoes, I would keep my current job and dive into real estate. I would keep my current job until it just wasn't financially practical to keep working it. There are ways in real estate to vastly surpass any normal job income, and you get the freedom of owning your own business. Starting with 200K always helps, too.

    Keep in mind that you came to a real estate investment forum. If you went to a doctorate alumni forum, you might hear very different advice. :D

    You might want to read Robert Kiyosaki's Rich Dad, Poor Dad. He outlines some of the different aspects of exactly what you are facing.

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  • N/A N/A
    OP
    Member since 2008 · 5 posts · 0 votes
    19y

    Thanks for everyones opinions so far. Keep them coming, very interesting.

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  • John Mitchell
    Investor · lakeland · Member since 2008 · 5 posts · 0 votes
    19y

    I am in a similar situation as yourself..

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  • N/A N/A
    Member since 2008 · 3 posts · 0 votes
    19y

    To me the answer would depend on how easy it is for you to get financing for REI (assuming you want to get into it) and how much it will cost you to go to university/college.

    By both going to college and REIing with your 200k you will have a balanced portfolio. If you put 200k in REI you may lose it; likewise you may feel you lost it putting it in college.

    There's an argument that you should have a laser focus, put all your eggs in one basket, and make sure you have a reason not to fail (losing it all).
    It depends on your propencity towards risk. I'm 24, I've got my undergrad and masters degree. I have become less risk averse, but perhaps that's because I have the security of my degree.

    Unless you're only focused on your career and wealth college can be a fun life changing experience. You'll probably never have such an opportunity to bang so many chicks. Education may change your own mind. College courses can be easy enough that you can do REI at the same time.

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  • N/A N/A
    Member since 2008 · 251 posts · 7 votes
    19y
    Originally posted by "nosrednehm":
    There is no place to move up in my current job, and sometimes feel like I wish I had that piece of paper(bachelors/masters) to get a better job.

    There's a lot more to life than just money. I would think long and hard about what I want to do in life if I were in your situation. A great career can be intellectually stimulating and may open doors to worlds you never knew existed. I'm involved in cancer research, and I get to see and do things other people could never imagine. I get to work with equipment that is unbelievable in what it can do, and I get to work on problems that nobody has yet ever solved. Better yet, I get to work with other people who are doing other, even more amazing things, and I get to help them solve problems that they encounter with their research. I also get to know that my work, and the work of those with whom I work daily, helps in a small way to make the world forever a better place.

    For me, personally, if my whole life were about nothing but making money, it would seem a little hollow. You can always invest in real estate in your spare time. I find it interesting that many (but not all) of the really successful investors at my REI club are not full-time investors -- they choose to keep their "regular job." One is a physician who now makes more money in real estate than he does in his medical practice. He loves it because he says "now I'm just working because I love to."

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  • Ryan Webber
    Wholesaler · Amarillo, TX · Member since 2008 · 1k+ posts · 659 votes
    19y

    LOL, overdriven. Ahh, the perks of college.

    I think you make an excellent point TN-Apprentice. Life isn't only about money. It's also about doing something you love. I love building something and I love being an entrepreneur so I get a lot of this business personally too. I think its very important to do something that satisfies you personally and not just monetarily.

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  • N/A N/A
    OP
    Member since 2008 · 5 posts · 0 votes
    19y

    TN-Apprentice - you are correct about life isn't about money. But here in Seattle I can't even afford to move out on my own on 40k. Condos are well above 200k. I agree on finding a rewarding career also, and what I'm doing is not rewarding, nor do I look forward to waking up and going to work. I feel like being an investor/entrepreneur I would enjoy though.

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  • Tom NA
    Real Estate Investor · Mountain View, CA · Member since 2008 · 234 posts · 32 votes
    19y

    Well put TN-Apprentice. Like you, I have a day job that I find very rewarding and would never quit regardless of the amount of money I make in real estate or other investments. In my opinion, nosrednehm, what to do with the $200k requires you to do some soul-searching. What do you enjoy doing? You may not enjoy your current job that much but will you ultimately enjoy real estate that much more or is it merely the glamour of possibly making your fortune? Don't let the latter convince you of how you feel about the former - give it some critical thought as I suspect even the professionals out there will tell you that the profession has its share of monotony and disappointments just like any other career.

    The way people talk, especially on RE Investing boards unfortunately, they sound like they would do anything for a living if it meant bringing in a lot of money. Probably a lot of them are the same ones that wanted to be day traders 5 years ago. Is that really the end all? With no offense intended to anyone's profession, I would much rather stay in my current job at my current pay than go to McDonald's and flip burgers for $1mil/year.

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  • Danny Kay
    Developer · Atlanta, GA · Member since 2008 · 148 posts · 34 votes
    19y

    if i were in your shoes : RE, not school.

    I know plenty of broke PHd's. Bottom line, you have your foot in the door with REI, why not continue that. And remember, your REIs should hold or grow in value, if for some reason in the future you NEEDED a degree, you could sell some property and pay for schooling. Even a couple years later, your 200K should have grown 10% i would hope as a min. LEaving you 220K for emergency schooling. Just a thought. You have two choices: REI with emergency schooling down the road, or schooling now and now cash for REI. Option 1 would be my choice.

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  • N/A N/A
    Member since 2008 · 1 post · 0 votes
    19y

    I urge you to invest in real estate. I chose to do real estate investing instead of finishing college. I have been doing it now for 10 years and doing well.
    In whatever city you live in go find the local real estate investor club and join!!! There you will be able to start building your network and education.

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  • N/A N/A
    Member since 2008 · 21 posts · 0 votes
    19y

    Ok, this may seem like a dumb suggestion but why can't you do both? If there is something that you want to do other than real estate why can't you go to school, it shouldn't cost 200K, and you could still invest. I am a real estate agent, I also have a Bachelor's and Master's degree. Life is about experiences and it is harder to go back to school the older you get because life often gets in the way. You need to figure out what will make you happy...what happens if your RE investment goes up in smoke tomorrow, what then? I don't believe in putting all my eggs in one basket, it doesn't have to be an either/or situation. I love real estate and I think that investment is a wonderful money making opportunity but you shouldn't have to choose one or the other. Why couldn't you go into something that has to do with real estate or investment or business management...after all you are running your own business. GL, HTH

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  • Jason Barnett
    Dayton, OH · Member since 2008 · 517 posts · 17 votes
    19y

    I did both (Master's in Accounting and REI). If you ever find yourself needing a "real" job then a degree in business (accounting, management, finance, etc.) is extremely valuable. Also yes it is VERY hard to go back once you start working.

    I think it is perfectly reasonable to get a Bachelor's degree (4 year degree) in business while you do REI. There will be a lot of overlap. That will also give you 4 years to decide whether you really want more education or not. A Bachelor's Degree is sufficient to get a "real" job and I think it makes a lot of sense for you.

    A realistic plan: Go to whatever school located in a city where you would like to live. For the first year you live in the dorms while you go find a bargain piece of real estate and buy / rent the property. Ideally you would find a duplex and rent out one side and live in the other. Then you go to school and learn about the "real world" of being a landlord!

    I wish I had that much money when I was your age. Good luck and I hope you find success.

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  • Bill & Sheila Easley
    Residential Real Estate Agent · Gatlinburg, TN · Member since 2008 · 12 posts · 2 votes
    19y

    Definitely invest in real estate. Ypu just need the right place and a truthful professional to guide you.

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  • Jason Barnett
    Dayton, OH · Member since 2008 · 517 posts · 17 votes
    19y
    Originally posted by "seasley":
    Definitely invest in real estate. Ypu just need the right place and a truthful professional to guide you. An example would be to learn about the lucrative market in the Great Smoky Mountains.

    Look at www.investmounts.com

    It takes a lot more than a truthful professional. In order to be profitable you've got to know how and where you as an investor will add the most value. You can hire out some of the work, but if you hire out all of the work to other people then you're going to really cut in to your bottom line.

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  • Regina Mccune
    Real Estate Investor · Member since 2008 · 16 posts · 0 votes
    19y

    Noserednedm,
    How many jobs have had? I think that in your search you need to comapre this current job against the other jobs you've have. Sometimes the grass isn't always greener on the other side. I add this theory only because I am in a simular situation. If you don't have a family to support financially and emtionally yet, then why not do all three. Becaause the post reply about "going back to school older" is SOOOO true! Also I'd like to hear more about how you got started. I'm still learning before I want to jump in but I can't wait. Good Luck!!

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  • Wade O
    Member since 2008 · 51 posts · 3 votes
    19y

    Everyone wants to answer this one!

    Here's what I have to say: do both.

    I would look into student loans with nothing due until graduation, and I would save the appropriate amount to repay those loans before they start gathering interest.

    You have your AA, so to get your BA we're talking $100,000 or less. Take the remainder and put the bulk of it in something that will earn some nice interest but that the banks will view as liquid. You'll need to set aside a small amount for RE investment. Either on your own or through a program, you can then use that to invest based on the strength of your credit and assets.

    At the end of two years you will have your BA and spent tens of thousands of dollars getting it, but you will also have earned a large chunk of that back in RE. The short of it is that you are not in an either-or situation. Follow your heart.

    If you need some specific ideas, let me know.

    Wade

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  • Brad Stoffel
    Fort Wayne, IN · Member since 2008 · 17 posts · 12 votes
    19y

    I'm in the same boat... errr except for the $200k

    I'm 24 and make $50 a year in the modest midwest. I,ve got 30,000 in equity in my home and 40,000 in an IRA. Asociates degree... working full time for a shaky company...

    I can tell you this, if i had 200,000 i would leverage it to purchase $2 million in real estate! Assuming you're buying at a discount you could still have $50,000 in the bank. I would try to be cautious and do this slowly though. I somtimes get carried away and go too fast... doing this with real estate can get you over leveraged real quick!

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  • Brad Stoffel
    Fort Wayne, IN · Member since 2008 · 17 posts · 12 votes
    19y

    :oops:
    double post
    :oops:

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  • Ken Hicks
    Boonies, PA · Member since 2008 · 333 posts · 15 votes
    19y

    nosrednehm Do you have an update on what you decided? Yeah 40k is not much at all to try and live on. that 200k would be a nice down payment for a house. look at it this way. how many years left do you have to get that 4 year degree? I would go part time till you have 2 years or less left. most colleges offer programs online now. ok lets say 3 years. so in 3 years what will you be making then? 60,000? to me that would be worth to go back to school. you can most likely get a loan I have seen them as low as 1% REI is not that easy. You see guys on the commercials with nice cars and hot babes what they don't tell you is you have to work extremely hard. Honestly it might take you 2 years just to get over the emotional part of REI if something goes bad. you said you had a friend that does it full time. maybe what he is not telling you is how he got started. not everyone has 200k to start with heck even if you put that into a money market account you can get 4% interest. thats not bad. If I was you and this is what I do. I purchase properties with my own cash, make sure they are fixed up right so you don't have problems then you refi and pull your own money out and sometimes 5k extra. SO based on that you have to calculate your purchase cost on what the cash flow and what management fees are. go to the store and check out the CD and offer generator package I think its $140 I don't buy much material just 2 programs in my lifetime and this is a good one. They have 3 books out. Secrets to real estate investing is their best one its like 15 bucks you can't lose on that. the chats help out a lot as well. well this is my input. I invest in real estate part time for retirement. I am looking to pick the pace up soon. I would diffidently stick with school at least part time if you can.

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  • Travis S.
    Wholesaler · Charleston, SC · Member since 2008 · 172 posts · 5 votes
    19y

    You have to have the inspiration & motivation to invest in real estate. I would choose real estate investing.

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  • N/A N/A
    Member since 2008 · 11 posts · 0 votes
    19y

    Seems to me that with $200,000 you could do both...or at least begin to both. Depends upon what your tuition/fees would be I guess. As a parent I preach EDUCATION first. It gives you something to fall back on if the real estate market hits a major dry spell. Just remember that in all things you do, do what you love. Ask yourself this question: "If money were not an issue what would I LOVE to be doing." You have youth on your side and appear to have a wealth of knowledge too...wisdom will follow shortly! Best of luck to you and your choice.

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  • Emma Powdrill
    Member since 2008 · 20 posts · 0 votes
    19y

    REAL ESTATE!! Seriously, schooling is just a waste of time in my book, most work isnt even based on qualifications these days its all down to experience.

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