Would you rather invest 250k in T-Bills in this market?

Question

Hello,

I have a 500k mortgage on a triplex @2.5% interest and 250k of cash in sitting in a savings account yielding at 2.5%. The treasury bill yields are getting close to 5%. I am feeling tempted  to invest my free cash into  T-Bills to completely offset my mortgage interest without any risk.Is this a bad idea? Can I do better passively in a hands-off fashion with other investment vehicles such as syndications in this market?

Allan C. · Answer

@Peter Morgan I’m in several syndications and likely not investing in syndications for the next 18 months.

I’m actively searching for buy and hold acquisitions, but none fit my underwriting criteria until sellers adjust to market reality.

So I have set up a T-bill ladder to keep 1/3 of my capital liquid every 4 weeks.

Steve Donovan · Answer

Hello @Peter Morgan  As others have suggested, you can make far more in a syndication or a turnkey.  There are still many 8-10% cash on cash turnkey deals in the Midwest if you do some research.  In addition to the cashflow, you have advantage of potential appreciation and the principal paydown provided by your tenants.  All the best in your investing future!

Greg Scott · Answer

Apples and Oranges

T-Bills are a safe short-term investment with lower returns backed by the US government and provide a very high probability of being paid.

Syndications, assuming you have a good operator and underwrite the deal conservatively, can provide large returns but are long-term investments.  Any cashflow projections they make are simply projections and may end up being higher or lower and are not guaranteed.

Account Closed · Answer

Why would I do that? People get 10% when they invest in my property projects, they get cash flow, they get security against an actual asset, they are passive and don't have to worry about getting their hands dirty. T - Bills, even at 5% aren't keeping up with inflation and are going to go through some pretty tough times ahead. Even the Stock Market is down 20% for the year. How is that even comfortable to contemplate?

Real estate, done properly, gives you cash flow, is based on an asset instead of an inflationary printing machine (the Treasury just prints away and debases your investment). Real estate can be depreciated for tax write offs and is something other people actually want.

https://www.primenewsghana.com...

Investors shy away from T-bills due to unattractive rates

"Investors are shunning government's short-term debt instruments - the 91-day, 182-day and 364-day Treasury bills - as liquidity on the primary market is strained on the back of unfavourable interest rates on these classes of debt securities."

Peter Morgan · Answer

@Alex Forest

Sofi with a direct deposit

Paul Moore · Answer

Great question @Peter Morgan! As several people stated you should be able to get 5% or more in current cash flow from a lot of different syndications and real estate funds. Then you also have the potential upside from appreciation and principal pay down later.

On the other hand, if you are extremely risk averse, you need to understand that the T bill would give you certainty that you cannot get in any syndication or fund right now. And let's be honest: multifamily has been overheated so long and some syndicators have been taking such big risks and there are risks involved. This is why my firm broadened our investing strategy to include self storage and mobile home parks, which seemed to us to have lower risk. Happy investing and good luck!

Mike Dymski · Answer

It's going to be hard to get confirmation for bond investing on a real estate site.  Plus, other members are looking for investors in their opportunities.

Similar options are online savings accounts in the mid 2s, commercial paper and online CDs in the mid 3s, and tbills in the mid 4s.  I don't see an issue with your strategy (and max out i bonds first).

Colton Hahn · Answer

If you are accredited why not invest in syndication that offers high cash flow, as an example we have an option that offers 10% annually distributed monthly with tax benefits of owning real estate? Never missed a distribution. Seems like a no brainer to me..

Ruchit Patel · Answer

Why not buy a turnkey and enjoy great passive returns!!??

Kathy Utiss · Answer

You mentioned using a treasury to offset your interest. Couldn't you purchase a zero coupon treasury to insure your loan against default?

Ie: zero coupon at discount matures and pays off principal?

Would you rather invest 250k in T-Bills in this market?

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