What would you do with 150K Cash

Question

Hello all,

I am currently running small business and was able to save 150K cash so far.

I am 27 years old and have no experience in real estate at all.

I am living in NYC (Queens) and my long time girl friend and I want to settle down in Fairfax, VA

I have been thinking about buying my first house and found out that the market is too hot in Fairfax County due to upcoming Amazon HQ 2.

What would you guys do if you are in my shose?

Thanks :)

Ian Ippolito · Answer

Also if you are a nonaccredited investor, there are additional options beyond hoping that a 506B sponsor will accept you into a deal (many will not take non-accredited investors at all, and those that do generally have a very limited number of spots versus what they can accept for accredited investors).

Crowdfunding is essentially a syndication that is done online and the SEC approved regulation A+ which allows nonaccredited investors to invest in certain offerings. There are about 50 or so of these currently open. So if you are looking for passive income, I would recommend researching here. Something to watch out for is that many of them suffer from very high fees, very little sponsor skin in the game and much less sponsor experience then accredited offerings.

The best answer for you will depend on your risk tolerance and a conservative investor will have different choices than an aggressive one. I am conservative, so personally if I were non-accredited, I would start with the fund with the sponsor that has the deepest pockets, has the most experience and is by far the largest (and which has much less debt than many of the others). That fund is Blackstone Real Estate Investment Trust (BREIT). I would also take a look at Broadstone real estate access fund (BDREX) which allows access to real estate funds that normally have a $500K to $5 million minimum for just $2500. It also has rock-bottom fees and the sponsor has significant skin in the game. If you want some other suggestions, PM me.

Taylor L. · Answer

Come check out Richmond! Far more affordable than NOVA.

I invest in syndications because they allow me to make a passive return. I believe for busy people who run other business, syndications are the best options to earn a return while still having the time and energy to focus on your main business.

John Fortes · Answer

All depends on your goals. Do you need that capital immediately? Do you  and your partner need a home or are you willing to rent? All these things need to be addressed before you can answer your own question. If you're willing to rent, consider house hacking a duplex, triplex, or more... Look for something with deferred maintenance that you can force appreciate.

If none of those options are of any interest, then you can consider syndications.

Jim K. · Answer

HOOKERS AND BLOW

Collin Corrington · Answer

While syndicates are. A good way to invest it will tie your money up for a while.

I would create a note, flip a house, or BRRRR.

Get your feet wet. Learn some ropes. Etc.

Make some money and reinvest.

My thoughts are at the beginning, you need to make money and reinvest, make money, reinvest, until you get settled into your groove.

But make sure you can cleanly cash out each time.

Once you learn the ropes a little better, you’ll know what to look for when shopping a syndicate.

Andrew Hogan · Answer

good points @Ian Ippolito. You're right that some crowd funders come with high fees and no track record.

@JB Park You worked hard to save that 150K, don't put it all in a home!

If anything, get owner financing (3.5% down) on a duplex, triplex, or four-plex while you educate yourself and can make a good investment decision. Flip out of it in a year or two. That solves the need for a home and doesn't put all the savings into something that doesn't produce cash flow.

Keep it up until you can invest in the 506c offerings.

I watched this video from a mentor this morning and it's sooo great.

Grant's Financial Plan for Millennials

Keep educating yourself

Get a great network

Save 40% of your income

Spend money on income producing assets

Alina Trigub · Answer

@JB Park

Welcome to BP!

If you and your g/f don't mind living with tenants next door, consider house-hacking. So buy a dup to quad place, live in one and rent the others. This would be a good intro to real estate to someone in your position. You can get into syndication down the road.

In the meantime, consider networking with like-minded investors in the City. We have a meetup coming up next Thursday. More details under my profile. I don't think I can post it here.

Taylor L. · Answer

@Elliot Marszalek that is incorrect. 506(b) syndications can accept non-accredited sophisticated investors. Sponsors must have a pre-existing substantive relationship with investors for those deals. 506(b) deals cannot be publicly advertised. Therefore, if you see a syndication deal posted publicly somewhere, it can only legally accept accredited investors.

So the next step for you is to reach out to sponsors and get to know them! Get on investor lists and start looking at deals.

Many of my investors are non-accredited people I've gotten to know over the years. It just takes time.

Elliot Marszalek · Answer

@Taylor L. for syndications you have to be an accredited investor which means a lot of net worth or have I been misinformed previously? I like the idea of syndication deals for passive income but I'm nowhere near the 1m net worth that I heard was a requirement for accreditation.

What would you do with 150K Cash

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