150k ready to invest. Where should I start?

Member since 2020 · 7 posts · 2 votes

I've been told for years investing in real estate is the way to go but never did. I have 150k in stocks at the moment that are currently dropping because of the Coronavirus epidemic and I'm looking to take my investments and put it all into real estate. Looking for guidance on what direction I should go (long distance investment, BRRRR, rentals). I figure I came to the right place for advice on this topic. Thank you in advance!!

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Whitney HuttenPro Member

Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes

@Michael Gabin I have a slightly different opinion than Wil. I would look at your portfolio and see if you have anything to tax loss harvest. Depending on your situation (and work with a CPA), you may be able to lock in the loss on those stocks, pull that capital now, and have the IRS partner with you on the losses. Outside of that... Wil has a great point, the market is on sale right now.

That aside, I'd start here:

1. Establish your WHY of real estate investing...

Side note: Think about this... if the Coronavirus is spooking you, how will you feel about a long vacancy, eviction, bad contractor, tenant damage to your home, etc. (crap still happens in RE investing!)?

2. Once you know your WHY, then you can start to set goals. Maybe your WHY is to spend more time with family and friends and it will take $X/ month to get you there... now you can break that goal up into milestones.

3. Now you pick an investment strategy to get you there!! There is flipping, turnkey, brrrr, syndications in SFR, MF, MHP, SS, Land, etc... a myriad of choices.

Podcast Guest on Show How to Build Generational Wealth Without Losing it Along the Way

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Will FraserPro Member
Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
6y
Hi @Michael Gabin; welcome to the Bigger Pockets forums!

This is my opinion only, but I'm going to shoot straight here. Do NOT dump these stocks because the market is "down"!!!!!!!!!!!! That would be akin to selling your stocks in 2012 after losing your butt for 5 years; which was 5 years shy of the FULL rebound of the stock market to a point about 2x the 2007 highs.
Investing in the stock market is not wisely used a short-term investment vehicle and I believe you would be doing yourself a disservice to look up and see the sky falling (due to a very clear cause -- a virus) and dump your depressed stocks so that you could put that money into a (potentially) inflated commodity like investment real estate.
The flipside of this equation is this: every stock that you currently own is probably "on sale" right now and you could purchase a larger share of that company for the same price you paid earlier! What a deal!
I would encourage everyone reading this to read (or better yet, listen to) The Richest Man in Babylon

We're all better together!
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Whitney HuttenPro Member
Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Michael Gabin I have a slightly different opinion than Wil. I would look at your portfolio and see if you have anything to tax loss harvest. Depending on your situation (and work with a CPA), you may be able to lock in the loss on those stocks, pull that capital now, and have the IRS partner with you on the losses. Outside of that... Wil has a great point, the market is on sale right now.
That aside, I'd start here:
1. Establish your WHY of real estate investing...
Side note: Think about this... if the Coronavirus is spooking you, how will you feel about a long vacancy, eviction, bad contractor, tenant damage to your home, etc. (crap still happens in RE investing!)?
2. Once you know your WHY, then you can start to set goals. Maybe your WHY is to spend more time with family and friends and it will take $X/ month to get you there... now you can break that goal up into milestones.
3. Now you pick an investment strategy to get you there!! There is flipping, turnkey, brrrr, syndications in SFR, MF, MHP, SS, Land, etc... a myriad of choices.
Podcast Guest on Show How to Build Generational Wealth Without Losing it Along the Way
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William Goss
Flipper/Rehabber · Member since 2020 · 29 posts · 12 votes
6y
@Michael Gabin this is just my opinion, but I agree with Will. You need to be very careful when stocks are volatile and have recently taken a big hit. I would discuss with a financial adviser and put together a plan to create a more diversified overall investment portfolio that is done slowly in phases at the right time (in the mind of a financial adviser). Real estate is a great investment, but it needs to work hand in hand with your overall investment portfolio, and it needs to align with your long term goals.
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Mark H. Porter
Investor · SC NC, VA · Member since 2020 · 1k+ posts · 756 votes
6y
I don't know about anyone else but the market is a great opportunity right now. I don't own individual equities but I'm keeping my IRA s and 401K's where they are. Due to the rentals I may never need them anyways.
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Maggie Polisano
Specialist · Ambler, PA · Member since 2020 · 15 posts · 10 votes
6y
@Michael Gabin
Are your stock investments held in retirement account or outside of retirement accounts? The reason I ask is, if they are held in an IRA or 401(k) not only would you be looking at the loss in value, but then you could be responsible for taxes and possibly an early distribution penalty. I agree with the comment to speak to your advisor or accountant. No one really knows what the stock market will do, we all hope it goes back up, but only time will tell. Your advisor can also help you come up with a plan to add real estate investing to your portfolio, they will likely recommend a mixture of things to include, not just 100% real estate.
In terms of real estate investing, it sounds like this is new territory for you. Some recommendations are to learn as much as you can- listen to podcasts, go to REIA groups and meetups in your area, connect and speak with people here on BP. Others can suggest different types of real estate investing, but ultimately every investor is different, they have different levels of experience, amount of "hands on" vs Passive, risk tolerance and total investment goals. You should learn about all the different investing options that appeal to you, talk to your network about the pros and cons, ask here on bigger pockets. Then you should have a good idea for what method and strategy appeals most to you and aligns with your goals. See if you have someone in your network who might let you shadow them and learn on a deal or 2 before you venture out on your own.
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Joseph CacciapagliaBusiness Member
Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
6y
I completely understand where you're coming from. If you've been invested in the market for a while, you just saw a year of returns disappear. Whether or not you take your money out now should depend on where you think the market is going from here. In the last downturn, I saw a lot of people hold onto their stocks waiting for them to "come back" before they sold. A lot of people missed a lot of opportunities in real estate, long before the market came back. I know @Will Fraser mentioned that this would be like selling your stocks in 2012, but I think it's just as likely that this would be like selling your stocks in 2008, long before they finished their decline. Sometimes we see these short term drops, and they're just that, but other times the market continues downward for a long time. Even professional investors usually fail at timing the market.
One thing that a lot of people forget, is that real estate often continues to appreciate in a recession. This wasn't true in 2008, but it was for many of the previous recessions. I'm not sure I would sell everything today, but if you think there is a 50/50 chance of it going up versus down, then I might sell half. It is all about your personal risk tolerance. If the $150K you're referring to is 100% of your assets, I wouldn't commit it all to real estate today.
That being said, I think buying in-place income is a good place to start for a new real estate investor. For many new investors this means buying a 2-4 unit multifamily property that is fully occupied. Imho, this is one of the lowest risk strategies, because you aren't guessing about what it might rent for, and you're not taking a large renovation risk. With this strategy, you are getting some degree of cash flow day one, which can protect your principal in the event of some downturn in the market. In my market, you could buy probably buy 2-3 duplexes, with a 25% down payment. I believe, this would be better than dropping it all into a single larger property. Again, I'm not sure jumping in and putting it all into real estate is the right move for you. You could always break it up over time.
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Michael Gabin
OP
Member since 2020 · 7 posts · 2 votes
6y
@Whitney Hutten thank for the support on the topic, it’s not that I’m spooked by the coronavirus, I was planning on investing in real estate but did not expect to see the market take such a plunge from the virus. I’ve been doing a lot of research online listening to a lot of different books and watching so many different podcasts from BiggerPockets. It all makes sense that Real Estate is ultimately the best investment when it comes to financial freedom.
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Michael Gabin
OP
Member since 2020 · 7 posts · 2 votes
6y
@Maggie Polisano my stocks are in a highly aggressive portfolio hell by JP Morgan Chase. At any time I can call and request funds up to whatever amount. The only thing I’d have to pay is capital gains on the interest made
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Michael Gabin
OP
Member since 2020 · 7 posts · 2 votes
6y
@Joseph Cacciapaglia I agree. I was looking to buy a couple multi families and have a residual rent be income to me whilst living free. My goal was to buy one to two properties per year for the next 5 to 10 years and then sit back and collect while managing or hiring a property manager to do so.
1 Reply
John Drowns
Investor · Kansas City, MO · Member since 2019 · 18 posts · 13 votes
6y
A quick thought: If you are an accredited investor (net worth of $1M or make $200k per year; are some basic parameters), you could invest in 506c syndicated partnerships. Truly passive (no asset management on your part), low correlation to public markets as you are invested in a commercial property, monthly distribution checks (depending on the Sponsor), and tax benefits. They are not liquid like your stocks, but because of that they are less volatile and can preserve generational wealth (kids will spend cash but they can maintain wealth if you are passing down units of investment in commercial property). In this type of investment you need to find a good Sponsor that has been around a long time and has been through market cycles and are truly real estate operators. Then you choose property type and geographic location you like from their offerings. Getting comfortable with a Sponsor takes some research, but is a good way to set up passive streams of income and benefit from property appreciation upon sale of the asset. Hope that is helpful.
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John FortesPro Member
Multi-Family Syndicator · Abington, MA · Member since 2017 · 603 posts · 347 votes
6y
This question is asked about once a week here on BP. End of the day, its a personal decision that you have to make once you determine what market, real estate investment strategy and criteria for which you will invest.
Happy investing!
1 Reply
Tom Ott
Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes
6y
Originally posted by @Michael Gabin:
I've been told for years investing in real estate is the way to go but never did. I have 150k in stocks at the moment that are currently dropping because of the Coronavirus epidemic and I'm looking to take my investments and put it all into real estate. Looking for guidance on what direction I should go (long distance investment, BRRRR, rentals). I figure I came to the right place for advice on this topic. Thank you in advance!!

I would do 20% down on multiple Turnkeys in the Midwest. They always hit the 1% rule and you can just earn passively. Like the market, but not as crazy.
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Cathie Lazarus
Los Angeles, CA · Member since 2020 · 16 posts · 6 votes
6y
@Michael Gabin. I’m in the same exact position as you. I plan to take a portion and use it for a down payment on my first investment property. I had planned to do that before the drop in the market and I am hoping it doesn’t derail my plans. Good luck with your decision. It’s not easy!
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Whitney HuttenPro Member
Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Michael Gabin The markets were volatile from news about supply chain disruption from the virus... what caused the plunge was the price of oil cratering (banks are hedged on oil... so that's not good for our economy). There are many factors converging right now.
To clarify... and I'm seeing quite often in this forum and others... people are leaving the market out of fear and thinking real estate will be the saviour investment (this may not apply to you... but I'm sure there are others who will read this). I just wanted to point out that real estate has it's fair share of issues too: capita calls, suspended distributions, vacancies... etc. I will invest in real estate over the market any day of the week... just wanted to level set the expectations!
Podcast Guest on Show How to Build Generational Wealth Without Losing it Along the Way
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Michael Gabin
OP
Member since 2020 · 7 posts · 2 votes
6y
@Tom Ott I’m very interested in the turnkey route but I have soooo much research still to do on what route I want to commit 100% to before I start to diversify!
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Michael Gabin
OP
Member since 2020 · 7 posts · 2 votes
6y
@Cathie Lazarus thank you so much! I’ve been honestly looking into this for 1+ year now and didn’t want to dive in without knowing every in and out. Plus I have a partner/mentor that is guiding me along the way. Best wishes to you as well in your journey!
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Michael Gabin
OP
Member since 2020 · 7 posts · 2 votes
6y
@Whitney Hutten absolutely and thank you for the continued support!
0 Reply
Andy Mirza
Lender · Ladera Ranch, CA · Member since 2014 · 1k+ posts · 1k+ votes
6y
@Michael Gabin Another thing to think about is do you want to be an active or a passive investor? Do you want to make real estate investing your full time job?
I think a lot of investors like the allure of making some quick bucks or think something will be passive when it's really not. (Holding rentals has not been passive for me until recently, when my business partner took over managing the portfolio. Even with property managers, you still have to make decisions and mange your vendors.) Do you want another full time or part time job on top of what you're already doing?
If you do, go for it. Keep educating yourself, find the niche of real estate that is you're calling. I agree with some of the others, stay put in the stock market until things calm down and recover, which they will.
If you want to be passive, consider investing in private placement offerings. There are lots out there run by full time professionals: multifamily, commercial, self storage, performing and non-performing note funds......
1 Reply
Jesse Vasquez
Investor · Modesto, CA · Member since 2020 · 31 posts · 19 votes
6y
id hold your stocks, its a long term game similar to real estate, these dips happen as you know how this goes! although it may be a good idea idea to diversify, sell some and invest some. Good luck
Jesse
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Account Closed
Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
6y
I’m going the other way as you I’m taking real estate profits and looking to buy some stock as they go further and further on sale
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Logan Freeman
Specialist · Kansas City, MO · Member since 2018 · 331 posts · 148 votes
6y
During this economic downturn we'd do well to heed the wisdom of Warren Buffett to “Be fearful when others are greedy, and greedy when others are fearful.” Don't dump all your stocks, and don't jump into a new investment vehicle without doing your due diligence. Just like you shouldn't buy a stock until after you research and understand what they do, their leadership structure, and their performance (among other factors), you also shouldn't start in real estate investing without first understanding WHY real estate is a good fit for YOU personally, and how it aligns with your life/financial goals.
Once you know your motive(s) you can look into different approaches (single or multifamily properties, wholesaling, commercial, flipping, BRRRRing, turn key, etc.)
From there its imperative to establish your real estate team (realtor, accountant, contractor, property manager, etc.).
I do believe now is an excellent time for the wise investor to find some great deals, and there are plenty of people on this platform that can help guide you in the right directions (myself included) as long as they're asking you the right questions.
Best of luck, and don't panic

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Alina Trigub
Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
6y
@Michael Gabin
Real estate is not a safe investment option... if one doesn't know what they're doing. So to make the smart choices, one has to spend time educating themselves to learn a specific niche within real estate - it should be a niche that interests them and that will allow them to apply the skills they have and enjoy using the most. What will it be - one may ask? Well, it can be flipping, buy&hold, tax liens, land investing, or many other strategies. Again the choice is on you to make the decision.
Start by analyzing your skills set, availability and how strong your desire to get to your end goal. Once you put it all together the overlap will guide you to what you should chose within real estate.
Also, this article should give you some more clarity:

https://www.biggerpockets.com/member-blogs/10850/86621-six-steps-approach-to-getting-started-in-real-estate

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Sean Ybarra
Rental Property Investor · Redondo Beach, CA · Member since 2018 · 47 posts · 22 votes
6y
@Michael Gabin Do you have an area in mind that you want to target?
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Philippe SchulligenPro Member
Investor · Atlanta, GA · Member since 2016 · 57 posts · 29 votes
6y
If you are OK with hands off investments, here are investment options you may want to consider:
- Turnkey single family: Some turnkey providers take care of renovations, management and leasing. I personally own a turnkey single family property in KC that is performing well. But with already several properties under management, scalability and workload can be a concern.
- Syndications: Work with an experience group who will take care of everything for you. I am both co-sponsor and investor in several multifamily syndications. From the investor standpoint, it is the best answer I found to unlimited scalability and very low workload.
I wrote a recent blog post on the topic that can help additional benefits of syndications: Guide to Find the Best Investment Option for You
1 Reply
Account Closed
Investor · Indianapolis, IN · Member since 2020 · 34 posts · 11 votes
6y
@Michael Gabin I wrote a forum on how I invest my entire investment portfolio, especially in times of volatility. Below is the link, however, I would discuss further with a financial advisor to put together a diversified plan for you.

https://www.biggerpockets.com/forums/48/topics/817098-thoughts-on-investing-in-times-of-volatility
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