Reinvest you’re Capex money?

Question

The money we save for Capex every month, should we reinvest that money in stocks, bonds, ETFs? I feel like the money could grow because Capex may not come into play until 4 or 5 years down the road.

Sudhanshu Singha · Answer

@Sam Bedich I invest my capital reserves in Vanguard S&P 500 ETFs for all of my properties. They are very liquid investments and have minimal fees.

Evan Polaski · Answer

@Sam Bedich I would argue investing your "reserves" means they are not reserves.  But yes, it is your money that you can place as you see fit.  The purpose of reserves is to be there when you need it and the interesting thing about capex is it is not always so predictable.  4 or 5 years might become 4 or 5 months.

Personally, a money market account or high yield savings is the best bet for me, but I tend to be more conservative, and don't want my roof money to NOT be there when I need it.  And as we saw 2 1/2 months ago, the bottom can fall out of the market very quickly and unexpectedly.

Antonio Figueroa · Answer

From my 20 years of working on wall street I can say this.  The closer you are to needing cash the less you want to be in stocks, volatility can make or break you.  Capex is for repairing big ticket items that sometimes go when not expected.  So for me I am stay liquid in cash for now.  I think once you start getting enough properties and your capex gets high enough you can start to leverage some of it in the market (bonds, REIT's or Tax Leins).  I personally like to buy and rehab my properties from day 1 so I know what the lifespan of items will be and for me it is unlikely I will have multiple roof's fail in one year.

Jon H. · Answer

@Sam Bedich

It’s impossible to know what’s going to happen over the next couple years during these unpredictable times but I wouldn’t feel comfortable investing in DJIA/S&P right now.

Cash is king at the moment. You can always keep the cash on the side and invest in the stock market once (if) there’s a big dip.

Sam Bedich · Answer

@Sudhanshu Singha

Thank you for the response. I am new to real estate investing, and when I read about putting money off for the Capex I just thought to myself why not just reinvest it? I just hate having too much money sitting there doing nothing. I must have not been the only person thinking it.

Reinvest you’re Capex money?

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