Wednesday, June 19, 2019

Considering real estate investment [non-poker]

Still playing online and live, though not nearly with the frequency I once did.  Funny how life gets in the way.

As careers progress and wealth gets accumulated, I find that I'm looking for new ways to diversify my holdings.  From my 401(k), 529 and other side cash investments (mutual funds, bitcoin), I think I'm flush with exposure to the stock market.  Unfortunately (really, fortunately - it's a good problem to have), there is still continuing excess cash flow.  I've been discussing available opportunities with my brother in law, and concluded that we should purchase a property with the intent of becoming landlords via a partnership.

Combined, we have around $100,000 of available capital to deploy (that's the rough number he and I feel comfortable using), and I'm not 100% convinced that real estate is the way to go, but it seems to be the most obvious and easy choice.  The idea is that we purchase a property, start a positive cash flow stream, escrow the cash flow and in a few years, purchase another property while also paying off the first one on the backs of the renters.  Pretty simple.

I'm sure more than a few of my readers have or are finding themselves in similar situations - albeit likely with even more capital.  What are you doing with that cash besides plowing it into the stock market or a high yield savings account?  I'm plumb out of ideas...

Thoughts are:

  • A franchise (which requires a TON of time)
  • Commercial real estate (which I lack education)
  • Beach house summer rental (lower cash flow, but allows our families to use it in the off season)
  • REIT / Real Estate Investment Trust (no control over what the REIT does AND also puts more money into the stock market)

7 comments:

  1. Coincidentally, I have decided to play in the WSOP Main Even and am looking for backers at a 3.69 mark up. Can I put you down for a cool $10,369?

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  2. id suggest u buy a highrise condo in atlantic city. your mortgage would probably be about 600 a month or in reno near the peppermill. and then rent it out to me for not more than 1000 a month. if i could get a place for that low in a place i like to go, id never want to move out and id keep it for years if the place was a luxury high rise. and if i did, u could still make money from airbnb.

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  3. I guess you have to sit down and do the math. Location of property (local vs beach), cost of property, cost of partial renovation, amount of rent, cost of property maintenance, amount of property taxes, insurance, number of years it will take to break even...and so on. You probably want to talk to a landlord around the DMV and DE beaches. Baltimore real estate that needs renovation can be bought for cheap the issue is: will the value of the property increase much over the next 10 years.

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    Replies
    1. Yeah; the problem is the math doesn't entirely work. I considered Baltimore but I think it's a lot of work and persistent chasing of the renters to get the rent on time... It's not the best area...

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    2. True. I've also seen properties that are used by the owner/investor part-time and when not in use, they list it on Airbnb. It is a nice way to earn a little extra cash in between personal use.

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    3. Agreed; problem is this is primarily intended for cash flow and a far secondary for personal use. I do have utilitarian benefits weighed into the equation, but it's not a big factor.

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  4. Today, I went to the beach front with my kids. I found a sea shell and gave it to my 4 year old
    daughter and said "You can hear the ocean if you put this to your ear." She placed
    the shell to her ear and screamed. There was a hermit crab inside and it pinched her ear.

    She never wants to go back! LoL I know this is completely off topic but I had to tell someone!

    ReplyDelete

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