Where to invest about $200,000?



It's not just the liquidity. They'll want to see 2+ years of work history, pay stubs, debts, monthly payments (rent/credit cards/mortgage/etc), tax returns, etc. In short, if the math doesn't show that you can make the payments (without the benefit of renters), you don't get the mortgage.

You might buy one house. Maybe two, depending on your current job/income. You won't get five. And, if you're self-employed...forget it.

It was looser before the mortgage collapse, but still not what you're describing.

Most of those "As Seen On TV" get-rich-with-property schemes try to sell you on the idea of brokering deals for other people, not buying the house yourself...at least not directly. Not that they aren't full of shit as well :)
 
As other have said lower end homes will often yield greater return because of the typically lower income that your tenants will have. They will be willing to let the maintenance side slide as some have noted, but also typically lack the ability to cover another security deposit and first months rent while you are still holding their deposits.

However, if they do decide to leave you will very quickly learn that people who have let the maintenance slide, will usually let it slide and continue to fuck up your house leaving you with a nice present when you go back to look at it.

We used to own 15 houses, and the only way to make the money is to do the work yourself. So no plumbers, painters, or normal trades people or property managers. When we looked at property managers some tried to ask for 20%, which eats into your money right away.
 
(O_o) said:
use the $ to take out a tiny ad in newspapers across the country for a big brand.

insane profit.
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"I took out tiny classified ads in newpapers across the country, before I killed myself in my jail cell while awaiting trial."

Don-Lapre-Arrested.jpg
 
blogginginc said:
Could you please provide the source to verify how accurate your statement is?
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Yes.

Am I willing to do it? Nope.

What do you want me to provide? My own bank statements? There are private bankers that can produce performance records for the last 3 centuries. If you approach them with that kind of money, theyll happily produce those kinds of returns for you.
 
Nicky, why don't you use your inkjet printer and print up some money like you did in the old days? That should solve your liquidity issues.
 
accord96 said:
However, if they do decide to leave you will very quickly learn that people who have let the maintenance slide, will usually let it slide and continue to fuck up your house leaving you with a nice present when you go back to look at it.
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This is most land lords fatal mistake and it can be solved simply. In every contract you put that every 30 days you will come by and change the air filter for the A/C unit. This gives you 2 things ... access to the home every 30 days to make sure they aren't punching holes in the wall, and maintaining your equipment so you aren't replacing it every 3-5 years.

I put this in every contract and also point it out directly to them when I speak with them. I give them an exact date (28th of every month unless it falls on a holiday, then its the following day). Tenants don't mind. If the tenants aren't home I just poke my head in all the rooms of the house to see if anything is damaged. If I find say .... a hole punched in the wall I repair it and bill them for it.

We used to own 15 houses, and the only way to make the money is to do the work yourself. So no plumbers, painters, or normal trades people or property managers. When we looked at property managers some tried to ask for 20%, which eats into your money right away.
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You probably had all 15 mortgaged up. If you have the majority of the properties paid off, paying a management company isn't too bad. In my case I started my own property management company to manage my properties and others.

Ideally, if you really want to get into real estate you should take your $200k and go buy, say ... 2-3 middle class/low end homes, or how many your $200k will get you in your area. Paid for in cash. Rent them, now you have solid income to show and $200k in assets. If you so chose you could HELOC, or mortgage them to buy more properties.
 
Funny thing is that despite the fact you are trolling, I know people who were thinking like this 10 years ago. It's virtually risk free since housing prices always go up!

Well now those people are fucked.
 
The money you have does not matter without relation to your brains. A fool and his money are soon parted. If you're looking to drop 200k on something, the assumption is you have 1m elsewhere. Because if 200k is all, half or near the majority of available funds, you are already in the "wrong" mindset.

Someone could tell you what to do but if you do not have the knowledge in that area it is useless. Figure out what you want to do because the ceiling on money is only in your head no matter what "field" you go in.

If you have 200k and you are a marketer, why are you not investing the 200k back into your own business? The assumption here would be that you are not a good marketer and lack the ability, desire, know how to become one.

Where ever you put your money it is still...you.

If you are not willing to do the work whatever you are in you will still get the same results. You could get lucky, but the basis of wealth is not luck. This is generally speaking of course and if you are not a woman.

If you and whoever you are working with have the money and already have food, clothing and shelter. Spend a few grand educating yourself and figuring out what you want to do and developing skill in it. No, not seminars and get rich programs, but books and lots of them along with applying what you learn. Then map out a plan based on your newly developed skillset and proceed from there.

Or you could go on SecondMarket become a lender on a personal lending site, learn how to handicap horses, make a cool app, become a VC, join a firm. Tons of things but without the knowledge of the thing you are still liable to be food for the sharks no matter what waters you dive into.
 
rish3 said:
It's not just the liquidity. They'll want to see 2+ years of work history, pay stubs, debts, monthly payments (rent/credit cards/mortgage/etc), tax returns, etc. In short, if the math doesn't show that you can make the payments (without the benefit of renters), you don't get the mortgage.

You might buy one house. Maybe two, depending on your current job/income. You won't get five. And, if you're self-employed...forget it.

It was looser before the mortgage collapse, but still not what you're describing.

Most of those "As Seen On TV" get-rich-with-property schemes try to sell you on the idea of brokering deals for other people, not buying the house yourself...at least not directly. Not that they aren't full of shit as well :)
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It pisses me off how people treat self employed people differently. They basically want to audit your business before you can even get a loan on something as simple as a car. I'm often thought about converting to an s-corp and paying myself a regular pay check and taking distributions at the end of every quarter instead of dealing with the LLC stuff. That way I can just show them a pay stub and be done with it.
 
cheshire said:
You probably had all 15 mortgaged up. If you have the majority of the properties paid off, paying a management company isn't too bad. In my case I started my own property management company to manage my properties and others.

Ideally, if you really want to get into real estate you should take your $200k and go buy, say ... 2-3 middle class/low end homes, or how many your $200k will get you in your area. Paid for in cash. Rent them, now you have solid income to show and $200k in assets. If you so chose you could HELOC, or mortgage them to buy more properties.
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Aaaah, dude you're a genius. That will pretty much solve my whole lending problem. Great idea man.

Get like 2 houses all cash, get rent from them that shows a monthly income, mortgage them, use cash to secure more properties. You're a fucking genius.
 
ILOVENICKICAKES said:
Lastly, I didn't even mention the equity buildup. $300,000 at 6% for investors with good credit = $1,800 a month (thereabouts). However looking at amortization tables, that comes to about $300 a month principle paid for the first year. *5*12 (5 properties, 12 months) = $18,000!!

So the total profit after 1 year from $200,000 (pretty much guaranteed) is $106,000!! Seriously that ain't bad at all. And it's virtually risk free.
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What the hell does equity buildup have to do with your credit rating? Maybe I missed something here.
 
cheshire said:
You probably had all 15 mortgaged up. If you have the majority of the properties paid off, paying a management company isn't too bad. In my case I started my own property management company to manage my properties and others.
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All were paid, but the circumstances were a bit of a one off where our family was moving a pretty big distance away and would not be able to do anything. So all that it takes is a leaky faucet trip, a burnt out light bulb and 2 grass cuttings to eat away at your $600 rent check that would come in. It also wasn't so bad that we couldn't make money at it but we chose to sell them all off and move with the cash. The op's initial idea was nowhere close to this though and did not mention any of these types of liabilities in his initial calculations.

These houses were not middle to low class either, they were low class. The drop by issue was never a problem and we would go by a lot but the damage was still there and continued to be there.

A bit different of a situation but was more an example of the risks that are associated with owning homes.
 
craigmc said:
What the hell does equity buildup have to do with your credit rating? Maybe I missed something here.
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You build up $18,000 a year in equity from rent if you're charged 6% interest. If your credit sucks and you can't secure a good loan, you make much less. Just look up amortization tables and see, the difference is pretty bad.

I think I see where the problems are going to be. I'm still going to try and see what I can do to make it work. I especially like the idea of paying cash for a property, renting it, mortgaging it, using cash to get another property, repeat. Hell nigga if it's that easy then SHIT I could get 100 houses alone this year. Jesus. Great info guys, I appreciate it.

____

Side note: and yeah I get there are problems, but really that's life. Nothing's perfect or we'd all be doing it. I think compared to many opportunities, real estate is one of the most solid strategies I've come across. And yeah the market's weak right now but just wait 5 years and we'll be back in full swing. The economy's already kind of picking up (definitely in my area).
 
and yeah it's real - my dad just cashed out his retirement fund because he wants to move from the usa permanently. he knows i do business online so we were brainstorming.
 
If you're serious, plan on starting small with a single investment and expect to put down a lot more than the 13% you were counting on. Unless you have major liquidity, you're going to need to put down 25% or more and figure on investing some of that cash into initial upgrades and repairs. Plus unless you like devoting your weekends to solving life's little problems for your renters, you'll have to pay someone to be a property manager.

All that said, real estate is a pretty solid investment, but you need to work on it over time. Jumping in with the idea of buying up five properties at once just isn't realistic.
 
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