What to do with $100,000

I’ve come into some $$$ and would like to invest $100,000. Aside from my house, I’m new to real estate investing. Is renting better then flipping and where are the best places to invest? Thank you in advance.

Gpooch :-*

Hi! I can tell you that in my market area (southside chicago) there are a great number of investors seeking short term, most often same day financing on properties they are looking to buy. You could loan acquisition money to purchase the property and on the same day these investors will acquire a mortgage(2nd) closing to pay you your initial investment plus interest! So you can in effect become the bank for a day. Good luck to you!

My advice is this. Put it in a money market, FOR NOW.

Sit back, take a breath, and relax. Don’t be in a rush to pull the trigger. Many fortunes have been lost this way. I can tell you that when people know you have money, they come out of the woodwork. I know this guy who has a friend…

Next up, read read read. Educate YOURSELF. Don’t rely on so-called “professionals”. If they knew half the stuff they tout, they would not be working for others. There, I said it.

You can put your money to “work” tomorrow or one year from now and if you are smart, it will return properly. Jump and make a bad move, well you got the idea.

Real Estate is the way to go, but you need to be informed and educated.

What state are you in? I personally would look into tax liens until you figure out what you really want to do with your money! They are safe secure and there is good intrest involved (notice I did not say great) I know here in colorado some counties pay up to 13.5% there are a ton of ways to make $$$ off of your $$$ do some research and do what is right for you really check out your market and think about what you want to do.

I appreciate all the good advice! A distant cousin with no family passed and left the $$$ to me because of her fondness towards my young daughter. I live in NJ (Bergen Co.) which has been on fire in the last couple years. When $$$ like that comes along, especially when you’re not used to having more then a paycheck, it can be intimidating. I am ambitious, but cautious. Being patient is always good advice.
Naturally, I would like the $$ to grow, tax liens sound interesting. Out of state sounds good too but wouldn’t it be wise to invest near where I live?
All responses are very much appreciated.

Gpooch

 Tax liens are just secure. That is why I like them houses can be great as well, I personally did a little of everything now I do a whole lot of nothing! As far as that goes I like to tell people really think about what works best for you! Would you like being a landlord?

do you really want to fix and flip? how long is the average house on the market where you live? What is that 100k house going to be worth in five years? how far below market can you find them to make it worth your time? just some thoughts! its all in your hands! I personaly have made a great amount in all areas of investing! Every area has its pros and cons! That money is just not doing much in the bank at 2.5% if your lucky! there is so much to look at and good luck to you Robb

where are good 100k houses? I only ask because I am in Vegas and there is no such thing. :smiley:

As to Tax Liens, while they are secure, you can buy bad liens–or so I have been informed.

About the money amount, patience is important. I know someone who was not used to having much. She ended up leaving her job of 20 years and had around $125k coming from profit sharing.

Result a little later? No money left, nothing really to show for it, and working paycheck to paycheck again. Very sad.

Treat your $100k, like it is your last paycheck. Don’t see 100k sitting there and start getting “loose” with your money. Few dollars here and few there add up. Every dollar counts.

Howdy Evergreen:

I am closing on a house tomorrow that I bought for $16,500. I will spend a few grand on paint and carpet and rent it for $500 per month or maybe sell it with owner financing. I got a loan for $20,000 which includes points, closing costs, and the fix up. I will have a few grand out of pocket still. I can not imagine your market with the high prices. The house I bought is north of Austin about an hour. I have others there too and am looking for more.

LOL

Evergreen,

Ted (as usual) is right on the money…there are lots of places that your money will go farther than Vegas, California, NY, Washington, DC, etc…

I moved here (NW Louisiana) last summer from the DC area. If you follow these boards at all you know that DC is another overheated market. Stuff goes on the market and sells in 1-4 days for over the already over-inflated asking price – it’s crazy.

Right now, in the database that I use (taking in just two parishes), there are 490 properties listed under $100K. There are 202 under $50K. Some of these properties are REAL junkers but some of them have ‘potential’. I’ve bought 2 so far – a 2BR/1Ba HUD home for $51K and a 3 BR/1Ba for $57K. I get strong cashflow from both properties. There is a large Air Force base here as well as a half dozen casinos providing a near-endless stream of renters.

Keith

Very good advice…

3 - Can you go on a little more? What do you mean quitting her 20 year job and getting $125k profit sharing? Why would she do that in the first place? Why did she have to get a job again?? I mean, how did she spend all of it?

She left her job because it was at an older casino here in Vegas and she was getting older, husband doing ok, etc. She has bad spending habits and was someone who lived paycheck to paycheck, like so many do. Thus, the money she got was wasted on all the material things she wanted at the time. Crap that has no real value and only depreciates.

Most people don’t think and plan too well. So $200 at Target, $100 at Walmart, $450 at Best Buy, and so forth does not seem like a big deal until enough time passes and you find yourself on your last few thousand and nothing to show for it.

The same can happen for over anxious investors-to-be. You finally get a lump sum and know you need to put it to work. You think that if you wait a few months or more that you will miss the “gravy train”. So, you rush out and throw it down on what others tell you to do. Sometimes it works out ok, most of the time money is lost.

As to homes, I was just curious. Las Vegas is still a value in my opinion–based on where it is going in the coming years. I can’t imagine buying a home that is a fix-it-uper. I am not a handy man–Mr. White Collar–so I don’t know if it would be financially viable for me.

As to renting homes out, that is something I have not tried yet. Seems like it would be a nightmare.

Hey Gpooch!Fellow Bergen Countyer here.For now follow evergreen’s advice and just hold it in cash.I am a commercial real estate developer and my mother is my broker and my sister is my property attorney and we are all holding cash waiting for these overpriced $600,000 one bedroom condos in Fort Lee and 1.5 million dollar 3 bedroom single family houses in Englewood Cliffs to start bottoming soon.
Stay in the vulture position with cash in hand and wait for the bubble to start bursting pretty soon and you will be able to steal these at rockbottom prices soon enough.If you bought today and you rented it out,you’d have significant negative cash flow,the price/rent ratio is like 400-500 to 1 in our market, and when the prices start down,your mortgage will be a $400,000 mortgage for a $100,000 property soon.
I have $300,000 in cash,$60,000 of it in 600 $100 bills in a safety deposit box,but the rest in 3 month New Zealand dollar CDs with Everbank which pay 5.64% interest and it rolls over and compounds every 3 months.No bank in NJ will give better than 2-3%.
Don’t follow the herd here and let them try to outbid each other on the properties here.They will regret winning the bidding war.Just swoop in and snap them up when this area’s bubble starts to deflate.Then rent them for a positive cash flow and hold until they go back up.

Proppurty:
Do you think that there will be a bursting of the bubble in the Bergen Co. area? I think that this area should remain consistant, maybe flatline a bit but no burst. Homes here are ridiculously inflated but I would be surprised to see a crash. Like to know your thoughts. Thanks for the great advice.

Gpooch ::slight_smile:

I am involved in condo conversions here in Florida. I am purchasing another one in Orlando on June 8th. This purchase will be before the public is aware of the sale. If your interested I can put you in touch with the developer who is selling the project.
There is no pressure and you will have ample time to look at the investment and make a clear headed decision which is important in any purchase.
Personally I feel very strong about this purchase and am very confident I will show a nice return. 10% to close and the developer pays you P&I for 2 years and also maintance and prop taxes. Units range from 190k-400k. I plan to stay in the 250 k range. The P&I for example, based on a 300k purchase means you will get a check for 2 years of $1764 every month + taxes and maintance is payed. You can flip at anytime but I plan to sit on it for at 7-8 months and re-assess at that time. With a good int only loan you can show a positive cash flow of a few hundred $$ each month. If you interested in looking inot this further email me and I can send you to them. They are a very large and reputable developer.

Either way just make sure you feel comfortable and have fully completed your duedilligence before investing. Good luck with whatever you do.

Jon

I think it will be worse than it was back in the late 80s here when we all suffered in real estate,but not as bad as the sudden 80% drop in Japan and Tokyo at about the same time.Bergen county is an affluent county with good schools,safe neighborhoods,and proximity to NYC,
but I feel the NYC/NJ metro area will sustain a steep decline along with south FL,CA,Las Vegas,and other frothy areas.

Rising interest rates and lowering housing prices may be accelerated by the dollar,a rise in unemployment,a recession,or a myriad of other over-leveraged economic dangers.I personally believe it will be a banking crisis like the S&L crisis years ago.

But bad news for some always is good news for others.
However much the prices fall and at what speed and how far can’t be predicted,but they will not be going up much more for much longer.

I think it will be worse than it was back in the late 80s here when we all suffered in real estate,but not as bad as the sudden 80% drop in Japan and Tokyo at about the same time.Bergen county is an affluent county with good schools,safe neighborhoods,and proximity to NYC, but I feel the NYC/NJ metro area will sustain a steep decline along with south FL,CA,Las Vegas,and other frothy areas.

Rising interest rates and lowering housing prices may be accelerated by the dollar,a rise in unemployment,a recession,or a myriad of other over-leveraged economic dangers.I personally believe it will be a banking crisis like the S&L crisis years ago.

But bad news for some always is good news for others.
However much the prices fall and at what speed and how far can’t be predicted,but they will not be going up much more for much longer.

I see no basis for these predictions and only see this as a media driven scare with zero numbers to back up their claims.

Jon, i am interested in what you are doing with the condo conversions and the 2 year leaseback.

In 2004 total residential mortgage debt outstanding grew by 13.2% to $8.7 trillion, the fastest rate of annual growth since 1986 and is now is greater than our Federal government debt.
23% of all residential home sales in 2004 were for investment purposes.Speculators are using interest only and adjustable rate loans to buy up overpriced properties with negative cash flows.

Las Vegas was up more than 50 percent in 2004 and several California and Florida regions gained 30 percent or more which
far surpass increases in personal income (5.8 percent) and rental prices (2.7 percent).

Fannie Mae and Freddie Mac have come into the limelight with serious accounting scandals that have forced them to restate earnings for previous years proving a negative effect in the billions of dollars.

The real estate bubble is swimming upstream in a downstream economy and with a glut of mortgage debt.New mortgage lending practices have led to more highly leveraged home buying have introduced a fundamental change to the housing market.If interest rates climb rapidly, it could leave many homeowners with far larger monthly mortgage payments than they have now. If that happens, it would add inventory to the market, forcing prices down and instead of housing busts resulting in small price downturns we may see large percentage losses.

When the crowd believes prices can’t fall and line up to bid auction style on properties that five years earlier would have been on the market for six months,it is the beginning of the end of any asset bubble.

Good luck with your FL condo sales!