You have $100,000 cash to invest today. What do you do?
forgot password / register

reset password

register

patrick.net

 

#investing


#housing #investing #politics #random more»
778,882 comments by 11,519 users, 1 online now: TwoScoopsMcGee
new post
« prev   investing   next »

1
0

You have $100,000 cash to invest today. What do you do?

By BayArea following x   2017 Oct 16, 1:34pm 1,302 views   46 comments   watch   quote     share  


Hello Patnet,

Say you have $100K-150K cash to invest today. Let's say the investment period is 5+yrs.

Real estate and the stock market equities are bloated at historical highs.

Where would you put your money today?

#investing

« First    « Previous     Comments 7 - 46 of 46     Last »

8 Heraclitusstudent   ignore (1)   2017 Oct 16, 4:13pm   ↑ like (2)   ↓ dislike (0)     quote        

M134s and barrels of whiskey.
9 rpanic01   ignore (0)   2017 Oct 16, 5:01pm   ↑ like (3)   ↓ dislike (0)     quote        

Secret rainy day account in case my wife goes crazy at some point.
10 Blurtman   ignore (1)   2017 Oct 16, 5:10pm   ↑ like (3)   ↓ dislike (0)     quote        

You will be approached by a man with a Nigerian accent, whose uncle owns the land that where the nuggets were found. You must wire transfer the money immediately to the account he will provide you. Great riches await!
11 bob2356   ignore (1)   2017 Oct 16, 5:51pm   ↑ like (0)   ↓ dislike (0)     quote        

BayArea says

Real estate and the stock market equities are bloated at historical highs.

Where would you put your money today?


Real estate is bloated at historical highs in some places. There are some great deals to be had out there if you look hard enough. I'm bailing out Vegas which is getting way too frothy and buying elsewhere. Just bought 2 houses for 100k (not 100k each, 100k for both) in a mixed neighbourhood in the rust belt. Not high crime. Both came with stable long term tenants. Gross rent 950 each. Net 600 to 650.
13 Ironworker   ignore (0)   2017 Oct 16, 8:02pm   ↑ like (2)   ↓ dislike (0)     quote        

Energy is the worst performing sector right now. I think it will change eventually and it will be the best performing.
Vanguard energy fund for long term potential and discounted value right now. But off course I would put only maybe 20% of my cash available.
14 BorderPatrol   ignore (0)   2017 Oct 16, 11:50pm   ↑ like (3)   ↓ dislike (0)     quote        

buy bitcoin if you feel like throwing away hard earned cash.

gold if you are easily manipulated.
15 anonymous   ignore (5)   2017 Oct 17, 7:18am   ↑ like (0)   ↓ dislike (0)     quote        

Ironworker says
Energy is the worst performing sector right now. I think it will change eventually and it will be the best performing.
Vanguard energy fund for long term potential and discounted value right now. But off course I would put only maybe 20% of my cash available.


Ticker?
16 Patrick   ignore (0)   2017 Oct 17, 7:19am   ↑ like (1)   ↓ dislike (0)     quote        

Vanguard index funds.
17 BlueSardine   ignore (1)   2017 Oct 17, 7:21am   ↑ like (2)   ↓ dislike (0)     quote        

Educate yourself in niche products that appeal to you.
Then buy low sell high.
18 HEY YOU   ignore (7)   2017 Oct 17, 9:25am   ↑ like (2)   ↓ dislike (1)     quote        

Buy a $50,000 shack for $100,000 & resale it for $200,000.
You losers don't no nutin!
19 anonymous   ignore (5)   2017 Oct 17, 9:32am   ↑ like (1)   ↓ dislike (0)     quote        

I did this 3 years ago with Total international index, Emerging market index and European index funds - all vanguard. They all performed very well and still do. Now they are getting kind of hot, so I will ride the wave little longer and find different value to tilt my portfolio to. Off course I am trying to do most of it in my tax sheltered account to avoid paying taxes as much as i can.
20 anonymous   ignore (5)   2017 Oct 17, 9:42am   ↑ like (1)   ↓ dislike (0)     quote        

I like this topic plus real estate topics on this side.

Too much politics topics otherwise here. I know and understand it is important. But I can't stand it.
21 Tenpoundbass   ignore (6)   2017 Oct 17, 9:52am   ↑ like (1)   ↓ dislike (0)     quote        

Pay off my Mortgage and free up $14.4K(escrow not included) a year over the next 20 years
That would be $244K I wont have to pay.
22 ja   ignore (0)   2017 Oct 17, 12:01pm   ↑ like (0)   ↓ dislike (1)     quote        

Tenpoundbass says
Pay off my Mortgage and free up $14.4K(escrow not included) a year over the next 20 years
That would be $244K I wont have to pay.


Paying off your mortgage is like investing in a bond. I like also some stocks in the mix
23 Tenpoundbass   ignore (6)   2017 Oct 17, 1:21pm   ↑ like (2)   ↓ dislike (0)     quote        

ja says
Paying off your mortgage is like investing in a bond. I like also some stocks in the mix


In Classic economics 101 it's the dumbest thing you can do. These aren't classic economic times. Today having assets without having debt is real wealth.
24 jvolstad   ignore (0)   2017 Oct 17, 4:07pm   ↑ like (2)   ↓ dislike (0)     quote        

CD's at my Credit Union. At my age, I tend to be rather conservative in my investments.

Last year I donated $200K. That is about my limit. My Will covers the rest of my donations.

https://www.flickr.com/photos/jvolstad/albums/72157687185737045
(Scholarship for veterans)
25 jvolstad   ignore (0)   2017 Oct 17, 4:10pm   ↑ like (1)   ↓ dislike (0)     quote        

Patrick says
Vanguard index funds.


I have some cash in Charles Schwab Index Funds. Low cost and doing well.
26 anonymous   ignore (5)   2017 Oct 17, 8:19pm   ↑ like (0)   ↓ dislike (0)     quote        

anonymous says
Ticker?


I have the Vanguard Energy ETF - ticker VDE

But like I said, no more than 20 % of your portfolio.

I agree with Patrick - Vanguard index funds. But I tend to go little further and look for recent 3 years back or so underachievers. And Than I lean my portfolio toward them. All Vanguard funds.
27 anonymous   ignore (5)   2017 Oct 17, 8:19pm   ↑ like (0)   ↓ dislike (0)     quote        

BlueSardine says
Educate yourself in niche products that appeal to you.
Then buy low sell high.


I agree with this too. I trade acreage. And I love it!
28 WookieMan   ignore (0)   2017 Oct 17, 9:38pm   ↑ like (0)   ↓ dislike (0)     quote        

anonymous says
BlueSardine says
Educate yourself in niche products that appeal to you.
Then buy low sell high.


I agree with this too. I trade acreage. And I love it!

Quick question. I'll get it out there that I personally don't like this anonymous thing Patrick lets go on. I could be off, but there seems to be a pattern here in your responses as anonymous. I think you've been posting recently and potentially frequently. I could be way off in that assessment.

Why not just set up a username and avatar? Just go to any email service and create an account that couldn't be linked back to you. There are ass holes here for sure, but Patnet doesn't bite too hard if they know who you are (at least with a avatar and username). If you want to be active, just do it and get yourself a god damn name here!
29 BayArea   ignore (0)   2017 Nov 5, 2:56pm   ↑ like (0)   ↓ dislike (0)     quote        

Sorry for the delay in response guys, lost sight of this post. Thank you all for the ideas.

Sniper says
BayArea says
If no better options at that time, then keep doing what I had been doing during the 5yrs up to that point?


Is this the only cash for have liquid or do you have another pool available for emergency uses (loss of job, etc)?

With the low rate environment we're in, is there a side "hobby" that you can buy/flip some items and make a return on the cash. I know you mentioned cars as one of your interests. Can you buy and flip some specialty vehicles and make a few bucks?


This is excess income that came from the sale of a rental property here in the Bay Area in July. Flipping cars is something I have done in the past but not something I am interested in at this time. It's just too time and labor intensive from my experience. Also, since that movie "Gone in 60 Seconds" came out, classic car prices surged and it's increasingly become difficult to find a deal.

rpanic01 says
Secret rainy day account in case my wife goes crazy at some point.


You know, I wonder how many husbands out there think about this sort of thing enough to take action on it like you are suggesting.

bob2356 says
BayArea says

Real estate and the stock market equities are bloated at historical highs.

Where would you put your money today?


Real estate is bloated at historical highs in some places. There are some great deals to be had out there if you look hard enough. I'm bailing out Vegas which is getting way too frothy and buying elsewhere. Just bought 2 houses for 100k (not 100k each, 100k for both) in a mixed neighbourhood in the rust belt. Not high crime. Both came with stable long term tenants. Gross rent 950 each. Net 600 to 650.


Bob, if I may ask, what approach do you use to not only find the location but the specific property? It sounds like the deal was sweetened by already having long term tenants? How did you managed that and am I correct that you are using a property management company?

FortWayne says
GOOG


GOOG in 2017? I think the upside of that isn't what it used to be and the ship has left the port.

BorderPatrol says
buy bitcoin if you feel like throwing away hard earned cash.


There's a lot of investors out there claiming that bitcoin is just getting started, in the 2nd inning today if you will. I read this week that there are 100,000 merchants in the USA accepting bitcoin and cryptocurrency today. Just look what it's done over the past year.

Patrick says
Vanguard index funds.


Which and why Vanguard?
30 BayArea   ignore (0)   2017 Nov 5, 3:10pm   ↑ like (0)   ↓ dislike (0)     quote        

For now I've pulled back my real estate, stock equities, and have transitioned more heavily into 20yr treasuries (TLT), precious metals and metal mining, and cash.

I am holding on to one start-up I believe in, FND. It was up 10% after Thursday's earning call.

Energy may be a good recommendation, I will look into Energy index funds this week (Vanguard or Fidelity).

But other than that, I'm at a loss of what to do next. I'm expecting a correction in real estate and stock market (especially if the GOP tax plan passes), just not sure how soon
31 bob2356   ignore (1)   2017 Nov 5, 3:46pm   ↑ like (1)   ↓ dislike (0)     quote        

BayArea says


Bob, if I may ask, what approach do you use to not only find the location but the specific property? It sounds like the deal was sweetened by already having long term tenants? How did you managed that and am I correct that you are using a property management company?


I'm transitioning out of a market that has been good to me, but the returns have dropped with fast rising house prices.

Location was simple. Googled cities with best rent to house prices or something along those lines. Lots of information comes up to dig through. Narrowed it down to a few select markets. Did a hell of a lot of research (literally hundreds and hundreds of hours) on neighbourhoods, long term trends, city information, yaddda, yadda, yadda. and narrowed it down to one market. Hotpads is a big helper. You get a really great graphic of house sales and rentals you can put side by side. Zillow and the rest have this stuff also, but it's more work to see.

I then started putting feet on the ground. Research pays off. I knew exactly what I was looking at and where it was. Met with a couple realtors to show me around and asked for their recommendations on property managers. Met with property managers until I found one that worked for me. Big score he was also a realtor who is doing flipping. He's getting deals I couldn't even begin to touch through MLS. Went with his recommendations for properties with best return to price. He does this every day on the ground for a living. I wouldn't even begin to try to second guess him..

Not even remotely feasible to own in out of town markets without a good property manager.
32 BayArea   ignore (0)   2017 Nov 5, 4:01pm   ↑ like (0)   ↓ dislike (0)     quote        

Bob, thanks for the reply. What city if you don't mind me asking?
33 BorderPatrol   ignore (0)   2017 Nov 5, 5:35pm   ↑ like (2)   ↓ dislike (0)     quote        

BayArea says
There's a lot of investors out there claiming that bitcoin is just getting started


my guess is these are the same investors who lost money in 2000 and 2009.
34 Sniper   ignore (7)   2017 Nov 5, 6:22pm   ↑ like (0)   ↓ dislike (0)     quote        

BayArea says
For now I've pulled back my real estate, stock equities, and have transitioned more heavily into 20yr treasuries (TLT), precious metals and metal mining, and cash.


What about lead and brass?
35 bob2356   ignore (1)   2017 Nov 5, 6:36pm   ↑ like (1)   ↓ dislike (0)     quote        

BayArea says
Bob, thanks for the reply. What city if you don't mind me asking?


Rochester, NY. But there are certainly other areas that offer excellent returns. Duplin/Sampson county NC was originally my first choice. I actually have lived in both areas. I prefer to invest in places I have lived previously (I've lived a LOT of places previously) but Rochester won out because it was drivable (very long drive) from where I live now. You look at duplin/sampson county on hotpads it's like a big black hole for rentals. Always a great sign. My LLC manager (He's offshore. I use offshore because I have properties in several countries and it makes more sense for many reasons to be offshore) is heavily invested into central WI. Check out this realty track map. http://www.realtytrac.com/news/heat-maps/rental-returns-and-cash-flow-heat-map/

You aren't going to get a lot of appreciation (like pretty much zero) in most of the area's that have the higher returns. But if the shit hits the fan there isn't going to be any real downside either. I was invested in the RIo Grande valley (another previous home) in 2007 and the properties didn't lose any value in the crash.Didn't gain much in 10 years I owned either. But the returns were very good. On the plus side these types of rentals are pretty liquid for houses. There's always a market for a good rental.

Currently I'm looking really hard at a 15 house deal for 300k with rehab running at 200-300k (still evaluating what needs to be done) with almost all occupied. Cash only deal. Rents running 700-800 range. That's around 50-60 months gross rent to purchase+rehab. Amazing. Certainly not great area's but not terrible area's either. Beats the shit out anything on the coasts or my state of residence. Stay with the low glamour places you can make a lot of money.
36 Strategist   ignore (0)   2017 Nov 5, 6:57pm   ↑ like (0)   ↓ dislike (0)     quote        

bob2356 says
You aren't going to get a lot of appreciation (like pretty much zero) in most of the area's that have the higher returns. But if the shit hits the fan there isn't going to be any real downside either. I was invested in the RIo Grande valley (another previous home) in 2007 and the properties didn't lose any value in the crash.Didn't gain much in 10 years I owned either. But the returns were very good.


Bob, I like a lot of the opinions you have contributed about real estate, but from a pure investment point of view, I am a little bit confused why someone would prefer Zero appreciation with high rental returns, vs high appreciation rates and lower rental returns? I would think, the latter provides better overall returns over time.
I could be biased as OC where all my rentals are, generally provides high appreciation with lower rental returns.
I ask this question to all.
37 anon_e8acf   ignore (0)   2017 Nov 5, 8:24pm   ↑ like (0)   ↓ dislike (0)     quote        

Ethereum, if you understand it to be another cryptocurrency 'oh it's like bitcoin', look again. The WWW you know is about to change dramatically, for the better. The revolution will be digitized.
38 BorderPatrol   ignore (0)   2017 Nov 6, 12:01am   ↑ like (0)   ↓ dislike (0)     quote        

i have read a lot of opinions from landlords on cash flow vs. appreciation and here's my conclusions.

- 95% of landlords are the "cash flow" type. the 5% doesn't talk much due to fear of being ridiculed and being called a "newbie."
- appreciation is riskier and requires entering at the right time.
- unless the landlord is from CA, he's most likely the cash flow guy. many CA landlords won big from and swear by appreciation which is the only game here. outside of coastal states, the rest of the country doesn't have this type of crazy appreciation. typically the appreciation rate is too low (barely keeping up with inflation) to make the strategy work. buying multi families in a war zone is more profitable.
- many, many seasoned landlords got burned with their appreciation bets in 2009 so they are now the "money in my pocket now" type.
- if you are a full time landlord (no other jobs) you have no choice but go for cash to pay bills right now.
39 bob2356   ignore (1)   2017 Nov 6, 12:48am   ↑ like (0)   ↓ dislike (0)     quote        

Strategist says
Bob, I like a lot of the opinions you have contributed about real estate, but from a pure investment point of view, I am a little bit confused why someone would prefer Zero appreciation with high rental returns, vs high appreciation rates and lower rental returns? I would think, the latter provides better overall returns over time.
I could be biased as OC where all my rentals are, generally provides high appreciation with lower rental returns.
I ask this question to all.


Good for you. Whatever floats your boat. Appreciation is a gamble. I'm bailing out of the vegas market hard because the roi numbers are plummeting with the big appreciation the last 4 years. . I prefer putting high roi money in the bank month after month and rolling it into more properties. After you get to a certain point it rolls faster and faster. I'm long since out of having to have loans so I'm not paying any finance costs.

So put some numbers down. Pick a long term property. What was your investment, what was the rental income plus appreciation minus financing costs over a 15 or 20 year time line. What is your long term ROI?

I looked up the OC numbers. OC prices 2017 are at $2 sq foot rents and right at 300 aq foot to buy. I'm buying at 40 a sq ft (actually slightly less but I don't have my calculator) and renting at .8. So for a 2k sq foot house you would be paying 600k and getting 4000 a month 48,000 a year. For 600k I can get 12 houses renting at 800 or 9600 a month 115,200 a year. That 66,000 a year difference. The expenses will work out differently but are houses in oc actually appreciating 60k a year each and every year long term? If so great of for you, but there are very very few markets that is true for and tying up half a mil plus for one house on that gamble doesn't turn me on at all.
40 Strategist   ignore (0)   2017 Nov 6, 8:29am   ↑ like (1)   ↓ dislike (0)     quote        

bob2356 says
I looked up the OC numbers. OC prices 2017 are at $2 sq foot rents and right at 300 aq foot to buy. I'm buying at 40 a sq ft (actually slightly less but I don't have my calculator) and renting at .8. So for a 2k sq foot house you would be paying 600k and getting 4000 a month 48,000 a year. For 600k I can get 12 houses renting at 800 or 9600 a month 115,200 a year. That 66,000 a year difference. The expenses will work out differently but are houses in oc actually appreciating 60k a year each and every year long term? If so great of for you, but there are very very few markets that is true for and tying up half a mil plus for one house on that gamble doesn't turn me on at all.


My old house, worth almost $800K rents for $3,300. The condos worth around $500K rents for $2,800 per month, with a $1,000 per month in expenses for association, property taxes, mello roose taxes. Still a 3.5% to 4% cap rate, which is still very high in OC compared to the past.
Also keep in mind the management headaches you would have with a dozen properties, and constant cost of fixing them up. $50K properties, anywhere, cannot be in great shape.
41 Sniper   ignore (7)   2017 Nov 6, 9:17am   ↑ like (0)   ↓ dislike (0)     quote        

Strategist says
I am a little bit confused why someone would prefer Zero appreciation with high rental returns, vs high appreciation rates and lower rental returns? I would think, the latter provides better overall returns over time.
I could be biased as OC where all my rentals are, generally provides high appreciation with lower rental returns.
I ask this question to all.


I keep thinking about picking up a few rentals, but there has been zero appreciation in this area for the last few years, so any gains have to come from returns. That net doesn't really excite me, considering having to deal with tenants. They have more rights in this state than landlords, so if they decide to stick you, and it takes multiple months to throw them out, kiss any net return bye bye.

The only way it might make sense here is to pick up a bad foreclosure and do a ton of sweat equity to gain appreciation that way. That's not much fun either.
42 zzyzzx   ignore (1)   2017 Nov 6, 10:14am   ↑ like (0)   ↓ dislike (0)     quote        

With all this crap going on right now in Saudi Arabia, I would think that non-Saudi oil stocks might be a good short term play. Might be a good long term play as well.
43 anon_1b829   ignore (0)   2017 Nov 6, 11:28am   ↑ like (0)   ↓ dislike (0)     quote        

Strategist says
My old house, worth almost $800K rents for $3,300. The condos worth around $500K rents for $2,800 per month, with a $1,000 per month in expenses for association, property taxes, mello roose taxes. Still a 3.5% to 4% cap rate, which is still very high in OC compared to the past.
Also keep in mind the management headaches you would have with a dozen properties, and constant cost of fixing them up. $50K properties, anywhere, cannot be in great shape.


You didn't read very carefully. My number included rehab costs on the bulk deal. Your numbers are coming up just about the same as my rough 1 minute guesstimate. Getting 3300 on 800k is 242 months rent to purchase. There better be a hell of a lot of appreciation. Yes the properties I'm getting into are really big time outliers at 50-60 months. Even 60-70 is very tough to find but they are out there. But appreciation in CA is an outlier too.

You dodged my question. What is the long term ROI? What was the original price, what is the price now, what is rent paid over what time period? You keep telling me appreciation works better, but you aren't laying out much of a case why. You also can't reinvest appreciation until you sell the house and then you pay 7% closing on it. I can keep reinvesting the higher rents relative to purchase price in an ongoing basis to create additional revenue.

I have a property managers to take care of headaches.
44 anon_b4677   ignore (0)   2017 Nov 6, 6:06pm   ↑ like (0)   ↓ dislike (0)     quote        

Bobs numbers are way exaggerated.

$50k purchase $800/m is war zone territory. Vacancy will be at least 30% and maintenance will be through the roof as tenants will cook meth turn tricks and trash the house before leaving.
45 Strategist   ignore (0)   2017 Nov 6, 6:21pm   ↑ like (0)   ↓ dislike (0)     quote        

anon_1b829 says
You dodged my question. What is the long term ROI? What was the original price, what is the price now, what is rent paid over what time period? You keep telling me appreciation works better, but you aren't laying out much of a case why. You also can't reinvest appreciation until you sell the house and then you pay 7% closing on it. I can keep reinvesting the higher rents relative to purchase price in an ongoing basis to create additional revenue.


Two houses I purchased were to live in, now rented. Presently getting a 10% return, including appreciation. Condos were purchased at the lows of the market, early 2012. So far I have received 20% returns on them mostly due to high appreciation rates. My expected future returns on all properties is 10%.
All the tenants are professionals with high incomes. They are the ones who don't give you trouble and take care of the property. Knock on wood. I will not deal with low income tenants in cheaper neighborhoods.
46 Strategist   ignore (0)   2017 Nov 6, 6:29pm   ↑ like (0)   ↓ dislike (0)     quote        

anon_b4677 says
$50k purchase $800/m is war zone territory. Vacancy will be at least 30% and maintenance will be through the roof as tenants will cook meth turn tricks and trash the house before leaving.


Good luck collecting the rent, dealing with bankruptcies, high lawyer costs, high maintenance, and the risks that accompany low end homes.
My preference is to sacrifice some returns for high quality real estate.

« First    « Previous     Comments 7 - 46 of 46     Last »


Comment as anon_6135f or log in at top of page:

users   about   suggestions   source code   contact  
topics   best comments   comment jail   old posts by year  
10 reasons it's a terrible time to buy  
8 groups who lie about the housing market  
37 bogus arguments about housing  
get a free bumper sticker:

top   bottom   home