If you're just jumping into my investing story now, I highly recommend catching up on the detailed accounts of My First Property and My Second Property.
For the rest of you...let's get started and #JumpIn to My Third Property.
If you recall, I JUST SOLD My First Property and rid myself of all the stress and headaches that came with it. BOOM! On to better and brighter things!
Because I bought that property all cash, literally had 100% equity in it, and SURPRISINGLY didn't sell for a loss...I got a nice injection of cash. Well, I've got a few options, and if you know me, my brain is pulling me in 47 different directions. What's the next move???
I've narrowed it down to a few ideas and strategies, but I'm not sure which direction to go just yet...
Sit on It
The most conservative route would be to keep my cash in a high-yield savings account. Thankfully, I get a pretty damn good 1.75% interest rate on my Ally Savings account. I've heard you can get up to 2% some places, but I've been with Ally for awhile and am loyal. If you're sitting here reading this and getting 0.01% on your savings account, go move your money RIGHT NOW! If you're not beating the inflation rate on your savings account (2%-3% annually)...you're literally losing money. Be smart.
With "talks" of a recession "coming soon" it may not be a bad idea to sit on my cash like Scrooge McDuck. If, and when, a correction in the market hits....I'd be better prepared to jump on opportunities and take advantage of having cash on hand.
I'm a bad investor. I have no money in index funds. I know, I know....what the hell. I promise you, it's been on my TO DO list for awhile now, but I just never pulled the trigger (and jumped in). This could be my chance to throw some money at the famous Vanguard VTSMX or VTSAX funds and collect a solid 7%-8% return over the long-run.
Investing in notes sounds amazing. Because it's SO PASSIVE! This will have to be it's own dedicated post at some point, but let me break it down in a simple summarized version. Basically, I'd become the bank on someone's mortgage and collect their monthly interest payments. Expected returns are are 8%-11% annually.
The downside? If the borrower defaults (doesn't pay), then I'm not getting my monthly cash flow (interest payment). But, as long as you invest in first position notes, you could foreclose and take control of the house. So, worst case scenario, you've got yourself a property (make sure it's a property you'd actually want). Sounds like a good deal, right?
Lend for Rehab Projects
Along the lines of becoming a lender (for passive reasons), I've looked into various online platforms. A friend of mine texted me one day about the company called Groundfloor, which allows an investor to lend on renovation projects. It seems very intriguing...on their site, you can see various loans, expected returns, term lengths, and an overall grade of the loan. A-rated loans are the safest, but returns are the lowest. F-rated loans are super risky, but have the highest returns.
There's a very low entry point to use this platform, because Groundfloor is essentially syndicating rehab projects. I've heard you can throw in as little as $60. So, this could be an interesting move and experiment!
Buy Another Single Family
You already know where I'm going with this. Having closed on My Second Property a few months ago, I'd love to pick up another similar type of property. Something under $100,000, rents for $1,000, in a B/A Class neighborhood, without many repairs/maintenance issues. I'd take that in a heartbeat! Cash flow baby!
Decisions....decisions. What's the next move?
What would you do if you suddenly had some extra cash?? Leave your response in the comments below!