What to do with $300k?

[mmmmm...beer 691]

Been thinking on selling the house with this PCS move to Japan. We should get something like $300 from the home sale if it all goes smoothly.

What if instead of buying another house when we get back . We just invest the whole thing immediately?

I mean... we put it in our Vanguard brokerage account? Vanguard 500 ETF (VOO), which is Vanguards SP500 mirror has averaged 12.92% each year since inception 13 years ago.

If we do that...

$300 in 10 years @ 

7% is $590K

10% is $778K

13% is $1,018K

When we get back we just rent or I get a VA loan for another house down the road with 0% down.

When will we ever have $300k free and clear?  Never... 

Also thought about maybe when we come back (3 years minimum, 5 max) we can use that $300k to down pay several rentals?  My pops has rentals... and a couple AirBnB's he's been renting to companies for $2500 a month.  So I could learn from him.

After thinking about it for awhile, I feel like putting that $300 down on another house would just be a wasted opportunity.

[Mark Davis 169]

If you do rentals you are essentially leveraging yourself.  It can be profitable but in this interest rate environment it certainly is more risky.  I own rental properties and have a bit of experience in both college rentals and small single family units and one vacation property.  I would say if you are considering this, you must pair it with buying your own home.  It's not a consistent strategy to rent your primary residence but purchase properties to rent to others.  The main reason is overhead and the simple fact that others won't care for your property as you would.  Your best return on average will be your own residence for that reason and the differential in maintenance, repairs, vacancies, etc.

When it comes to mutual funds, just remember the disclaimer past performance has no bearing on future results.  I think we may be out of the long term double digit returns there, but that's just an opinion.

[Gepetto 988]

I would not invest that type of money in the stock market / mutual funds. 

Buy farmland and cash rent it out. Also put some of that money in safe CDs.

[IGotWorms 3,315]

Hookers and blow

[WhiteWonder 2,172]

32 minutes ago, Mark Davis said:

 It can be profitable but in this interest rate environment it certainly is more risky. 

Well, he's talking about doing that 3-5 years down the line.  Rate environment may be significantly different. We saw mortgage rates swing from sub 4 to above 7 in a matter of 1-1.5 years. 

I would agree with owning your property, regardless of type, before accumulating rentals.... but i've seen it done by close friends, husband and wife, who rent their main residence. They own 3 rental properties outright. The monthly rent they get from all 3 covers upkeep/expenses/taxes on those 3 properties and their own monthly rent of main residence with money left to bank. Those 3 properties have also obviously appreciated in value. 

[WhiteWonder 2,172]

46 minutes ago, mmmmm...beer said:

Been thinking on selling the house with this PCS move to Japan. We should get something like $300 from the home sale if it all goes smoothly.

What if instead of buying another house when we get back . We just invest the whole thing immediately?

I mean... we put it in our Vanguard brokerage account? Vanguard 500 ETF (VOO), which is Vanguards SP500 mirror has averaged 12.92% each year since inception 13 years ago.

If we do that...

$300 in 10 years @ 

7% is $590K

10% is $778K

13% is $1,018K

When we get back we just rent or I get a VA loan for another house down the road with 0% down.

When will we ever have $300k free and clear?  Never... 

Also thought about maybe when we come back (3 years minimum, 5 max) we can use that $300k to down pay several rentals?  My pops has rentals... and a couple AirBnB's he's been renting to companies for $2500 a month.  So I could learn from him.

After thinking about it for awhile, I feel like putting that $300 down on another house would just be a wasted opportunity.

You should absolutely be investing the whole thing immediately if you have no use for the funds while in Japan. 

Although you are giving hypothetical figures for a 10 year period when you say you may be back in as few as 3, max 5 years. I can't imagine you want to go 5-7 years without access to that money, so make sure it's in something with easy access.  I would safe side it at 400-450k after 4 years, depending on average annual ROR. 

Or put it in bitcoin now and have 3 million... i assume... after 4 years.

by the time you get back you can see what your options are. Mortgage rates might be more palatable. 

The idea of down paying several rentals is not one I like. Taking out several mortgages, at whatever the rate, sounds like a royal pain in the ass. That's a lot of closing costs as well to eat up front. One or two rentals like that, maybe. I think it would be much better to find one nice place you can make a cash offer on. Not sure where you would be moving back to but even a condo or modest home in a commuter friendly neighborhood, you'll be able to charge a nice monthly rent on. Likely enough to cover all fees associated with owning the rental (maintenance or hoa fees, property taxes, utilities not paid by tenant, etc) as well as your own rent. Probably minimal or no money left over though but you own that rental property outright. 

[IGotWorms 3,315]

Acquiring rental properties is mostly a young man’s game. I’m sure you’ve got a pension plus 401k and social security down the road. What good is a rental revenue stream going to do that won’t be hitting high gear til you’re in the old folks’ home?

[mmmmm...beer 691]

46 minutes ago, Gepetto said:

I would not invest that type of money in the stock market / mutual funds. 

Buy farmland and cash rent it out. Also put some of that money in safe CDs.

I'm not worried.... the SP500 has averaged 11.8% per year since 1957... wars.. rumors of war.. recessions... what have you.

Yes... can I lose money?  Sure..

I'm still down $100k from my high in 2021 in my 401K...

But I'm not overly worried it won't come back... sh!t always goes up and to the right eventually.

 

[WhiteWonder 2,172]

1 minute ago, IGotWorms said:

Acquiring rental properties is mostly a young man’s game. I’m sure you’ve got a pension plus 401k and social security down the road. What good is a rental revenue stream going to do that won’t be hitting high gear til you’re in the old folks’ home?

that's why it can't be done with mortgaged properties.  1-2 fully owned properties and that rental income stream is hitting right away, with the added bonus of potential appreciation of those properties for if/when you decide to sell. 

[mmmmm...beer 691]

8 minutes ago, IGotWorms said:

Acquiring rental properties is mostly a young man’s game. I’m sure you’ve got a pension plus 401k and social security down the road. What good is a rental revenue stream going to do that won’t be hitting high gear til you’re in the old folks’ home?

Yeah I don't NEED the 300 really.  I'll have a pension, SS (early supplement), and TSP (401K) should be somewhere around $110K not to include the wife's job.

So this is just... money to make money.

[mmmmm...beer 691]

5 minutes ago, WhiteWonder said:

that's why it can't be done with mortgaged properties.  1-2 fully owned properties and that rental income stream is hitting right away, with the added bonus of potential appreciation of those properties for if/when you decide to sell. 

So maybe I don't do any of it... just put it all in VOO and let it ride.

Or... much more conservatively... I have a Discover Bank savings account @ 4.30%.

I'd get roughly $15K a year just leaving it in savings...

[WhiteWonder 2,172]

7 minutes ago, mmmmm...beer said:

So maybe I don't do any of it... just put it all in VOO and let it ride.

Or... much more conservatively... I have a Discover Bank savings account @ 4.30%.

I'd get roughly $15K a year just leaving it in savings...

CIT bank has an online savings at 4.95, just so you know. I opened and moved a chunk out of my Cap One which was paying 4.3

 

I don't dislike the idea of a rental property, I just think that's something you'd want to do pretty soon after returning which means your theoretical numbers are much higher because you based them off 10 years. I think if you can find a good rental property that you can make a cash offer on, which will also allow you to get it for a bit less than making offers and getting a mortgage, It can be a nice income stream AND a piece of property in your portfolio. 

[League Champion 1,593]

6 hours ago, mmmmm...beer said:

What if instead of buying another house when we get back . We just invest the whole thing immediately?

It all depends on the market where you live now. Ideally I'd want to rent that property and parlay the income into other investments. I have a couple rental properties but they're in a touristy area, I have no problem keeping it occupied, even at an absurd rate.  

The key is to use other people's money to make money, not yours. 

[GutterBoy 2,281]

If you're gonna invest, I would suggest more diversification than just that one etf.  Maybe dollar cost average over time as well.

If you drop it all in that etf and the next day the market tanks, you got a bigger hill to climb.  As opposed to putting in $100k to start, maybe add a bond fund, and then each qtr add more.

[BeachGuy23 512]

9 minutes ago, League Champion said:

It all depends on the market where you live now. Ideally I'd want to rent that property and parlay the income into other investments. I have a couple rental properties but they're in a touristy area, I have no problem keeping it occupied, even at an absurd rate.  

The key is to use other people's money to make money, not yours. 

I'd either rent your current house or sell and buy a rental property. 

[mmmmm...beer 691]

1 hour ago, GutterBoy said:

If you're gonna invest, I would suggest more diversification than just that one etf.  Maybe dollar cost average over time as well.

If you drop it all in that etf and the next day the market tanks, you got a bigger hill to climb.  As opposed to putting in $100k to start, maybe add a bond fund, and then each qtr add more.

Yeah I get you.  Though I like the idea of a set it and forget it.

"You may not be able to predict the performance of the S&P 500 Index for the next 20 years, but you are not alone. In one of his annual letters to shareholders, Warren Buffett included an excerpt from his will that ordered his children’s inheritance to be placed in an S&P 500 Index fund because the “long-term results from this policy will be superior to those attained by most investors—whether pension funds, institutions, or individuals who employ high-fee managers.”

Unpack that a little.  Here's a guy who makes his money being the last thing on that list right?

Essentially saying, we high-fee managers can't beat the index.

 

[mmmmm...beer 691]

1 hour ago, BeachGuy23 said:

I'd either rent your current house or sell and buy a rental property. 

I really don't want the stress of living in Japan worrying that some idiots are destroying my nearly  $700k house back in the States.

Also... I didn't mention, the .gov is paying the realtor fees for the sale of the current home.  That's a 6% gain for us we won't have to pay.  So...$40k'ish savings.

[League Champion 1,593]

9 minutes ago, mmmmm...beer said:

really don't want the actress of living in Japan worrying that some idiots are destroying my nearly  $700k house back in the States

Hire a management company and never worry about it. Let it earn 

[Mike Honcho 4,035]

2 chicks at the same time.

[mmmmm...beer 691]

2 minutes ago, Mike Honcho said:

2 chicks at the same time.

I'll tell you what I'd do...

[mmmmm...beer 691]

19 minutes ago, League Champion said:

Hire a management company and never worry about it. Let it earn 

Current mortgage is $2300.  Say we could rent it for $3500.

$3500 - 2300 = $1200 - 8% management fee = $1,104 x 12 months = $13,248 a year (not counting any maintenance ie appliances/furnace going out) or paying taxes on that $13K as well.

For that little...

$300k × 4.3% savings account interest = $12,900/yr not even compounded.  With zero risk.

[League Champion 1,593]

2 minutes ago, mmmmm...beer said:

Current mortgage is $2300.  Say we could rent it for $3500.

$3500 - 2300 = $1200 - 8% management fee = $1,104 x 12 months = $13,248 a year (not counting any maintenance oe appliances/furnace going out).

For that little...

$300k × 4.3% savings account interest = $12,900/yr not even compounded.  With zero risk.

Let it eat. It's a retirement goose egg

[frank 2,145]

Geek club time share. Imagine the threads. 

[GutterBoy 2,281]

41 minutes ago, mmmmm...beer said:

Current mortgage is $2300.  Say we could rent it for $3500.

$3500 - 2300 = $1200 - 8% management fee = $1,104 x 12 months = $13,248 a year (not counting any maintenance ie appliances/furnace going out) or paying taxes on that $13K as well.

For that little...

$300k × 4.3% savings account interest = $12,900/yr not even compounded.  With zero risk.

If you keep the house you also have appreciation to factor in.

[Cdub100 3,381]

1. Use some of that money to go an amazing vacation

2. 100k split between Large, Mid Small cap mutual funds

3. 100k split 50k Bitcoin, 20k ETH, 20k SOL, 10k ADA  (stake the ETH, SOL, ADA using a ledger)

4. Put the rest in a high-yield savings account

[frank 2,145]

1. Collect underpants  

2  ?

3  Profit  

 

[jerryskids 5,206]

In 2007 we bought a 4-plex as a rental to diversify our investments and begin to generate a long-term rental return.  It was an older place but on the edge of gentrification in Paradise Valley, the richest city boundary in the Phoenix area, so it had great appreciation upside. 

It became a total disaster.  The housing market crashed, making it worth a fraction of our mortgage on it.  Because of the glut of housing we never had it fully rented.  It had a lot more problems than the inspectors found.  Our management company sucked.  It was 30-40 minutes from our residence so going there for anything took up 1/2 day minimum.  

As a bonus, I lost my job in 2009 after a major reorg.

In the end we short sold it for pennies on the dollar.

I say this because I sense above, and I've been there on many investments including my story here:  a feeling of "well, at a MINIMUM the value will go up X, and I'll just hire a company to manage things and everything will be great from far away..."   it doesn't always work out that way.

I'd maybe, maybe consider keeping my current house and renting it out if I had to move.  But I'll never again buy a place, especially a multi-unit place, with the idea of an easy life of rent profits.

Instead I invest in real estate through REITs that focus on growth areas like data centers.

[WhiteWonder 2,172]

20 minutes ago, jerryskids said:

In 2007 we bought a 4-plex as a rental to diversify our investments and begin to generate a long-term rental return.  It was an older place but on the edge of gentrification in Paradise Valley, the richest city boundary in the Phoenix area, so it had great appreciation upside. 

It became a total disaster.  The housing market crashed, making it worth a fraction of our mortgage on it.  Because of the glut of housing we never had it fully rented.  It had a lot more problems than the inspectors found.  Our management company sucked.  It was 30-40 minutes from our residence so going there for anything took up 1/2 day minimum.  

As a bonus, I lost my job in 2009 after a major reorg.

In the end we short sold it for pennies on the dollar.

I say this because I sense above, and I've been there on many investments including my story here:  a feeling of "well, at a MINIMUM the value will go up X, and I'll just hire a company to manage things and everything will be great from far away..."   it doesn't always work out that way.

I'd maybe, maybe consider keeping my current house and renting it out if I had to move.  But I'll never again buy a place, especially a multi-unit place, with the idea of an easy life of rent profits.

Instead I invest in real estate through REITs that focus on growth areas like data centers.

That’s a good cautionary tale but I would also caution anyone wanting to be a landlord and generate a rental income from purchasing that property more than 15-20 minutes from home. And would definitely not suggest 4 units at once to start out. Too much to worry about with 4 separate rentals including having all of them always rented. You can go with a management company but do your homework, otherwise 1 close rental property do it on your own. 
Also this example brings me back to my thought  of only doing it if you can buy the property with no mortgage. If the housing market crashes, you treat it similar to other investments. Don’t think about the properties value on a day to day basis and have faith it will recover. 

[Mookz 1,287]

How about a 3 or 5 year fixed interest annuity?  Below is an example from a company called Athene.  3 year rate is currently 5.55% and 5 year rate is currently 5.70%.  You're able to withdraw 10% of the balance penalty-free each year if you need to.  Otherwise it sits there at the locked-in rate and grows tax-deferred until maturity.

https://prnt.sc/TOZQnTuSrr-f (page 1)

https://prnt.sc/MycTKREwQGWD (page 2)

[League Champion 1,593]

1 hour ago, frank said:

1. Collect underpants  

2  ?

3  Profit  

 

. This actually great advice. Feet pics as well. 

[Gladiators 1,904]

1) Buy FFT

2) Send everyone free t-shirts

3) Start paying my mom you cheap SOB

4) I don't care what you do with the other $299k

[WhiteWonder 2,172]

14 minutes ago, Mookz said:

How about a 3 or 5 year fixed interest annuity?  Below is an example from a company called Athene.  3 year rate is currently 5.55% and 5 year rate is currently 5.70%.  You're able to withdraw 10% of the balance penalty-free each year if you need to.  Otherwise it sits there at the locked-in rate and grows tax-deferred until maturity.

https://prnt.sc/TOZQnTuSrr-f (page 1)

https://prnt.sc/MycTKREwQGWD (page 2)

Imo better to go with a high yield savings (4.25 upwards of 5%) fully liquid just in case you need more than the penalty free 10% or want to pivot into a different investment. I don’t like locking in money, especially when there could realistically be another rate increase 

[mmmmm...beer 691]

5 minutes ago, WhiteWonder said:

Imo better to go with a high yield savings (4.25 upwards of 5%) fully liquid just in case you need more than the penalty free 10% or want to pivot into a different investment. I don’t like locking in money, especially when there could realistically be another rate increase 

I already have one and have talked about it a few times in here.  Discover Bank Savings account. I started it in July and I currently have about $13k in there.   I've been saving for a gap fund between retirement and pension kicking in.

It has a current rate of 4.35%.

[MTSkiBum 1,594]

I have a good idea for a business, invest in me.

I am still in the research phase, but I might hire a software architect to get the project started, 300k would be a big boost. If the company takes off i could turn that into many millions.

[Mookz 1,287]

 

32 minutes ago, WhiteWonder said:

Imo better to go with a high yield savings (4.25 upwards of 5%) fully liquid just in case you need more than the penalty free 10% or want to pivot into a different investment. I don’t like locking in money, especially when there could realistically be another rate increase 

I hear ya.  Do we think rates will continue to rise though?  Didn't the Fed meet recently and not raise rates?  With this annuity, you can add money along the way, https://prnt.sc/lmnaGWlWm4im , so maybe Beer could put $100k in initially, open a Webull account and stash the rest there at 5.0%, and then watch interest rates, and if they stay the same or start to fall, send more over to the annuity. 

[MTSkiBum 1,594]

If the confused look is from beer I can try to explain further.

I have an idea for a software that I am designing, and may start an LLC shortly. The problem is I am a below average programmer. I know my shortcomings and would hire a software architect to start the software for me before i started programming. Even then I would probably need to convince my brother to work on the project for it to have any chance of success. He has written his own operating system and created his own computer language. He is not a below average programmer.

I am not looking for investments though, that was a joke. I still need to determine how feasible my idea is. This may still be a pipe dream.

 

 

edit: and what a better place to post a pipe dream than a mmbeer thread. Am I right @Alias Detective

[peenie 1,690]

Congratulations on your move to Japan. Low crime, bidets, polite society, heaven!

[League Champion 1,593]

You could always spend it on a Cocaine Hooker bender, just sayin. 

[Cdub100 3,381]

1 hour ago, Gladiators said:

1) Buy FFT

2) Send everyone free t-shirts

3) Start paying my mom you cheap SOB

4) I don't care what you do with the other $299k

You really think FFT is worth that much?

[Alias Detective 1,179]

1 hour ago, MTSkiBum said:

If the confused look is from beer I can try to explain further.

I have an idea for a software that I am designing, and may start an LLC shortly. The problem is I am a below average programmer. I know my shortcomings and would hire a software architect to start the software for me before i started programming. Even then I would probably need to convince my brother to work on the project for it to have any chance of success. He has written his own operating system and created his own computer language. He is not a below average programmer.

I am not looking for investments though, that was a joke. I still need to determine how feasible my idea is. This may still be a pipe dream.

 

 

edit: and what a better place to post a pipe dream than a mmbeer thread. Am I right @Alias Detective

Its all good to dream but to act as if they are all reality is another.