What would you do right now with $500k in cash?

[doctalaughs]

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Once I get the 2M loan all paid off, then I will cash flow about 250K or 100%FTE not to mention about 6-8M paid off properties.

So when I retire, I would be getting paid what I was an an attending for very little work and continue to have the properties appreciate.

If you had that 8M in the market wouldn’t you be cash flowing on average more than 250k/yr?

I get that real estate is about leverage but seems like a lot of work and maybe more risk.

I’m sure you’ve done really well but if you have a 10M diversified portfolio mostly in the market but not RE cash flow at retirement, nothing has to say you you draw it down (aside from RMDs). You could easily live off “only” 350k/yr and the whole portfolio would likely appreciate faster than 10M in RE (on average).

 

[sevoflurane]

If you had that 8M in the market wouldn’t you be cash flowing on average more than 250k/yr?

I get that real estate is about leverage but seems like a lot of work and maybe more risk.

I’m sure you’ve done really well but if you have a 10M diversified portfolio mostly in the market but not RE cash flow at retirement, nothing has to say you you draw it down (aside from RMDs). You could easily live off “only” 350k/yr and the whole portfolio would likely appreciate faster than 10M in RE (on average).

VTI 2 year returns: 40%, 5 year returns 80%, 10 year returns: 161% (VGT: 504% return)

8 mil invested = substantial gains with ZERO effort into a business (outside of your work..IF you work).

If you have 8 mil in vti 12 months ago the return on that investment today is almost 1.7 mil and that does not include yield. We have been in a crazy market. Something has to give at some point.

I see RE as a diversification avenue and a way to deal with downturns without tapping into market investments/retirement accounts (especially during retirement). They can also be liquid at times when RE is hot (few years ago in certain markets).

The upside of RE is that it can get you into big business- at that point it requires work, planning, developers, managing firms, knowing the right people to get permits quickly and cash to get the business started. Can be risky.

I am no expert, just my opinion.

 

[emergentmd]

There is more ways to skin the cat. I am not saying RE is a slam dunk but just another way to invest outside the indexes. If you don't enjoy RE, then you should not do it so just put it in the market. If you don't want to run a business, then just stick with W2/1099.

I enjoy RE and being my own boss so I do both. I also have an IRA and in stocks.

Never have I said RE is a slam dunk, this is the only way.

 

[doctalaughs]

VTI 2 year returns: 40%, 5 year returns 80%, 10 year returns: 161% (VGT: 504% return)

8 mil invested = substantial gains with ZERO effort into a business (outside of your work..IF you work).

If you have 8 mil in vti 12 months ago the return on that investment today is almost 1.7 mil and that does not include yield. We have been in a crazy market. Something has to give at some point.

I see RE as a diversification avenue and a way to deal with downturns without tapping into market investments/retirement accounts (especially during retirement). They can also be liquid at times when RE is hot (few years ago in certain markets).

The upside of RE is that it can get you into big business- at that point it requires work, planning, developers, managing firms, knowing the right people to get permits quickly and cash to get the business started. Can be risky.

I am no expert, just my opinion.

I think this sounds valid.

I wonder if there is enough other easier more passive vehicles to diversify though which give equal protection in downturns (bonds, reits, maybe even gold/silver, maybe you have a pension etc).

Definitely if you enjoy RE sounds like a good way to invest.

I feel like “enough” of my portfolio is in RE with my primary home given it’s 2M paid off, even if I’m not moving anytime soon.

I might do some RE in the form of buying a condo for my kids to live in after college if the market looks good and they are temporarily in a city - but more of a gift than investment.

 

[Gern Blansten]

Invest in ball bearings.

 

[PpfSuxTube]

 

[triggermaster]

View attachment 388112

Crypto?

 

[masterPain]

View attachment 388112

???

 

[Gern Blansten]

???

Looks like a Cheech and Chong movie.

 

[hckyplyr]

If you are looking at cash flow from RE in relation to a physician salary, then I think RE is a terrible option. You are better off working an extra shift and make as much/more than renting it out with the associated Headaches.

If you are looking to get to 400 units and creating a job, then sure but I am not looking for another job.

I look at RE as diversification, deductions, leverage. I am not looking for cash flow when I am in my early attending age b/c juice not worth the squeeze.

As an example, I bought a 500K STR and put in prob 300K in renovations so 800K all in. It is worth 2+M now, and I have about 200K note. Once I pay off this note, I would be cash flowing about 75K/yr with a prop manager cost accounted for. Terrible Cap rate on 2M but not bad for 800K. But now I have 75K income built in with little work plus I get to use it. When I am in retirement, I will have 30% FTE pay. I have STR/MTR/LTRs for a total of 7 properties. Once I get the 2M loan all paid off, then I will cash flow about 250K or 100%FTE not to mention about 6-8M paid off properties.

So when I retire, I would be getting paid what I was an an attending for very little work and continue to have the properties appreciate.

What would be your recommendation for someone in my position? High paying W2 job, not a ton of ways to decrease tax liability and take more home. My thought was to build an indoor RV/Boat storage location where my wife can get REPS status and we can deduct losses from my W2, I'm not interested in the STR loophole. I want to somehow be able to decrease the W2 taxes and have write offs including phone, office, augusta rule, section 179, etc etc. Would love to hear your thoughts based on all of your experience.

 

[abolt18]

If I inherited $500K cash, I would most likely do a few things.

1. Tithing (I do 10% to my church)
2. go on an awesome vacation with and without my family
3. pay off student loans.

Welp that's it, I'm out of money.

 

[ERRES2288]

I have 2 different accounts, one is ETFs I picked, invested at times I believe to be advantageous. The other one is a fixed amount that goes into a three fund portfolio each month. The automatic account has a rate of return 1% higher than my picks.

To add to this. I’ve tried picking stocks/etfs since 2016 with about 10% of my portfolio. I’ve significantly underperformed the market. I still do it because I like researching companies. Maybe someday I’ll hit it big but recognize probably fools errand.

 

[finalpsychyear]

All in bitcoin

Yes or at least half and half in VOO. He may retire in 2030 if he actually did this but you def need to understand the space and be willing to take great risk and if there's a time to do it its early in your career.

 

[PpfSuxTube]

To add to this. I’ve tried picking stocks/etfs since 2016 with about 10% of my portfolio. I’ve significantly underperformed the market. I still do it because I like researching companies. Maybe someday I’ll hit it big but recognize probably fools errand.

A lot more people need to read this. Stock picking also incl stock timing...

Just buy s&p and hold forever...

 

[dmk5n]

80/20 VTSAX/VWALX. Put it to work. Also, read bogleheads what to do with a windfall.

 

[emergentmd]

What would be your recommendation for someone in my position? High paying W2 job, not a ton of ways to decrease tax liability and take more home. My thought was to build an indoor RV/Boat storage location where my wife can get REPS status and we can deduct losses from my W2, I'm not interested in the STR loophole. I want to somehow be able to decrease the W2 taxes and have write offs including phone, office, augusta rule, section 179, etc etc. Would love to hear your thoughts based on all of your experience.

I looked into REPS status but I hear it was being phased out plus it becomes a never ending hamster wheel to offset W2 income. But eventually the taxes have to be paid and you can't continue to kick the can down forever.

I went through this same REPS discussion with my CPA and the amount of work just wasn't worth the up front savings. I could easily achieve REP status but work/tax benefit ratio just wasn't there for me.

Best to find out what you enjoy and put money towards that. If you can't just stash the money away in the market and the dividends could easily cashflow your lifestyle later on if you reach a high net worth.

I am always looking for business opportunities because when you have time, money, and connections it is not too time consuming. I am running 3 businesses right now and may start a 4th later in the year. Once you get everything in place, it can run on autopilot.