Have $50K, what to invest in?

[bling]

Guys, I have $50K that I would like to invest and I am having a tough time deciding what to do with this chunk of money and would like to hear some opinion.

Let me give you some background info:
- I am 29 year old, with normal tolerance to risk
- I am looking for 10-15% return /yr and the time frame would be for 3-5 years
- My choice of investment vehicle: Real Estate (fixer-upper), REIT (national retail mall operators like GGP, Simon) or foreclosure properties.
- My typical work-week will be approximatley 60 hours or so. That means I have only the weekend to handle and "real" work on my investment.

This is a list of pros and cons I see for the 3 type of investments:

Real Estate (fixer-upper):
- Pros - good return. A small amount of manual labor can have great impact.
- Cons - time consuming. I have to cramp a lot of work done and time the closing right in order to maximize my profit. Time is a luxory for me....

REIT:
- Pros - requires little time and attention if I pick the "blue-chips" REITs. I know them well since I work in commercial retail real estate and I know how many malls they own and their business plan. A handful of big player dominate the Mall world at this moment.
- Cons - To me, REIT is just like stock and is subject to fluctuation of the market. I have less control over my investment. Of course, I can have call or put option when I buy them...again, it's a security, not real estate.

Foreclosure properties:
- Pros - good return. Finding the right deal can mean jackpot...
- Cons - like fixer-upper, time consuming. I have to do a lot of research, title search, inspection and closing...I don't know if I can do any of these (except inspection) during weekend.

Please advise....If you think my pros/cons are not correct, feel free to add your opinion...

THANKS in advance. :smile:

 

[Ryanmcd2]

spend 10k on classes and talking to people that have made money doing what you what to do, When I got into the market I found people that made at least 1 million a year to help me and watched and learn from them. Find internet forums and ask questions. If it was easy to make money and did not take work everyone would be rich. BTW I am 29 as well.

 

[Modernceo]

Whatever happened to good old fashioned investing in the market ? Ie, stocks, bonds, etc ? Much less time involvement, just need to find a good investor or broker who knows what they are doing.

Fyi, my father is the vice president of one of the branch offices here in Houston at UBS Warburg, a investment firm. With him being in the stock market for over 30 years, hes done well for me, and because hes a professional that is researching stocks and investments all day, hes definitely better trained at knowing what to invest in.

 

[DocL]

Invest in yourself. Get veneers on all your teeth at my office. The fee will only be $50k.

If there are any preconstruction properties for sale in your area, buy one or two. I have a few friends that have been doing that for a few years and they are making 20-30% on each deal, and sometimes more. Down here in Florida there are condos going up every day and the market is still supporting them as there is a shortage of housing here.

Or you can be a real man and put it all on hand of blackjack!

 

[White92]

I say invest it in the Human Fund. :smile:

Seriously though. I've always liked the idea of buying properties, fixing them up a little and selling or renting them. Talk to Steveny on here. He does this alot.

 

[Ryanmcd2]

I always use this question "If he's so good why does he work for a investment company?" Also 99% of brokers suck and they make money when you trade, if they could trade themselfs they would not be working. All of the good stock ppl trade there own accound and work for themselves.

Whatever happened to good old fashioned investing in the market ? Ie, stocks, bonds, etc ? Much less time involvement, just need to find a good investor or broker who knows what they are doing.

Fyi, my father is the vice president of one of the branch offices here in Houston at UBS Warburg, a investment firm. With him being in the stock market for over 30 years, hes done well for me, and because hes a professional that is researching stocks and investments all day, hes definitely better trained at knowing what to invest in.

 

[FCarAndNSXLuvr]

10-15% on average with no work involved is asking more then I would expect to recieve in this day and age.

I would NOT invest in real estate right now....unless you have the time to scout property and find a good deal....Reason is, it is a basic consensus that we are in a housing bubble...The buying and flipping days are over, too much stuff on the market and it is not moving anywhere near the pace it was....Real estate agents and brokers will tell you that you should invest, and that there is still money to be made, but look at the source...Thats their job, and they will tell you whatever to get you to support their income. There are still deals out there, but they are few and far between, so if you don't have the time then don't bother....The blackjack idea is better then this...

Stock market is a good idea IMO....I think we are starting to see a slow shift of funds out of the RE market and into the stock market. Ever so slightly though, something too noticeable would cause alarm. I think the market is fairly valued, not over or undervalued...and will produce minimal return..but not 10-15% on average.

REIT's - have no idea..don't follow them....but I wouldn't throw all your eggs into one basket....I would diversify...I could see you earning 10-15% but I think you run the high risk of losing 20% depending on what companies you invest in....I think any of the mall property companies such as Simon are a good investment because they actually are less dependent on the real estate market and more with the overall economy.

Of course, you could always get veneers

And as I also say, my advice is worth what you paid for it.

 

[Modernceo]

I always use this question "If he's so good why does he work for a investment company?" Also 99% of brokers suck and they make money when you trade, if they could trade themselfs they would not be working. All of the good stock ppl trade there own accound and work for themselves.

If 99% of brokers suck, then I suppose my father fits the 1% that doesnt suck. Hes done very well for me, and a lot of his clients. Hes also made a lot of money himself investing. Again, keep in mind hes been a broker for over 30 years.

Now, granted, even with that much experience, there can be downfalls. But, when you work in a field for just about half your life, you generally know the ups and downs, and know what your doing.

(This is not an advertisement for my father, and frnakly I dont think hes even taking any new clients now if I remember correctly. Im just saying, that if you can find a seasoned broker, and you can stress what your goals, and risks your willing to take, you can usually make a very wise investment. )

 

[steveny]

I say invest it in the Human Fund. :smile:

Seriously though. I've always liked the idea of buying properties, fixing them up a little and selling or renting them. Talk to Steveny on here. He does this alot.

Closing on two next week.YYYYYEEEEEEEEESSSSSSSSSS!!!
One of them has been such a pain in the butt. The buyer has pretty bad credit. I spent a lot of time finding the buyers financing. The other one is the house I bought for 5k, sold it for 25k, took about 6 months to find a buyer for that POS, but I didn't do anything to the house at all, its a free 20k.
I am running out of property around here that is run down. Most everything that was run down I bought and fixed up and resold already. There is one house I am trying to buy right now. It is a 5 bedroom 2 bath 2 car garage on 4 acres, 35.5k. The pipes broke last winter and destroyed the inside of the house. Fixed up it should be a 159k house. Probably cost me 15k to have my contractor do the tear out and rehab. If all goes as planned next summer there will be a Gallardo in the stable.

If the 50k is money you can "gamble" with buy 5k or so in GOOG puts a few months out.

 

[PushHands]

I always use this question "If he's so good why does he work for a investment company?" Also 99% of brokers suck and they make money when you trade, if they could trade themselfs they would not be working. All of the good stock ppl trade there own accound and work for themselves.

I can appreciate your view and understand the underlying logic behind what you say. There are some very bright people who are great at managing other peoples monies but not their own. One reason is because it's easier to disassociate yourself and not be emotionally invested when the monies are not your own.
And this my sound foreign, there are people that actually enjoy being a broker and making money for themselves and their clients. Some investing strategies require a longer perspective and if a broker is successful, why not invest his own $250k as well as clients' money totally over $5mil and earn a percentage of that as well? So this broker gets to leverage his clients money by making them wealthier while making his wealth grow as well. $5.25k in the market is a drop in the bucket that the market can absorb without affecting the broker's strategy. I think that's a win-win situation.

I also realize that brokerages make their money from transactions so there is a tendency for the house to encourage and active account. And there are some brokers are more than happy to oblige by churning accounts. This is one reason why I turned away from a career at some of the very well known, larger brokerage houses and purposefully chose a financial career at the particular instituion I currently work at.

Guess the "jewel" you can draw from this is to find a good broker :biggrin:

 

[RPM217]

Hey, there are good "brokers" and bad ones, there are good mechanics and bad ones, there are good NSX's and, I hope you get the drift. I too have been handling other people's money for many years. I've made some mistakes through the years, yes, I'm not perfect, just ask my wife!!! But I've made some serious money for my clients, I don't solicit clients, the only way people get to me is through a referral, I work for a major "wire house" and some of the statements made on this thread are laughable!!! If I "churn" an account, compliance will shut me down, I'll be terminated. For "active" clients we now promote commission substitution accounts, where the client can trade unlimited for a fixed percentage of the assets (I don't want accounts like that, let them trade with the internet brokers). I prefer to do things one of two ways, select the appropriate money managers, make sure they do their jobs properly, and monitor the account. Or, the old fashioned way, structure a portfolio myself for the client, position it, and monitor it as well. I also use ETF's, mutual funds, I utilize bond "ladders" both taxable and tax free, extensively, I do retirement, and education planning, estate planning, You see, nowadays, we're not "stock brokers", we do "wealth management", it's a whole different ballgame. Speak to some people you know and respect, find out who they use to manage their money, interview their "advisors", if you find someone you feel comfortable with, check them out with the regulatory agencies (kind of like a carfax), make sure that their record is clean, and proceed from there. There is alot of opportunity in the markets for someone who is willing to invest for a minimum of 3-5 years. Don't expect to make a killing, and you won't get killed. Don't be a pig, set realistic goals, and you can acheive them. In this environment, a 7-9% expectation can be met, 10-15% is quite aggressive. JMHO, best of Luck :smile:

 

[Dtrigg]

RPM217 makes several very good points. Many people think that a 15% return on their investment is fine, and really have not tempered their risk/reward expectations. I use managed money brokers. They don't get paid for trading stocks, bonds, options, etc.. They are paid a percentage of assets under management. If I make money, they make money. If I lose money, they lose money. I have been extremely pleased with their performance over the past few years. Just my opinion.

 

[bling]

Thank you all for the valuable opinions. :smile: Keep'em coming. :biggrin:

Too bad we don't have a beer smilies.. :tongue:

 

[PushHands]

Hey, there are good "brokers" and bad ones, there are good mechanics and bad ones, there are good NSX's and, I hope you get the drift. I too have been handling other people's money for many years. I've made some mistakes through the years, yes, I'm not perfect, just ask my wife!!! But I've made some serious money for my clients, I don't solicit clients, the only way people get to me is through a referral, I work for a major "wire house" and some of the statements made on this thread are laughable!!! If I "churn" an account, compliance will shut me down, I'll be terminated. For "active" clients we now promote commission substitution accounts, where the client can trade unlimited for a fixed percentage of the assets (I don't want accounts like that, let them trade with the internet brokers). I prefer to do things one of two ways, select the appropriate money managers, make sure they do their jobs properly, and monitor the account. Or, the old fashioned way, structure a portfolio myself for the client, position it, and monitor it as well. I also use ETF's, mutual funds, I utilize bond "ladders" both taxable and tax free, extensively, I do retirement, and education planning, estate planning, You see, nowadays, we're not "stock brokers", we do "wealth management", it's a whole different ballgame. Speak to some people you know and respect, find out who they use to manage their money, interview their "advisors", if you find someone you feel comfortable with, check them out with the regulatory agencies (kind of like a carfax), make sure that their record is clean, and proceed from there. There is alot of opportunity in the markets for someone who is willing to invest for a minimum of 3-5 years. Don't expect to make a killing, and you won't get killed. Don't be a pig, set realistic goals, and you can acheive them. In this environment, a 7-9% expectation can be met, 10-15% is quite aggressive. JMHO, best of Luck :smile:

Some very sound, excellent information. I just want to reiterate it just in case people miss categorized this response as unimportant. A lot of jewels behind those words.

 

[White92]

You could always just do $50k worth of mods to the NSX and call it good. :smile:

 

[Ryanmcd2]

I want to short that pig so bad, I think goog puts are money in the bank lol

Closing on two next week.YYYYYEEEEEEEEESSSSSSSSSS!!!
One of them has been such a pain in the butt. The buyer has pretty bad credit. I spent a lot of time finding the buyers financing. The other one is the house I bought for 5k, sold it for 25k, took about 6 months to find a buyer for that POS, but I didn't do anything to the house at all, its a free 20k.
I am running out of property around here that is run down. Most everything that was run down I bought and fixed up and resold already. There is one house I am trying to buy right now. It is a 5 bedroom 2 bath 2 car garage on 4 acres, 35.5k. The pipes broke last winter and destroyed the inside of the house. Fixed up it should be a 159k house. Probably cost me 15k to have my contractor do the tear out and rehab. If all goes as planned next summer there will be a Gallardo in the stable.

If the 50k is money you can "gamble" with buy 5k or so in GOOG puts a few months out.

 

[Ryanmcd2]

I will say that I did turn 20k into a little over 300k in one year and every year I start out with about 100k and end up with over 1 mill for the past 4 years. Yes I did lose every $ I had the 1st few years and blew out my account several times learning but now I know the risk and it's just a game, the money does not even matter. If you want to make the MAX $$$ dont be a lazy ass, study and learn I put in 16 hours days for 3 years learning this stuff as well as talking to 4 people who make over 1 million a year and have been for the past 20 years in the market using different styles. Also the key to the market is MONEY MANAGEMENT, most people lose all there money like me the 1st time and quit and never learn. Also you have to be able to change, like I said I used to play the @ES now I am playing the@EC because of trend. I used to counter trend now I play the trend and ride it. Less strees more $$$ also today was great in the @EC

Hey, there are good "brokers" and bad ones, there are good mechanics and bad ones, there are good NSX's and, I hope you get the drift. I too have been handling other people's money for many years. I've made some mistakes through the years, yes, I'm not perfect, just ask my wife!!! But I've made some serious money for my clients, I don't solicit clients, the only way people get to me is through a referral, I work for a major "wire house" and some of the statements made on this thread are laughable!!! If I "churn" an account, compliance will shut me down, I'll be terminated. For "active" clients we now promote commission substitution accounts, where the client can trade unlimited for a fixed percentage of the assets (I don't want accounts like that, let them trade with the internet brokers). I prefer to do things one of two ways, select the appropriate money managers, make sure they do their jobs properly, and monitor the account. Or, the old fashioned way, structure a portfolio myself for the client, position it, and monitor it as well. I also use ETF's, mutual funds, I utilize bond "ladders" both taxable and tax free, extensively, I do retirement, and education planning, estate planning, You see, nowadays, we're not "stock brokers", we do "wealth management", it's a whole different ballgame. Speak to some people you know and respect, find out who they use to manage their money, interview their "advisors", if you find someone you feel comfortable with, check them out with the regulatory agencies (kind of like a carfax), make sure that their record is clean, and proceed from there. There is alot of opportunity in the markets for someone who is willing to invest for a minimum of 3-5 years. Don't expect to make a killing, and you won't get killed. Don't be a pig, set realistic goals, and you can acheive them. In this environment, a 7-9% expectation can be met, 10-15% is quite aggressive. JMHO, best of Luck :smile:

 

[snake08]

I may get ridiculed for suggesting this but I have made good money this way in the past.
penny stocks.
If I were in your position, with $50K to spend, I would probobly throw around $500-$1000 this way.
Back when I was in high school, I heard about this local company that was creating VR programs. I checked on their stock, $.03 cents/share. Something told me to just give it a try. I figured if they got bought out, or came up with some popular program, I could do well. Got 3000 shares for $90. It didn't do much for about 7 months, but one day it just shot up over a dollar. All told after taxes and broker fees I made $2750, off a $90 investment. Not a bad percentage at all. If I had invested $500, I could have made over $15k. Of course the chance of any of these stocks going up a great deal is fairly slim, but you can get lucky.

 

[Pacemaker Kid89]

A Condo down in West Palm...get em while they are hot...they are going pretty fast...rices r deffinetly climbing, some even hitten HIGH 3s to Very low 4s...I know I am just a kid, but I west just down there...it would be a good idea...then have people rent it out...

 

[steveny]

I may get ridiculed for suggesting this but I have made good money this way in the past.
penny stocks.
If I were in your position, with $50K to spend, I would probobly throw around $500-$1000 this way.
Back when I was in high school, I heard about this local company that was creating VR programs. I checked on their stock, $.03 cents/share. Something told me to just give it a try. I figured if they got bought out, or came up with some popular program, I could do well. Got 3000 shares for $90. It didn't do much for about 7 months, but one day it just shot up over a dollar. All told after taxes and broker fees I made $2750, off a $90 investment. Not a bad percentage at all. If I had invested $500, I could have made over $15k. Of course the chance of any of these stocks going up a great deal is fairly slim, but you can get lucky.

Why take a huge risk on penny stocks when you can buy options on good solid companies for pennies?

I am not saying penny stocks are out of the question just that they are VERY risky.

 

[rickysals]

hmm,


this is why i'm gonna be a designer. This stuff is confusing...

so if you're not a money-guy.. like i'm not.. how do I get involved in this?

 

[Ski_Banker]

Sorry guys, had to chime in on this one...hang on while I put the firesuit on.

Okay, got it.

Before you invest in speculative real estate, keep in mind the two sources of value in any asset. 1. The amount of income it will generate - finance geeks like me call it discounted cash flow, and 2. the cost to replicate the asset. Beachfront condos in South FL, being the most egregious example in which I currently RENT, can only be rented for what the local economy can support. NYC rents are skyhigh because NYC Wall Streeters make loads of money, even the peons. Miami bartenders and concierges don't make that money and thus can't be expected to pay exorbitant rents. Simply put, there ain't that many people in Miami (that are career-type renters) that can afford high dollar leases. Equally important, the cost to replicate one of these shiny new waterfront highrises is the (expensive) 2 acres of land and the (commodity) concrete. And that two acres of land can be made available to any developer with a nice boat to wine and dine the 5 schmucks on a city council that determines zoning. The same valuation principles hold for any real property, but the magnitude is just not as alarming in a Kansas suburb.

As for stocks and stockbrokers - it is what it is. I would personally recommend spending 45 minutes at a Borders reading a basic book on investing/portfolio management (park the NSX out front, sit next to a cute girl, and you're sure to have an "enlightening" evening). For stock, the guiding principle is simply - a little of everything. This can be accomplished with about 5 index mutual funds. Just talk to an investing-saving tax accountant to make sure you invest tax efficiently. Those that make it out to be Wall Street rocket science are bs artists that never worked there. Retail stockbrokers are notorious for that nonsense, but most will be pretty helpful in getting you invested in a similar way to my 5 index funds if you are really gunshy about doing it yourself.

Before I take off the firesuit -- Google puts is a stupid idea, although 99.9% of the time any puts or calls is a stupid idea.

My two cents...

 

[Ko-nsx]

i've done well in real estate. Most of my portfolio was purchased in the late 90's. 4-fams 2-fams and single homes foreclosures, Hud and such. With interest going down in the early 2000's, 4-families apt buildings i bought for 45k easily brought in 65-70k. I've cleared out most of my stuff and am looking for more. For the tax write-off and such real estate is a good deal(depending on your area). Here in st.louis, you can get and live cheaper the most cities. My recent deal- bought a house in need of cosemetics form a little(tall) old lady. Bought for 54k got about 15k in it with repairs(new everything-roof-siding etc). Gonna list this week for 110k. I am an electrician by trade so that helps. Always interest in steveny's logic tho :smile: Your still young enough to bounce back from mistakes. Im 32.

 

[snake08]

Why take a huge risk on penny stocks when you can buy options on good solid companies for pennies?

I am not saying penny stocks are out of the question just that they are VERY risky.

True but with more risk comes higher gains.
I don't really know how options work, but you're probobly right. And I'm only suggesting a very small investment in these. Actually, I'm not really suggesting it, just throwing out my own experience, but again if I had the kind of money he's looking to invest, this is something I might consider. $500 is only 1% of what he's looking to spend, if he lost it, not really a huge deal. But the potential payoff is tempting.

 

[NsXMas]

K.I.S.S.

Pay off all non housing debt. Put rest into a brokerage account, buy a mix of bonds, equity (mutal funds that are indexed to the major boards). Your ratio may vary depending on your aggressiveness.