real estate or other investment?

Question

i recently came into some money (100 K). i'm currently renting, have no other outstanding debt, no wife, kids etc.,and i am employed ( 40 k yearly). should i buy a home or invest in something else? how long would i have to keep the house in order to not lose money (if i decide to relocate after buying). any advice will be greatly appreciated... thanks.

Answer 1

Congratulations on the wisdom to invest all or part of the money you've received. How many people would enjoy one big party valued at $100K?

Despite limited knowledge of your situation, some people will undoubtedly provide you with a "one-size-fits-all" solution.

Therefore, without specific knowledge of your situation, I won't pretend to give advice.

Questions for you to consider:

1. What current debt do you have? Any high-interest, non-deductible debt should be paid off.

2. How long do you plan to stay in the area in which you're currently living? Investing in real estate should start with your own home. Plan to live in your home for at least 24 out of 60 months...100% tax-free cap gains. Think twice about being a landlord. Being a landlord is unpredictable at best, especially if you're a long-distance landlord. Among thousands of property management companies, only a few will even care enough to manage _your_ property.

3. Any desire to continue your education that could increase your earnings potential? Investing in one's education is sometimes as wise as investing in real estate.

4. Of course, you could consider the stock market. Your age, risk tolerance & and objectives will affect your return.

I apologize for not getting more detailed. Without details, I would not provide justice to such an important question.

Good luck.

Mike

Answer 2

First - Congratulations! Because ... (1) You are one of the very very few people, if you do not carry any debt (2) For running into $100K ... just to put things in perspective ... if you are making $40K per anum ... in the best case scenario you can save $10-20K per year, after taxes, and some very basic needs ... so, you ran into 5-10years worth of savings.
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Now ...what should you do with that money? When people say "Real Estate" ... often times they mean buying a house. Given your situation (single etc) you don't "need" a house ... don't buy it. Period.

Difference between an "Asset" and "Investment" is ... Asset is something you "need" for your operations. An "investment" is what you do with your spare money (that you dont need for operations) with a specific intent to grow it. The idea is to buy something low and sell it high.

The only way you can buy a home low is, if it is broke and needs repairs. If you are good at making repairs yourself and know the construction stuff - then you may consider "investing" in real-estate. Otherwise, you may be buying an asset that you may not need.

There may be few people who just timed it right and made money buying a home and selling it later - if you look at the stock market during the same time frame - one could have made same or more money by just investing in the stock market. The only difference would have been - you can leverage a lot in the real-estate market - i.e. borrow whole bunch of money on top of your own money - but, leverage is not free - basically you are taking lot more risk.

In short - forget real estate. Put your money into some market index funds - may be 60% US stocks, 30% Foreign Stocks, and 10% Bonds. Consider Vanguard funds.

By the way ... invest your time and energy in building some long-term relations - get a wife, and kid(s). I am calling them investment because, you make sacrifices in the short-term but they will give you a big return in emotional support terms.

Also - I am guessing you must be very disciplined person (to be debt free in the USA) - you may deserve more money than $40K don't undersell your self. Good luck with everything.

Answer 3

buy a house if you want to stay in that area and if real estate is a good value. where do you live?

use some to make a 20% down payment on a house . no more. mortgage the rest.

invest the rest - 10% of it in a high yield savings acct (hsbcdirect.com) and the othe 90% in stock mutual funds (Vanguard, Dodge & Cox)

good luck. if u need more help, just ask

Answer 4

real estate is a great way to invest money as never loses but gains. read tips on real estate , investing and stocks to help you better on this site

Answer 5

Yes. Buy a house.