What do you do with some extra cash?

[angelapeng]

Greeting to REIN members here.

I recently refinanced a rental property and pulled some extra equity out of the property. It is not a big amount, close to $100k. Currently, it sits in the checking account, I wonder what will you do with this money.
-investing in a savings account with 2% interest for emergency use
-pay off some mortgages (I have two rental properties with HELOC attached to the mortgages, if I pay off some principles with the fund, I still can access to it when it is needed)
-any other short term investments?

What is your thought?

Thank your for sharing your thoughts.

 

[Thomas Beyer]

What’s your goal here ? What’s your age & income today ? What’s your risk tolerance?

With 100,000 cash and a 300,000 mortgage you can buy an income producing asset worth 400,000.

If you’re young ( say under 40) your goal ought to be asset accumulation & net worth increase.

Once you’re older, say 65+ income generation while preserving your net worth ought to be the goal.

What is it ? Wealth accumulation or wealth preservation ?


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[angelapeng]

Thank you, Thomas, as always giving advices here.
I am at the stage of stabilizing the income stream from the rental properties, more so than accumulating assets. (Not young, but not older yet either)
Over more than 10 years of real estate investing here in Vancouver, through the learning from REIN group, has generated us (me, and partners, and money investors) a sizeable real estate portfolio, so far, we have not sold one property yet. However, Vancouver's market is going so hot, the return on equity is not that good now.

Fully aware of the new mortgage rules in 2018, I went to the bank trying to refinance the rental properties to pull some equity out before then, yet, it becomes quite challenging, though across the portfolio, our LTV is only around 40%, since the bank's DCR should be above 1.1, the maximum LTV I can get is only 60%, meaning all those equity sitting there can not be pulled out for further investment.

My goal is to (in order of priority)
-Stablize the monthly income stream (calm and modest life is the goal, therefore, enough not excessive is good)
-If opportunity arises, we may be able to invest other rental properties. (thought it becomes difficult to get financing now)
-For diversification and less management engaged, seek other investment products. (such as private lending, participate into other income producing and equity growth projects)
-Pay off existing mortgages with the ability to access them when needed
-Savings account for emergency purposes.

Thomas, your questions make me contemplate about the various investment stage comes with various strategy. I shall say I am at the transitional stage, from active acquisition to sustain the portfolio, and slowly enter into diversifying the portfolio and streamline the management, which ultimately presents a peace of mind, as you said before, peace of mind has its value, and I see "peace of mind" as the foundation of happiness, joy and content.

Again, thank you for taking the time sharing your thoughts.

 

[Thomas Beyer]

You may wish to diversify far more. Unload maybe 33-50% of the Vancouver portfolio and buy real income producing assets in smaller towns or in US with true cash flow at 75% leverage. Look beyond residential to REITs, retail, office, mobile home parks or industrial assets.


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[angelapeng]

Ok, how do I start to research other sources? Do you have any suggestions? Such as books, links and blogs?

 

[ActionTaker]

What do you mean by a mobile home park? Are those actually purchasable?

 

[Devin Roberts]

What do you mean by a mobile home park? Are those actually purchasable?

Yes! Currently know of one in Clearwater BC I could send to you if you would like.


Devin Roberts — Brent Roberts Realty
Vancouver REIN Member
Cell: 604-354-7160
Email: [email protected]

 

[Thomas Beyer]

What do you mean by a mobile home park? Are those actually purchasable?

Of course. Look around you. Anything you see can usually be bought: high rises, office towers, cars, land, government buildings, mountains and lakes, retail malls, industrial warehouses, churches, schools, observation towers, junk yards, marinas, boats, mobile homes and of course, the land under these homes called a mobile home park.

I am not saying they can all be bought all the time or that they are good investments at any price. Like houses or condos you can lose your shirt or make a million $s, depending on purchase price, property condition, location, leverage, upside and your skills.

Thomas Beyer, Asset Manager, Investor, Community Improver, Author, Father, Mentor www.prestprop.com

 

[Rickson9]

Go on a nice cruise w the family