what would you do with $150k???

urban cowboy

urban cowboy

talking with a fella today about a similar scenario to the below - thought i'd put it here as hypothetical scenario for you all to ponder...

Say you were to have no discernible income, were going backwards so to speak and due to circumstances, were unable to just go out and get a menial job to make ends meet. One day, you came into a sum of money - for the argument lets say its 150k after you have cleared your debts...

WHAT WOULD YOU DO WITH IT??

invest??? shares/property
Annuity or similar??
stick it in the bank???

or would you use it in another creative way to generate an income??

interested in hearing what people with a property bias think!!

cheers
UC
 
Depends what you want...

If you wanted to work hard at something, 150k would be a good start in a small business.

Or if you wanted to go surfing. 150k in a listed property trust (income not growth) could yield 10% - that's 15k p.a - move to Indo, live the dream.
 
urban cowboy said:
Say you were to have no discernible income, were going backwards so to speak and due to circumstances, were unable to just go out and get a menial job to make ends meet.
Click to expand...

if he is unable to earn an income, depending on circumstances, before he takes receipt of the 150k, he should apply for job seek allowance or sickness benefits.

I'd suggest he split the money between high div blue chip shares and corporate bonds.
Property is not on with the lack of income, imho. He needs to stay in a more liquid state. Stamp duty would be another gotcha.

Suppose he could look a property trusts though, but too risky imho.
 
Assuming no assets and no particular skills at the moment with investments or business.

Buy a cheapy PPOR so that the mortgage repayments will be less of a burden than the rent paid at the moment, this should allow all potential benefits to still be available and will provide a default savings and investment plan to start with. Add value by improving the place with simple cosmetic renovations and yard work, go to work on the job/business/investing skills!
 
thanks folks - interesting comments...

Painter the irony of your post is that I grew up in South West Rocks and know of Fisho's reach very well!! be funny passing that on as the subject of the conversation knows my history...:p

WW - like your thinking...centrelink is off the table - long story there...nothing dodgy, but just too hard with them. There is potential for him to earn down the track, but he's in one hell of a hole now with no real ability for about 12 months due to his circumstances etc. I like your suggestions - he wanted some ideas before speaking to a professional about this, bit cautious given the hardship and now a way out!

cheers again all
 
I would place the funds into a covered call strategy and use a margin loan to increase the overal investment to $200K, to generate a monthly cashflow between $3000 - $5000 per month.

OSS
 
portfolio margining is where you buy 12-24m puts to the value of "x" number of stock.

the CBOE or whatever then lend you the number of stock your puts cover (at a POXY interest rate...:D) and then you write calls and pull in the income monthly. however, i've found that you need TWICE the amount of puts to stock borrowed if you want to profit both ways regardless.

CBOE very hesitant to lend the other way though for obvious reasons - dunno about australia.

i think OSS is talking about broker margining $100k up to $200k and then writing calls against the $200k worth for around 1.5-2% pcm.
 
Use as a deposit on a $500K multi-family property of, say, 25 apartments in a solid area of the USA (anywhere in Texas should be OK), which should get figures something like this:

gross income $150K
operating expenses $60K (would include paying a part-time on-site PM)
net income $90K
interest on $350K @ 6% $21K
net net income $69K pa
 
JulieW said:
Sorry, can you explain what that is please.
Click to expand...

Put very very simply, writing covered calls is a share based strategy whereby you sell to someone else, the option for them to buy shares from you that you already own. The option you sell has an agreed sell price and an agreed expiry date for the other party to "exercise" the option. For this option, the buyer of the option pays you a "premium" which is yours to keep regardless of what happens with the shareprice. Yes there is risk involved so you need to learn what you are doing and seek sound advice

You can start your research by looking on the ASX...
http://www.asx.com.au/products/options/how/library/covered_write.htm

If you do a search on google, google video or youtube for "Covered Calls" you will find heaps of info about it.

OSS
 
Too easy.

Buy the 3 blocks down the road. Build a house on one. Sell it. Build a house on the next one. Sell it. Build a house on the third. Keep it.

Then decide what to do with the $200k or so you now have, and the rent from the house you kept.

Be fantastic to be able to do that without going near a bank.
 
ozperp said:
Use as a deposit on a $500K multi-family property of, say, 25 apartments in a solid area of the USA (anywhere in Texas should be OK), which should get figures something like this:

gross income $150K
operating expenses $60K (would include paying a part-time on-site PM)
net income $90K
interest on $350K @ 6% $21K
net net income $69K pa
Click to expand...

ozperp how is this possible who would you lend the 350k off that would allow
an australian investor to buy a 25apartment building in the USA?
 
Well, I think a fundamental decision point has been reached, with essentially 2 options:

1. Cashflow - difficult in property with no income, no ability to offset unforeseen costs etc... a strong CF+ could work. Bad liquidity if property chosen asset class & potential to faulter for the 1st time investor with no reserves, no disposable income etc.. Shares or Managed Funds could offer a passive income stream whilst preserving quick access to capital if required.

2. Growth - invest into an asset class, with no holding cost and good CG prospects (like shares, managed funds, CF+ or neutral property etc) Good liquidity with this option if shares chosen.

I think leverage is out of the question due to the circumstances stated and that either Cashflow or Growth needs to be determined prior to further assessment of the situation. ;)
 
Ol School Skata said:
I would place the funds into a covered call strategy and use a margin loan to increase the overal investment to $200K, to generate a monthly cashflow between $3000 - $5000 per month.

OSS
Click to expand...

And lose your A$$ if the market takes a sharp dip.
Selling covered calls & puts only works in a steady or uptrending market.
As does any type of "dollar cost averaging".
It was all the rage until many went broke and most got margin calls.

Back to real estate, if you don't want a job then maybe a rennovator is the way to go.
Though with all due respect I don't think there is any such thing as a menial job. I respect anybody who works for a pay and does whatever they need to do (legal & ethical).
And without knowing your cirumstances, I'd describe a lazy bludger anyone who does'nt want to get off their bum and do some work.
 
ozperp said:
Use as a deposit on a $500K multi-family property of, say, 25 apartments in a solid area of the USA (anywhere in Texas should be OK), which should get figures something like this:
Click to expand...

I doubt what your describing would be more than a slum.
And how many K's involved ibn the search process?
And of course:
Have you done this ozperp?
 
You must log in or register to reply here.

Similar threads

D
What would you do in my shoes?
Replies
14
Views
3K
datto
datto
H
What would you do in this scenario?
Replies
6
Views
812
Harriet
H
R
How would you handle these selling scenarios ?
Replies
18
Views
2K
random
R
rodimus
Property Manager says this is "wear and tear". What do you think?
2
Replies
21
Views
4K
DavidMc
DavidMc
R
Opportunity to set myself up ? need advice on how to begin
Replies
9
Views
3K
rednut
R
Back
Top