If you invest in real estate with some degree of success, at some point you could have a brand new problem – too much cash. Not that its a bad problem, but that money needs to go somewhere. Do you know where to put it?
Again, it’s a nice problem to have. Truth be told, even with a few real estate investments, you may find you have an abundance of cash. Having some liquidity and emergency reserves is always a plus, but too much cash or liquid money and equity sitting idle is definitely counterproductive. It is highly risky, and will certainly drag down your overall returns. So what can you do with it?
Here are 10 places that you should consider stashing your real estate profits:
1. Reinvest in More of the Same: If you are running into the “problem” of excess profits, there really is no reason not to continue what you’re doing. Take the money you have made from previous investments, and find more properties to invest in. If you put your money to work, it will certainly benefit your business. There is no reason that your profits can’t make your next rehab that much more profitable. If the comps call for it, go ahead and add that fancy backyard patio, or make additions the the kitchen you never thought you could.
2. Diversify: Diversify in units with different types of properties. Diversify by the location you invest in. Diversify by country. The more diversified your real estate investing and portfolio is, the better protected your income and wealth will be, and the better your investments will perform over the long run. If you’ve been investing in single-family homes, consider a condo, or duplex, a multifamily apartment building, or office condo, or land. If you’ve been investing on the east coast, try out the west coast, or scoop up that vacation property in the Caribbean.
3. Diversify Your Real Estate Investment Strategy: Wholesaling real estate, fixing and flipping houses, and turnkey rental property investing all works. They can be great to start out with, and for the long run, but why stick to just one? Mix it up a little. Look for other strategies like private lending, or building.
4. Reinsurance: There are various forms of re-insurance available to entrepreneurs and real estate business owners. This can provide mandatory insurance requirements, help protect portfolios and wealth, and can come with tax advantages.
5. Invest in Art: Art and real estate have recently been dubbed the two best investment choices at the moment. Art is obviously tricky for many reasons. However, if you’ve maxed out your exposure to real estate, have plenty of cash to spend, and find the idea of learning about art fun, then why not.
6. Hedge against Your Current Investment Performance: A great way to protect against any downturn in your real estate business or portfolio’s performance is to hedge against it with investments that thrive when real estate is down. Or that at least don’t suffer as bad at the same time. When real estate hit bottom, a lot of other things did too: home improvement stores, investments in local government, and more.
7. Education: If there is one thing you can never lose, or that will never depreciate, it is knowledge. Bulk up on your education and learn more about real estate investing. Boost your knowledge of appraisals, title, mortgages, and more.
8. Precious Metals and Gems: Investing in gold and other similar stocks may be over according to some leading investment minds. However, if you are really running out of places to stash your profits and cash, why not combine making your partner happy and diversifying your assets with expensive jewelry. Think upgraded rings, watches, and more. Do note, however, that this comes far after everything else, and isn’t just for show.
9. New Lines of Business: New lines of business that compliment your current real estate investments and business can be a smart move. This is especially true if you can use these additions or spin-offs to create more profit in your existing investments. For example; can you add lending, title, property management, or insurance to the mix?
10. Invest in Others: Regardless of your energy levels, there is only so much you can do. Why not invest in others? This may be setting up a philanthropic foundation, training others, investing in real estate investors, or into other’s real estate business ventures.