Simple Question

The answer may depend on a few other things. This includes whether your $100,000 nest egg is in addition to savings you have for emergencies. Financial planners advise 3 to 6 months' worth, or even a year of money in some occupations, of emergency funds.

Another consideration is whether you have any other places to put this money--any credit card debt to pay off?

People who invest in real estate for a living use formulas to determine whether an investment is a good one, and for comparison purposes when deciding among investments. I often do these calculations for my buyers, and I do a lot of work in Brooklyn, so feel free to contract me it you would like to look at investment apartments: kharby [at] RutenbergRealtyNY [dot] com.

Never take financial advice from someone who is incentivized to make money off of you, unless their incentive is to make money when you make money.

Simple answer: No

KHARBY2, Which formulas are you reffering to, that RS investors use to determine whether it's a good invesrment?

So don't listen to anyone MSP?

> I have $100k cash. Should I invest in buying a 1 bedroom condo for $300k in Brooklyn to rent out? I'm pre-approved for a 4% mortgage.

no way, transaction costs are super high, including your time! to me, this is kind of a middle-class trap, the idea that investing in RE the direct way is "smart".

i'd rather invest in a great REIT, like Sam Zell's, and have the best professionals working for me. transaction costs? less than $10 in and out. what's not to like? just my 2 cents.

>i'd rather invest in a great REIT

Yes. Diversification is your friend.

All good points. Just from the most simple level, try to answer this yourself to see if a more in depth analysis is even needed....
What would your monthly costs be if you bought this? Add insurance costs. Then figure conservatively what you can rent it for. Do you net any money? Dont forget to figure in tax benefits and taxes owed on income. My guess is that you wont see any profit and may even lose.

Diversification is key to investing. If you are not orherwise diversified, plopping huge amount of your assets in an illiquid real estate purchase at a dubious time in RE would not be terribly prudent.

If you are buying to live in it, have long time horizon (10 years perhaps), and this fits into budget and long term savings pla, then that is a different story.

> Diversification is key to investing. If you are not orherwise diversified, plopping huge amount of your assets in an illiquid real estate purchase at a dubious time in RE would not be terribly prudent.

also take into account that your product competes with product offered by professional guys that have the benefits of scale on top of it. do you really think you are on the right side of the biz as a small landlord?

only way i see this being the way to go is if you don't value your time (literally assign almost $0 to your labor, like farmers do), you consider managing a rental your best possible hobby and hate being a shareholder of a nice company.

In renting out ones own place, it is also necessary to factor in lost months of rental income when you are between tenants or having trouble with a tenant not paying. Costs of advertising to get a tenant also need to be accounted for. Then there is also the more frequent maintenance issues hat crop up when a renter is living in a place versus the more attentive owner.

Thanks for your input. So it seems the alternative of putting $100k in a conservative brokerage account, earning about 6% interest would likely yield more money and allow me to purchase a better place later on?