What would you do with 200k?

posted 5 months ago in Money
Post # 2
432 posts
Helper bee

I would absolutely buy property. If it’s an investment property you’ll be renting out, be sure to become very familiar with your obligations and tenant rights to understand your risks and determine what kind of property will help you mitigate them (location, number of units, short-term vs. long-term, residential vs. commercial vs. mixed, etc.). And create have a plan for what to do if things go wrong, like tenants withholding rent. 


Good luck!

Post # 3
8426 posts
Bumble Beekeeper
  • Wedding: August 2012

Why wouldn’t you live in it yourself? Personally I would never want to be a landlord. Way too much hassle IMO, and you risk your tenant ruining your home. Plus with covid going on you may not even get paid.

If I was going to buy a second property, I’d do it on a cute lake or something with air bnb potential and use a property management company to deal with renters. Then at least I could use it when I wanted to and not worry about the upkeep as much.

Post # 4
535 posts
Busy bee

I wouldn’t buy a second property or a rental, but I would put money into finishing the landscaping of our backyard. We’d love to have an indoor / outdoor patio that doubles as a balcony out of our master. Maybe hire a painter and get new carpet. Pay off our credit card, maybe go on a nice vacation or two. Then keep the rest in savings / investements / college funds for kids. I probably wouldn’t even buy new cars because ours are leases and pretty cheap already. If it were more like a million, I’d sell this house and buy a new one but 200K isn’t all that much in the grand scheme of things. So I’d just use it to be a bit more comfortable and worry free. 

Edit: the only “rental” property I would ever buy would be a cabin in the mountains but that would be primarily a vacation home that we’d rent for extra money nightly or weekly. I have no desire to be a landloard, and I’d only do it if we could successfully hire a property management and cleaning company to handle it all for us. We definitely have a dream of having a lake view cabin in our local mountain town.. someday! But I’m not sure 200K would be enough for what we want there. 

Post # 5
1339 posts
Bumble bee
  • Wedding: October 2018

Buying property is always a good idea, but why in the world would you buy a home and then continue to give your money to someone else for rent?  Why not buy a home for yourself?  It’s still a good investment.  Then if you still want to become a landlord (a huge commitment that is not for everyone, so think hard about that) you can save and leverage your house to buy another property to manage. 

Post # 6
2448 posts
Buzzing bee
  • Wedding: November 2015 - City, State

I would buy myself a readonably priced car and invest the rest.

Post # 7
2703 posts
Sugar bee
  • Wedding: August 2017

If I were renting, I would use $200k to put downpayment on a house for me to live in, and also get a vehicle.  Investment property is generally something a person gets after they have the first property that they actually live in.


but in the hypo the game for me – if I were handed $200k I would pay off the rest of my school loans/all debts, upgrade vehicles for my husband and I (modest, we both drive vehicles that are 8 y old), and invest the rest in savings for the future.  

Post # 8
2761 posts
Sugar bee

Check out this flowchart: https://www.reddit.com/r/personalfinance/comments/4gdlu9/how_to_prioritize_spending_your_money_a_flowchart/

What to do with the money really depends on your circumstances, both how you got the money (is this a windfall or a couple years of savings that you could easily save up again?) and what your financial picture looks like overall. Paying off high interest debts and maxing your retirement accounts, for example, are typically the first things you’d want to do. If you don’t have an emergency fund you’d also want yo set aside money for that. 

Property can be a good investment, but buying a rental property also has risks and takes a lot of management potentially.

The housing market is also very hot right now so you’re much less likely to find a “deal”, which would be important for maximizing your profit. Obviously you need to be able to charge enough in rent to cover not only mortgage/taxes/insurance, but also account for necessary maintenance and upgrades to the property, plus the fact it might go unoccupied for months between tenants. If you plan to hire a property manager you need to account for that too. All that to say, this might not be the best time to buy an investment property. 

ETA: if it were me, I’d put roughly half into home upgrades–new siding, new driveway, dream kitchen remodel, bathroom remodels–and put the rest into savings (ETFs in a taxable brokerage account).

Post # 9
12274 posts
Sugar Beekeeper
  • Wedding: June 2011

We invest all our extra money in index funds.  

Post # 12
3820 posts
Honey bee

I would pay off my house which is my only debt, I have about 100k left on the loan. Then I would have the ring I’ve been jonesing for made, which would probably cost around 3k using a lab diamond. The rest would be invested in index funds as mentioned by a PP.

Post # 13
915 posts
Busy bee

With rentals, to echo a PP, you need to factor in recurring expenses like property tax, property management fees, expenses to maintain the place, taxes you will pay on rental income, and the depreciation that will offset taxes (this last one works in your favor). At today’s property prices, property taxes are proportionately higher, which could cut into your profits. Rents in my area have gone down, while property prices have actually gone up. Strange, and not at all favorable to landlords. For perspective, I rented out my home and could not cover property taxes. Just my basic mortgage. No surprise, I live in a HCOL with a very low rent to buy ratio. The only way landlords here make money is if they bought decades ago at really low prices. Or if they sell at today’s insane prices. 

Since you’re probably looking at not having a mortgage at all, even with your standard property expenses, you’re still looking at positive cash flow. This may make sense, but compare your cash flow from rent (14k-ish minus all expenses) to what you’d likely make by investing the money in an index fund. 

Like a pp, I’d put the money into an index fund. In my particular property market, this is a no brainer. 🙂 

Post # 14
67 posts
Worker bee

Invest in more property I guess. 

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