Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

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clad856
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Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by clad856 » Thu Nov 08, 2018 3:02 pm

I inherited approx. 200k cash recently and I have decided that I want to go to grad school/medical school. I am not sure whether I want to pursue grad school in finance, business, medicine or a combination quite yet but I would like to free up more time in my work schedule to figure out my path through internships, etc. I am 27-28 year old so I know I am a bit late going into grad school (I am a college graduate). I am self-employed right now as well making 80-90k but I plan to just go full-time 100% into grad school/medical school. I have ~80k in retirement funds (Roth, Solo 401k, etc.) additional to the 200k cash and a paid-off car.

I am wondering if it is a good idea for me to use the 200k inherited to invest in real estate that will give me 7-10%+ cash on cash returns and to use this to pay for my living expenses. Since grad school/medical school is so long, I feel safest first trying to invest the 200k for cash flow. I have been studying real estate for over a year now as I plan to get into real estate together with being a physician. My heart is in doing some real estate deals right now and leverage capital and time.

I have family members that invest in real estate and the like. Should I ask them if they have any deals (SFH, small multifamily, small apartments) for me to invest in to generate cash flow to cover my living expenses as I pursue my uncertain career path? My goal right now is thus to use this inherited money to generate enough cash flow so I do not have to work as much to support myself and so I can pursue medical school/grad school (I live in a LCOL area and need only ~1300-1500/mo for living, food, insurance expenses). I'd like to get advice on whether this is a good idea in my current situation. Again, my ultimate goal is to become BOTH a real estate/business investor and a physician and I'd rather do both at the same time as it makes me feel safer financially/psychologically and I think it is not only doable but wise financially and career-wise.

Any feedback/advice is appreciated. Thank you.

alex_686
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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by alex_686 » Thu Nov 08, 2018 3:08 pm

I would do grad school or real estate, but not both - or at least not right now.

I think getting 7% to 10% return on a passive real estate deal is optimistic. It is a possibility for a active investor - somebody who is willing to hazard their capital and spend their time on their project. However, if you spend time on real estate, they you can't spend that time on prepping for grad school. If you have to move to go to grad school, you can't be a active investor.

I think you are going to have to pick one or the other in the short term.

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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by Nissanzx1 » Thu Nov 08, 2018 3:21 pm

I'd use the money for schooling and invest in real estate with cash after you are settled into your career. Fooling with rentals while in school could blow up in your face.

Congrats on the windfall.

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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by JGoneRiding » Thu Nov 08, 2018 3:34 pm

I am having a hard time understanding your desired life direction. I am "just a vet" but can tell you being a doctor is incredible hard work to get there and maintain. Regardless of your specialty it's extreme high stress it had high divorce and suicide rates and is truly a life style choice.

You have a good job that it sounds like you enjoy bit don't love that makes a decent if not amazing income. In your shoes I would Perdue that along with the real estate investing and maybe if you felt driven an mba on the side

SheReadsHere719
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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by SheReadsHere719 » Thu Nov 08, 2018 3:47 pm

There’s a lot to unpack here and you should do so one at a time. Fortunately, these are all good problems to have. They are all doable, but I recommend a more phased approach, so you can thoroughly vet each decision first.

*First, the Bogleheads recommend waiting 6 months to a year before making any major decisions with a windfall: https://www.bogleheads.org/wiki/Managin ... _your_time
*Next, this leapt out at me: “I am not sure whether I want to pursue grad school in finance, business, medicine or a combination.” These are very divergent paths that require different prerequisites, standardized tests, etc. I would strongly recommend you take some time to figure this out first before making any other decisions. Internships could be one way to do this; networking would be very valuable as well.
*You’re already making $80k - $90k as a self-employed. Would you not want to focus on growing this instead, i.e. using some of the windfall to invest in your business, so you can keep the momentum going? What industry are you in currently, and why do you want to leave it? Not sure how long it took you to grow to this salary, but I’m guessing it wasn’t overnight.
*I will leave others to comment on real estate, but I agree that it is not a good idea, at least not right now. There are lots of other vehicles for providing you with a steady cash flow. Real estate might make you ‘feel’ safer, but it is not necessarily safer from a number-crunching perspective.
*Your monthly COL assumes you will remain in a LCOL. What happens if you apply to grad school and are accepted somewhere in a HCOL area? Those assumptions will change, and your numbers will too.

I would break out your decisions as follows:
1. Grad school – which avenue will you pursue between business and medicine?
2. Grad school – will you apply this year and plan to attend in fall 2019? If so, what are the steps required to execute?
3. If you don’t go to grad school right away, what will you do with your business in the meantime? Continue as-is or plan to invest in it and grow?
4. COL projections– this will vary based off your answers to #1 and #2 above
5. Using your COL projections, determine how to allocate your windfall. Can you leverage tax-advantaged space better (i.e. a 529)? Do you need steady cash flow to live on / cover gaps?
6. Complete the above, then spend 1-2 years researching real estate investment, likely after grad school if attending

Hope that helps segment out the decisions you need to make. You’ll note that 4 of the 6 come before touching that windfall.

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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by jb1 » Thu Nov 08, 2018 4:16 pm

Im 28 also. Why would you entertain the idea of grad school? Youre already making good money.

You can seriously buy a property for 10% of that, put 75% in the market, and use the rest on yourself.

I have never inherited money, but thats what I would do.

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Phineas J. Whoopee
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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by Phineas J. Whoopee » Thu Nov 08, 2018 4:35 pm

jb1 wrote:
Thu Nov 08, 2018 4:16 pm
Im 28 also. Why would you entertain the idea of grad school? Youre already making good money.
...
There are reasons to go to grad school that aren't motivated by increased income. It's just that not everybody recognizes those reasons. I'm not criticizing anyone's personal education choices for themselves, of course.

OP: I'm sorry to hear about your loss. Grad school is a serious commitment. Echoing SheReadsHere719, for the immediate moment you may find our wiki article managing a windfall useful.

PJW
Last edited by Phineas J. Whoopee on Thu Nov 08, 2018 4:49 pm, edited 1 time in total.

Thegame14
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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by Thegame14 » Thu Nov 08, 2018 4:41 pm

sorry to be mean, but you have literally no idea what you want to do. You are not going to invest a small amount like 200K and become a real estate mogul, you will not get 10% return of free cash flow being a passive investor, ie not an active landlord. you want to go to grad school but have no idea what to major in finance, business, medicine, they are so different.

I think you best bet is to first figure out ONE major for grad school, then if you are a VERY VERY handy fix it person, buy a duplex and rent out half of it while living in the other half to get your feet wet to real estate investing and being a landlord.

Keep your self-employment and go to grad school at night, NOT full time.

From your plans, having no idea what major to go back to school and relatively small amount to invest considering it is real estate, unrealistic returns, and if you go to grad school 100% how are you paying for it? loans??? Then just use the 200K for grad school and an emergency fund instead....

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SevenBridgesRoad
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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by SevenBridgesRoad » Thu Nov 08, 2018 5:19 pm

clad856 wrote:
Thu Nov 08, 2018 3:02 pm
...I want to go to grad school/medical school. I am not sure whether I want to pursue grad school in finance, business, medicine or a combination...I am a college graduate...I am self-employed right now as well making 80-90k but I plan to just go full-time 100% into grad school/medical school....
I am wondering if it is a good idea for me to use the 200k inherited to invest in real estate that will give me 7-10%+ cash on cash returns and to use this to pay for my living expenses. Since grad school/medical school is so long, I feel safest first trying to invest the 200k for cash flow. I have been studying real estate for over a year now as I plan to get into real estate together with being a physician.
...financially/psychologically and I think it is not only doable but wise financially and career-wise.

Any feedback/advice is appreciated. Thank you.
Some thoughts...
Others here are more qualified to talk about real estate. I will focus on med school and how it is different than grad school. If you already know all of this, I apologize. But the way your are mixing grad school and med school makes me think you need more information.

Grad school/MBA programs are pretty variable. Many are incredibly hard and others not as much. Depending on which program you pick, the time commitment can be part-time or full-time. Also, different programs have different entrance requirements and vary in difficulty (or ease) of acceptance. If you are willing to look around, acceptance to a program is not an issue. There are programs with incredibly high bars for acceptance and there are programs where everyone is accepted. Pretty much anybody wanting entry into a grad school can find a home. This is not to slight grad school in any way. There are incredibly difficult grad school programs. Our son got his MBA from University of Indiana. Very competitive entry and very much a full-time, challenging program.

Med school: You have to be accepted and the bar is high no matter where you apply. There's no med school that takes everyone who applies. The numbers of acceptance verses applications is available from various on-line sources. It is very competitive. You don't say what your undergrad coursework was, but all med schools require some success in the hard sciences in undergrad (biology, chemistry, physics, math). You are likely smart and motivated, just know its not a guarantee to get into med school.

Med school unlike grad school is pretty standardized. It will be full-time no matter where you get in. For most, it really is full-full-time. The first two years are mostly classroom science and the 3rd and 4th years are mostly in hospitals and clinics. I worked part-time during the first two years. It was tough but doable. I had a classmate who lived in a run-down house he bought, which he gradually fixed-up and flipped at the end of his 2nd year. It did not produce income during that time, but I think he did well on the sale. It would be really difficult to have outside work during your 3rd and 4th year. You will work as a med student incredibly long hours (although technically there is an 80-hour work week limit for residents, I don't know if this applies to students; I do know compliance is variable) and the hours are not yours to choose for the most part. 4th year can offer some easier electives and some breathing room.

Then, you will have a minimum of three years of full-time residency. Again, there is an 80-hour a week work limit, but count on at least that. Many residencies are more than three years.

How managing real estate (and depending on what you mean by that) during all of this would be very dependent on the person (and for grad school, the program).
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Watty
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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by Watty » Thu Nov 08, 2018 5:45 pm

A couple of things;

1) I would take buying any real estate off the table at least until you figure out what you want to do as far as school and you get accepted into a program. With being a first time landlord you do not want to be a long distance landlord.

2) It gets a lot harder to justify buying an investment property if you need to hire a property manager to take care of it. With graduate school and especially medical school you stand a risk of there being a problem with the rental property at a bad time when you cannot take a day off to take care of itso you may need to have a property manager.

3) There are lots of pitfalls and I would not recommend it but if you go to grad/medical school you could buy a condo to live in wherever you go to school. You might even be able to rent a room. In some college towns you can even buy a condo for $200K in cash.

4) How are you going to be paying for grad/medical school? That $200K might come in very handy for that.

5) Many companies will pay for employees to get an MBA. If that is what you want to do then you might get a job where you could get an MBA and have them pay for it.

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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by unclescrooge » Thu Nov 08, 2018 8:31 pm

You could joint a joint MD/MBA program.

I know 3 people who did that program.

One works half time as a cardiologist and half time as a health care consult for a top consulting company.

One works as an anesthesiologist and the last one works for a pharmaceutical company managing their FDA approval process.

I would either forget about the real estate, or if you put a gun to my head, buy a $150k home in Indianapolis for cash flow and keep the $50k in a bond fund.
Last edited by unclescrooge on Thu Nov 08, 2018 11:18 pm, edited 1 time in total.

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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by SevenBridgesRoad » Thu Nov 08, 2018 10:56 pm

unclescrooge wrote:
Thu Nov 08, 2018 8:31 pm
You could joint a joint MD/MBA program.

Good point. Still have to get into medical school. Here's a list: http://www.mdmbaprograms.org/md-mba-programs/
There are stars in the Southern sky | And if ever you decide | You should go | There is a taste of time sweetened honey | Down the Seven Bridges Road

InvestedEngineer
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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by InvestedEngineer » Thu Nov 08, 2018 11:20 pm

Thegame14 wrote:
Thu Nov 08, 2018 4:41 pm
sorry to be mean, but you have literally no idea what you want to do. You are not going to invest a small amount like 200K and become a real estate mogul, you will not get 10% return of free cash flow being a passive investor, ie not an active landlord. you want to go to grad school but have no idea what to major in finance, business, medicine, they are so different.

I think you best bet is to first figure out ONE major for grad school, then if you are a VERY VERY handy fix it person, buy a duplex and rent out half of it while living in the other half to get your feet wet to real estate investing and being a landlord.

Keep your self-employment and go to grad school at night, NOT full time.

From your plans, having no idea what major to go back to school and relatively small amount to invest considering it is real estate, unrealistic returns, and if you go to grad school 100% how are you paying for it? loans??? Then just use the 200K for grad school and an emergency fund instead....
This was exactly my reaction, too. I don't think it's mean - it's just realistic. OP needs to decide his plans before investing in any of the options stated. Medical school and an MBA will lead to very different lives - neither is wrong, but it's a hard decision and one that needs to be well-considered before spending years and hundreds of thousands of dollars on it.

Real estate can be a very good investment, but it can also be difficult. Dealing with that while attending medical school or grad school is a lot of extra stress.

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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by jacoavlu » Fri Nov 09, 2018 12:20 am

If it’s your passion, and you can get in, go to med school. It’s not too late. Especially if you don’t have to go into debt to do it. You could probably get through on the cash. (Don’t invest the money, just keep it safe and pay for school.) Then as a physician, you can use your interest in accounting, finance, real estate, etc to optimize your practice and career and retirement.
Last edited by jacoavlu on Fri Nov 09, 2018 7:50 am, edited 1 time in total.

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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by ProfWengen » Fri Nov 09, 2018 1:41 am

First off, I applaud you for saying you want to buy assets and use the cash flow to pay for your expenses while in school. That's SMART, most people would just use the cash to pay for school without thinking twice.

I think your first step here is figure out what you want long term. You're not going to find a lot of long term success without a clear objective. Looking back on the guys I was in grad school with, those who knew what they wanted all got it and those who didn't never really amounted to much.

If you do wind up deciding to go to school, I would certainly invest (in real estate or anything else.) There's no reason you can't do both.

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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by SGM » Fri Nov 09, 2018 5:08 am

It is not too late to get both degrees although some BHs may discourage you. Residential real estate is a bit of a burden while studying.

I recently found out that my masters thesis completed almost 40 years ago was included in "Retrospective Theses and Dissertations" by the official "Stars" administrator of the university. "Stars" is the university's official open access "Showcase of Text, Archives, Research & Scholarship." The masters degree opened up doors for me. :D

I am grateful that I had the opportunity to obtain multiple advanced degrees. I considered medical school a privilege unlike some of my younger classmates who considered it more of a burden.

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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by Valuethinker » Fri Nov 09, 2018 5:52 am

SGM wrote:
Fri Nov 09, 2018 5:08 am
It is not too late to get both degrees although some BHs may discourage you. Residential real estate is a bit of a burden while studying.

I recently found out that my masters thesis completed almost 40 years ago was included in "Retrospective Theses and Dissertations" by the official "Stars" administrator of the university. "Stars" is the university's official open access "Showcase of Text, Archives, Research & Scholarship." The masters degree opened up doors for me. :D

I am grateful that I had the opportunity to obtain multiple advanced degrees. I considered medical school a privilege unlike some of my younger classmates who considered it more of a burden.
There are a couple of big differences between medicine now and medicine then?

1. cost of medical schools has risen in real terms muchfaster than inflation. It seems, from posts here, nothing to graduate with $300k of debt (and the interest rates are high, too, it seems)?

2. being a doctor now means much more working for a large health care provider, and/or dealing with paperwork from insurance companies etc. You can't just set out your shingle in the way a GP might have 40-50 years ago.

As in so many professions, the top doctors do well in America, very well. Millions of dollars a year well - that's clear from some of the posts here. But it's a different profession now, and the average doctor is not necessarily so well off.

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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by Valuethinker » Fri Nov 09, 2018 5:58 am

clad856 wrote:
Thu Nov 08, 2018 3:02 pm
I inherited approx. 200k cash recently and I have decided that I want to go to grad school/medical school. I am not sure whether I want to pursue grad school in finance, business, medicine or a combination quite yet but I would like to free up more time in my work schedule to figure out my path through internships, etc. I am 27-28 year old so I know I am a bit late going into grad school (I am a college graduate). I am self-employed right now as well making 80-90k but I plan to just go full-time 100% into grad school/medical school. I have ~80k in retirement funds (Roth, Solo 401k, etc.) additional to the 200k cash and a paid-off car.

I am wondering if it is a good idea for me to use the 200k inherited to invest in real estate that will give me 7-10%+ cash on cash returns and to use this to pay for my living expenses. Since grad school/medical school is so long, I feel safest first trying to invest the 200k for cash flow. I have been studying real estate for over a year now as I plan to get into real estate together with being a physician. My heart is in doing some real estate deals right now and leverage capital and time.

I have family members that invest in real estate and the like. Should I ask them if they have any deals (SFH, small multifamily, small apartments) for me to invest in to generate cash flow to cover my living expenses as I pursue my uncertain career path? My goal right now is thus to use this inherited money to generate enough cash flow so I do not have to work as much to support myself and so I can pursue medical school/grad school (I live in a LCOL area and need only ~1300-1500/mo for living, food, insurance expenses). I'd like to get advice on whether this is a good idea in my current situation. Again, my ultimate goal is to become BOTH a real estate/business investor and a physician and I'd rather do both at the same time as it makes me feel safer financially/psychologically and I think it is not only doable but wise financially and career-wise.

Any feedback/advice is appreciated. Thank you.
1. do not invest in real estate until you have some career direction

2. medicine is a calling. I really believe that the extreme effort and hardship of becoming a doctor is only tolerable because the vast majority of people going into it have some sense of it as a calling - a desire to heal the sick. You can be simply venal and be an accountant or lawyer (although I would warn you that that can lead to burnout) but a doctor?

Work in a hospital for 6 months as a volunteer and see if you really like the thought of working with sick and dying people.

3. take a masters in real estate investing & finance. Or do an MS in Finance, generally, to see if that's what you want to do -- you can do your dissertation on RE finance.

Another way into real estate is via the law. Go to the highest ranked law school you can get into (or a strongly ranked regional school) practice for 2-4 years in real estate law, and then get involved as an investor/ developer. Real estate is one of the few industries with a strong inherent demand for lawyers. Lawyers are involved at every stage of the RE process - land acquisition & due diligence, getting planning permission, design & construction, financing, tenanting. An MS in RE + a law degree could be a really strong proposition.

Again if you can get work experience in the real estate field before undertaking further training, that would be fantastic - increases your chance of an internship or summer job in the field (MBA hiring is largely done on the basis of what your summer job was, these days).

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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by michaeljc70 » Fri Nov 09, 2018 4:10 pm

Maybe I missied something, but if you invest the money for living expenses, how will you pay for schoo? Medical school is very expensive.

Frankly, there is a big difference between a medical degree and business degree and real estate so I question how passionate you really are about medicine. Also, if I spent hundreds of thousands of dollars on a medical degree and made a big salary, I wouldn't want to waste my time managing rentals. That isn't to say I would not invest more passively in real estate.

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Re: Inherited ~200k cash. 27-28y/o. Want to go to grad school/medical school. Want to invest in real estate right now.

Post by Tal- » Fri Nov 09, 2018 4:33 pm

A few things:

1: I'm normally a big advocate of real estate, but IMO, you are not a good candidate for it right now. Trying to get into real estate while making other big life changes, such as school or a career change, are bad ideas. Real estate is among the more risky investments because when it goes poorly (and it will) you will need to chip in additional money. Find stability first, then consider real estate.

2: The key question here is not "how do you spend the money" but rather "what do you want?" I think your passion and direction should drive your next step - not your money. So, wait until you know what you want, and then consider if you can afford it, and use the money to that end. But, in the words of Covey, begin with the end in mind.

3: You're doing well. You haven't gotten enough props for being where you're at - you're financially stable and your outlook looks great. Change if you want to, but my initial read is that you're doing great on your current path.
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