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Help A Reader: From Buying A House to Selling Wholesale Goods on eBay

By Erik Folgate

I answer all of these questions with what I would do, so don’t take my word as gospel. Surround yourself with a team of professionals that you trust like a financial planner, accountant, good real estate agent, and attorney, before you make any final decisions such as these.

I am looking into purchasing a house for 80K. Payments are about 680 a month with insurance and taxes already included.

In order to tell you if I think buying this house would be a good idea, I’d need to know more information. If $680 a month would be no more than 25 to 30% of your take-home pay, then I think it’s a good deal. If not, then stay away from buying for now.

I have about 50K cash that I want to use for something with fast return. I was looking into duplex homes that require 25 to 30% down. My credit score is 750. I was also looking into buying some land here in Fort Worth, Texas and putting mobile homes there, but the cost to run electricity, plus the trailer home, plus plumbing, gas lines, and moving the used mobile home, may not be worth it. I was also researching bonds, stocks, and other avenues of investment.

I don’t believe in “fast returns”, and most investments that boast a “fast return” are scams. If you’re talking about generating immediate income from your $50k, then yes, a rental property would be the best way to go, but unless you can pay cash for a rental property, then it’s not worth it. Once you pay the mortgage, taxes, insurance, and maintenance expenses, there won’t be much left over for income in your pocket. The mobile home idea sounds like a really bad idea. Mobile homes go DOWN in value. Yes, you can rent them out and generate some income, but they are horrible investments.

If you’ve got $50k sitting in the bank, this is what I would do with it in this order:

  1. Pay off any outstanding debts you have
  2. Set aside an emergency fund of 3 to 6 months of expenses
  3. Fully fund a retirement account like an IRA with growth stock mutual funds (about $5k a year)
  4. Even before the retirement investment, once you’re debt free and have an emergency fund, I would put a chunk of that money towards the down payment on the house you are looking to buy.
  5. If you’ve got anything left over after that, you can put it in growth mutual funds and index funds.

I am also looking into purchasing pallets of wholesale and sell on ebay. What do you think is the best thing to do?

As far as a quick return, I would definitely not go this route. There is a lot of risk involved with buying a wholesale lot of good to sell on eBay and Craigslist and actually turn a profit. Actually, you might have a better chance on Craigslist, because there are no selling fees to list on Craigslist. I once bought a lot of ipod replacement screens, because I saw them going for a lot of money on eBay. By the time I was able to put them up for sale on eBay, there was another line of iPods announce that were coming out and the value of them went down significantly. I definitely lost some money on that venture, and you will too if you’re not careful. I hate eBay now, because retailers came in and flooded the marketplace. Now, you have to literally give stuff away to compete on price.

That’s my two cents, take it for what it’s worth. Contact me again if you have follow up questions or shoot a comment below if you want to reveal your identity. Also, readers, please provide your input. I don’t claim to know it all, and many of you will have better ideas and thoughts than me!

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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  • Elizabeth I

    I have to disagree with you on the rental property. If the rent covers the mortgage, you should be in good shape. However, you need a good accountant to get you started. Tax wise, rental properties usually appear as a loss coming straight off you income even if the rent is covering the mortgage. (There are scenarios which would make this untrue.)

    Also, you can run liability risks in rental properties. You may wish to put the rental in your name and perhaps your primary dwelling in your spouse’s name to reduce liability. Also, you can incorporate the rental property, which would reduce your personal liability, but this would only be strategic if there was no mortgage on the property. Having a mortgage and incorporating a property can have HUGE tax consequences.

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