At 39, I Inherited $4M in Real Estate and $200K Cash – What Should I Do Next?

Receiving a big inheritance can be a good thing or a bad thing. It’s good if you use the money wisely, but an inheritance can turn into a nightmare if you get deeper into debt. It’s similar to winning the lottery but on a smaller scale.

A 39-year-old recently received an inheritance, and it’s likely that he will use it for good. That’s because he posted in the FIRE subreddit about what to do with it. While posting on Reddit doesn’t guarantee that you will make good money decisions, it shows a conscious effort from the Redditor to make good decisions with the inheritance.

The Redditor received enough to change their life but not enough to retire. However, it helps immensely. The total inheritance came to $200k in cash and a $4 million real estate portfolio.

Start Slowly

The first thing you should do is nothing. The Redditor has $300k saved up and earns $50k per year. If the 39-year-old makes drastic life changes, it can lead to consequences once the inheritance dries up.

The Redditor spends $3k per month, and it’s probably not a good idea to retire right away. While being single with no kids certainly helps, the Redditor is still too young to retire. It’s important to continue living your current lifestyle for at least a few months before you make any changes.

Retirement shouldn’t be in the cards yet, but the Redditor can afford to get flexible. They can map out career opportunities that give them more flexibility and similar pay. It’s better to continue earning money now versus having to return to work in your 70s.

Consider If You Want Kids

The Redditor might already know the answer to this one, but it’s worth considering if the Redditor wants to have kids in the future. The individual is 39 years old, so there is still some time.

Having a spouse and a kid will increase monthly expenses. It’s a good idea to keep this option open in case something changes instead of retiring too early so it’s not feasible.

Sell the Real Estate That You Don’t Want to Manage

The Redditor is receiving this inheritance from an aunt, and she was good at managing real estate. She has to be good at it to amass a $4 million portfolio. The 39-year-old has to ask themselves if they want to manage real estate and collect cash flow from tenants.

The Redditor already wants to live in one of the aunt’s properties, but knowing if you want to be a real estate investor or not determines what you do with the others. If the Redditor wants to continue collecting rent from the existing properties, it can result in a steady paycheck that makes it easier to retire. However, the Redditor is better off selling any remaining properties if they don’t want to be an investor.

When you receive a property as an inheritance, it’s stepped up to the current market price. That means you don’t have to pay any taxes on the capital gains that your aunt has accrued on the property. If the Redditor holds the property for a few years, they are responsible for taxes on any capital gains accrued while the property was in their possession.

The Redditor has been given a great inheritance. It’s not enough to retire, but it puts them on the right path. It would be easier for the Redditor to retire if they were older, but it’s good to avoid rushing or making impulsive decisions with the inheritance.

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