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Saving for investment property...muni bonds vs. ETF's?

Bogleheads • View forum - Investing - Help with Personal Investments - www.bogleheads.org
I'm saving up to buy an investment property using the profit from one of my jobs. My goal is, in 2-3 years I want to have enough to put a large down payment on a property in a specific part of my town that has 1-2 rental units (apartments) up top and then office space I can use on the ground floor for my practice.

Each month I figure I can dedicate $2k-$3k to the down payment but I'd like to earn money while it sits rather than it doing nothing. I was at the bank today and they suggested a money market account yielding around .1% or an 18 month cd that yielded more but they said they couldn't quote the rate until ready to invest which sounded a little odd.

In the past people have suggested index funds. I did some homework on it but the buying/selling fees and taxes on stocks, unless you have 6-figures to work with, eats up a ton of the potential profit.

However, to account for inflation I'd like to safely be making at least 5% annually.

On another forum municipal bonds and ETF's were suggested. After some homework it seems like the municipal bonds are great because they are tax free but you have to pay someone a fee to buy them. Not sure if people buy municipal bonds in other communities or just their own but I have to look into what those fees would be.

ETF's sound like an amazing option, especially traded on Robinhood without any fees for buying/selling! However, unlike municipal bonds, I'd have taxes to pay on gains.

So I guess what I have to figure out is...

Are the fees I'd have to pay with municipal bond purchase/selling less than the tax savings I'd get when compared against the taxes I'd pay without fees if buying ETF's?

In other words, activity aside....are ETF's or Municipal bonds cheaper to buy/sell when looking at taxes vs. fees?

Any thoughts?

Thanks

-Emt1581


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