How to invest 500 K

Question

Hello,

I'd like to get your input on how you would invest 500 K. I am a 40 year old high earning professional. I do not work in real estate. I have a few single family homes, but no major real estate experience. I have 500 k of liquid assets that I would like to deploy for real estate. I am no in a huge rush and I am not limited by location. My goal is to invest the 500k for about 50 k in cash flow a year. By the time I'm 50, I'd like to be around 100 k. I do not plan on retiring soon. I would like the investment to be mostly passive, though I am certainly willing to give time to understand and plan well.

The asset categories I am considering are passive RE through syndication, multifamily, or NNN commercial. I am leaning towards NNN commercial given the low expenses once purchased, appreciation and equity pay down. I know the cap rates are lower with this class, but I am not looking to milk every penny. More interested in stable, low maintenance return on investment.

You all have much more experience than me, so I am hoping that you all will give me a sense for how you would handle things.

Thanks!

John M. · Answer

Your best bet is to buy an asset up to 1.5million.  You may not get your exact cash flow right away, but as a high income earner you will at least have the ability to control the payoff IF needed. You can find a few qsr’s in that range or some medical facilities with a good reputation and long leases. Finding the asset is easy, its the due diligence thats important. Ive been in your shoes, and so far it seems like your on the right path. Feel free to ask me any questions I love the nnn lifestyle!

Joey Rahman · Answer

Can I ask why NNN, or syndication? I'm in somewhat similar financial situation and age, want long term low maintenance ROI as you do. I am thinking turn key as something passive, and long term.

Ricardo Hidalgo · Answer

Have you thought about building a Short term rental portfolio? I think those numbers can be achieve if you would consider doing some renovations on an older property. I am seeing options below 350k in Panama City Beach that could be maximize to exceed or have those returns in the current market.

Brock Mogensen · Answer

Investing in a syndication as an LP can be a great way to build a passive portfolio.  There are tons of great syndicators out there.  Really depends on what sort of deal and market you want to invest in. I suggest connecting with a few different ones to see who you like the best/has the best deal to offer.

Brett Deas · Answer

Trying to achieve a 10% return is not that hard in syndications. But to do so you may only have a few options due to the fact that the greats require a high amount of capital.

One thing I would look for is a mid-hold period with mid-returns. Something around 3 years and in the realm of 10-14% payouts. The hold period is important because if you want to be at 100K in ten years then growing your principal amounts are important. I would say prioritize growth over payout because the more you have the safer you can realistically get 100L in ten years.

Carlos Ptriawan · Answer

I would categorize it by risk asset class :

60% core asset goes to almost-risk off asset class like NNN commercial/DST.
30% asset goes to higher risk un-levered debt financing
10% asset goes to higher risk investment (leveraged financing/office space/crowdfunding,etc) or even stock index.

Neil Cronkrite · Answer

Love the NNN space! Not all cap rates in NNN are lower than multifamily. It's all about the stability and reduced expense inflation risk.

Jay Hinrichs · Answer

agree with the NNN ..  mid west seems to have the best returns for NNN

How to invest 500 K

How to invest 500 K

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