$5.3M to use but 0 experience. Advice...?

Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes

2y

Is this post even for real? It reads like a satire piece. It's hard to know which are legitimate questions to focus on answering. Generally speaking, if you have $5.3M you have ALL the options. I don't know how I'd narrow it down. Sounds like you're busy. Maybe a syndication is the right answer for now. Good luck.

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26 Reply

Krista Patrick

Northwest Arkansas · Member since 2015 · 17 posts · 7 votes

2y

I'm doing STR's now but not in the areas you've mentioned. I'll see if I can find your STR post. I'm interested, what made you choose those specific locations? If I were you, I'd definitely try to partner on something since you don't have the experience yet. There are tons of people who have knowledge but lack capital (always need more capital!) and are generally willing to discuss. If you're interested in the self storage, I know a couple projects happening around the country and could possibly connect you for more information if that's the route you'd like to go.

Your plan is ambitious, where are you planning to start?

1 Reply

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

2y

talk to a small wealth manager BP is not really the place for this.. most folks here are SFR small multi owners and STR.. why in the world would you want to personally involve yourself in managing property ?

Other thing to do is be the bank.. far more passive . no tax bene's thats why you need a wealth manager .

with a business that made you that kind of after tax cash.. not sure why you want real estate at the street level.

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26 Reply

Mike Dymski

Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes

2y

17 Reply

Mike Dymski

Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes

2y

You have experienced so much success with your existing businesses, why not stick with them and invest your money there rather than in a new real estate business with no experience?

14 Reply

Theresa HarrisPro Member

Member since 2019 · 15k+ posts · 11k+ votes

2y

If you are serious, I would start small-buy one house (average home) and see how that goes. Do not let your agent or tenants/property manager know how much money you have or you will be taken advantage of.

6 Reply

Theresa Holl

Investor · Minneapolis · Member since 2023 · 265 posts · 162 votes

2y

OMG - I did a double take on this one. LMAO!

"I want to cash out at the age of 115 and use the cash to buy artificial organs to live forever, lol"

As far as helping you manage multiple businesses while diving into an STR journey, there are different resources for those with time but no money and money but no time. Sounds like you're the 2nd one. So then the question becomes, what are your specific business goals, besides freezing your organs. I'm so glad appreciation is as important to you as cash flow. A lot of (young) investors don't think that way and I think they miss out on decent investments in the long run.

Also, what work are you good at and what do you want to outsource/automate? There are tons of AI tools and guest messaging platforms like Hospitable and others to help you do more with less if you go the STR route. My advice on the tech stack is to make sure you consider your long term goals and make sure that what you buy today integrates with tools on your wishlist for later. It's easy to forget that, fall for a flashy sales pitch and paint yourself into a corner.

Oahu is beautiful by the way. My favorite area is around Diamondhead Crater and I definitely left my heart on the Koko Head Steps. See you there! Aloha.

0 Reply

Tim Ryan

Investor / Mentor / Contractor · Arcadia, CA Buying Out of State · Member since 2015 · 654 posts · 622 votes

2y

You can buy properties. But what you need to do is to be entrepreneurial about it which is sounds like you have the skills to do. This means thinking outside the box. In 2009 I got into multifamily and did very well up to 2018. Then the markets became flooded with multifamily investors. Time to look for a new strategy. I got into commercial and office in 2018 to today. Yep, office! and I'm killing it because I am buying in Tertiary Markets and not in the big metros (where all the problems for office is). Where do you think those businesses moved to...

Now I have a new concept and plan. It'll take both entrepreneurism and capital. DM me to hear more if you are interested.

1 Reply

Olga Daisel

Member since 2020 · 69 posts · 25 votes

2y

@Alton Pettit

Currently the lifespan age of male American is 76. You probably lived 26 of it, so 50 is left. Why would you expect to exist 100 years more? That impossible. As soon as you understand this limitation you might change the investment plan.

3 Reply

Nathan GesnerBusiness Member

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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

2y

It's not wise to wave your money around. The first thing I would suggest is a measure of privacy and humility.

1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turner or The Unofficial Guide to Real Estate Investing by Spencer Strauss.

2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by Scott Trench , or The Total Money Makeover by Dave Ramsey.

3. As you read these books, watch the BiggerPockets podcasts. This will clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.

4. NETWORK!!! Get out of your comfort zone. Stop hanging out with your deadbeat buddies that spend all day drinking, talking sports, and otherwise wasting away. Go to BUILD YOUR TEAM at the top of the screen and look for local investors or meetups in your area. You can also find real estate investing groups through meetup.com, facebook, or a Google search. Birds of a feather flock together!

5. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. A handy search bar in the upper right makes it easy to find previous discussions, blogs, podcasts, and other resources. BiggerPockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, recognizing a good deal will be much easier when it shows up. Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice. It doesn't take long to learn how to spot a good deal.

6. Study the market. You can learn to do this independently or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR who works with investors and knows how to help you best.

7. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. You could read 100 books and still not know enough because certain things must be learned through trial and error. You don't need to know everything to get started; you need a foundation to build on and the rest will come through experience and then refining your education.

You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a forgiving world; the average person can still make money even with some big mistakes.

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Alexander Szikla

Real Estate Agent · New York City · Member since 2020 · 818 posts · 639 votes

2y

Seeing a lot of criticism in this thread towards @Account Closed

In my opinion - big F ing congrats on making so much money at a young age. No easy task and you should be proud.

Clearly, you are "new" to RE and exploring a variety of options and educating yourself. Nothing wrong with that.

I would advise you to consider what is most important - yield, appreciation and/or passivity. Based on your primary focus, you can then begin your journey.

6 Reply

Todd Dexheimer

Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes

2y

There is no best answer to your question, because this all really boils down to what you want out of life.

If you're looking to be active and build a real estate investing business, then learn about commercial real estate. Once you have put in the time, hired a mentor and are ready, then start buying commercial multi-family, retail, office, self storage, etc. (I would highly suggest sticking with one asset class). This is active, no matter how much you want to believe that you can hire a property manager and go sip Mai Tais, it's just not going to be the case. You could also go buy single family and small multi-family for long term or short term rentals, but that comes with an even greater amount of work. One other active option is to buy distressed notes.

If you're looking to be passive, then look into syndications, hard money lending or NNN lease properties. Investing in a syndication is the most passive. You invest a portion of your capital into multiple deals and allow them to cash flow, while the sponsor plays the active role. The active part is doing your homework up front. Hard Money lending is still active, but once you have the business set up, you will get loan requests, underwrite them and finance them. These are typically short term 6-12 month loans. Buying NNN lease properties (think Walgreens) can be fairly passive as well. These require underwriting on the front end and a little bit of back office. The biggest risk is that if the tenant moves out or default, you get to deal with it.

As with anything become educated.

2 Reply

Chris Romany

Orlando, FL · Member since 2014 · 93 posts · 35 votes

2y

@Account Closed

Your post covers a lot, so I'll just narrow my input to your initial conerns about zero knowledge in real estate.

As you live in Orlando, I would strongly recommend you join our local REA Central Florida Real Estate Investors (CFRI). They host a number of in-person meetings throughout the month covering many different aspects of real estate investing. It costs practically nothing but your time, and the knowledge gained is invaluable. Like other REAs, they have their share of "gurus" who sell their wares, but from your post, it looks like you are mature enough to discern the real opportunities from the "shiny" stuff.

To be clear, I don't work for CFRI, so this is not a promotion; I joined this local assocation back in 2014 and it gave me the foundation for my direction in real estate and allowed me to build a healty nest egg. I recommend this association to everyone living in Central Florida I meet who wants to learn about real estate investing in person (as opposed to online).

A group of advanced investors and real estate related vendors (and myself) meet once per month for drinks here in Orlando; if you are in interested in joining, send me a DM and I'll let you know where/when.

0 Reply

Michael Dumler

Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes

2y

@Account Closed, buy a Ferrari and call it a day.

4 Reply

Stephen Sherbin II

Realtor · Orlando, FL · Member since 2023 · 14 posts · 9 votes

2y

Quote from @Account Closed:

Title says it all. Currently live in Orlando. Made money from other businesses in a relatively short time and at a relatively young age, and now want to put it into real estate. Problem is this would be my first real deal. I would like some general advice from the knowledged community about where might be best to deploy this (I did make an STR-specific post elsewhere, but this is for more general wealthbuilding advice). Also don't have any agent at the moment, insurance people, or loan officer (if I even get a loan), so open to advice from people here in their areas of expertise. I used to work in CRE acquisitions so I understand the numbers but lack deal experience.

Some stats:

- I am open to both debt and all cash depending on circumstances.

- My biggest parameters are long-term appreciation, and enough cash flow to comfortably live off of (which is why I'm strongly considering an all cash "park and profit" approach without worrying about crazy interest rates). I want to cash out at the age of 115 and use the cash to buy artificial organs to live forever, lol. Honestly that is the main goal and what both keeps me going and up at night, so I'd say the ultimate "end goal" is having lots of cash and the means to withdraw it down the line, WITHOUT going absolutely insane.

- To this end I have primarily considered Hawaii (Honolulu Oahu, Kihei Maui, and Kailua-Kona - either short term rentals or long term, ideally able to live in one unit/room of the property or properties), Miami, Houston, and Space Coast Florida. Hawaii or Miami would likely be an STR, Houston would be MTR, and Space Coast also a STR. I have a buddy in Houston with large lumbar and tool yard that I believe could make good prices for new development, but again, despite the cash, I am inexperienced and don't want to make a mistake biting off more than I can chew.

- While I can manage 1-3 STRs (I think, especially if I live in or near them) and one sub-15 unit multifamily complex, I definitely cannot for more than this on my own, and still have my other businesses to run, and want to leave adequate time to devote to those as they are my only revenue sources (another reason why I'm interested in some more livable cash flow).

- And i guess as a bonus, if you had this cash, what would you do to exponentially multiply it over a 100+ year period? I am considering buying self storage, branding it, turning it into a real business and scaling with more self storage facilities to sell to BlackRock in 2077 or something like that. Standardized, corporate, branded. Or maybe some adventurerous, extreme vacation rental business. Open to putting in the time and effort for that, but I have 0 experience with self storage, turning around some old mom and pop, or managing something like that outside of what I've read online. I am not a "handy" person. I don't want to lose this money on my first deal.

Overall, I'd love to live in Hawaii and collect 6-figures a year while living for free in one unit of a multifamily or multiple condo group, just as much as I like the idea of going all in on some big brand. I wonder, where is the balance, what would be best for now, and could I start with one and scale into the other as i grow experience and hopefully more capital? I know this is a lot, but I think it'd be an interesting discussion and would really appreciate some advice from the communtiy! Thanks.

Hey @Account Closed, sooooo first, congrats on the wealth you've built, no easy feat for sure. It would be extremely difficult to give advice because of the number of options. So, let's narrow it down: do you want to be an active person within the business, or generate the income passively while spending your time on something else? Like everyone here, you are looking to multiply your money, and are looking for the fastest vehicle to do so, but what will be fastest is what you are passionate about. So with that in mind, what in real estate are you fascinated by, what are you obsessed about learning?

The answer to both those questions will really be the guide. There's opportunities in multiple sectors both in and out of real estate, like the conversation I had last night with a young lady who is following her mother's footstep in Ice Cream Trucks. Mom makes ice cream from scratch, dad is a mechanic, and they find older cargo/transit vans for a couple thousand dollars, spend $10k to convert them and equip them, and then hire drivers (for 25% of revenue) to go sell the ice cream (high quality version). They make about $300-400/day/truck in the slow season (winter). That's $9,000-12,000 per month revenue if they run every day. they have 14 trucks currently with more under renovation right now. They found a way to make great money from something no one else would think could make good money. It's the passion, passion drives learning, creativity, and effort. That's where your golden goose is. So, What are you obsessed with?

1 Reply

Cody L.

Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes

2y

What *I'D* do with $5m cash? More of what I'm doing.

Likley find a good multifamily in Houston. Class C building in a B or better location. I'd aim for something with recent distress due to interest rates. Try to target about $50k/door for some ~$800/month rents.

Buy two different ~80 unit buildings, with about 50% LTV from a freddie loan (to get ~6.5% rates). That's 160 units. With a good 3rd party management company you're doing pretty well with the $4m invested.

Then I'd toss the other $1.3m into short term (~5.5%) treasuries to make an extra $70k/year of interest income.

In a few years, after the market has gone back up and I've added some value, I'd refi the two buildings with a local bank.  With higher LTV (~75%) and a stronger basis, you should get all $4m you invested back.

Then I'd do the same thing again. Take those 160 units and rince/wash/repeate

PS, this isn't something that "Well if I were you I'd..."  This is something I'm doing.

So there ya go.  That's your plan.

10 Reply

Malgorzata SadowskaPro Member

Real Estate Agent · Miami, FL · Member since 2017 · 506 posts · 205 votes

2y

brilliant! congrats on your success - would love to know what kind of business.

Before you dive into RE, my suggestion would be to learn not WHAT but HOW you'd buy - if you haven't already, you should immediately focus on asset protection.

1 Reply

Peter W.

Member since 2020 · 351 posts · 329 votes

2y

Buy one either where you live or frequently visit at 20-25% down and wait a year or two and see if the headaches are worth it before figuring out your next steps. Congratulations on you success so far.

0 Reply

V.G JasonPro Member

Investor · Member since 2022 · 3k+ posts · 3k+ votes

2y

Good job on your success, but this can be blown really quickly. I'd be very careful about advertising your position publicly, and would do more reading and less asking right now if REI is your end game. Figure out what interests you and then pursue that with the capital.

I've seen countless mid to late 20 year olds blow a really good bonus or a good windfall, there was just another thread the other month about this. Understand delayed gratification and understand not letting people know. Operate strictly business-oriented and don't forget what got you here, and make sure you continue it.

If REI ends up being your pursuit, I'd do something similar that @Cody L mentioned and that I mentioned in the NFL player thread but more SFH oriented. 60% towards 20-40% LTV properties that are undervalued(less than median price) in a growing city(by characteristics, trends, industries). Prefer 3-4 cities and just go deeper, not wider. 30% into debt notes(sub 5 year tenure), 10% in to rolling 4-8 week tbills. Re assess every year and how to move properly to continue to make money and keep yourself lined up with good hard assets.

3 Reply

Noah Laker

Real Estate Broker · Sacramento, CA · Member since 2021 · 517 posts · 408 votes

2y

I am a broker and lender in CA and manage over 100 STR properties, as well as some LTR. I also started a business (at 19) and made some money young, not $5m, but now I own 7 doors and looking at a potential 8th.

STR is still a great strategy depending on the region. If I were you I might park some of the money in all-cash deals, keep some around to leverage, and potentially leverage the cash buys in the next few years if and when rates come down.

Focus on A-class appreciable areas and enjoy the tax benefits.

2 Reply

Matthew Irish-JonesBusiness Member

Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes

2y

@Alton Pettit 5.3 million and going to a forum for advice?

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Carlos Ptriawan

Member since 2019 · 7k+ posts · 4k+ votes

2y

Quote from @Jay Hinrichs:

talk to a small wealth manager BP is not really the place for this.. most folks here are SFR small multi owners and STR.. why in the world would you want to personally involve yourself in managing property ?

Other thing to do is be the bank.. far more passive . no tax bene's thats why you need a wealth manager .

with a business that made you that kind of after tax cash.. not sure why you want real estate at the street level.

LOL 44x ....

We're small fish here yes....

with those 5 mil need to think big and safe lol, I am sure some of our friend would recomment you to buy in ohio or indiana :-)

1 Reply

Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

2y

@Alton Pettit

I know a guy who knows a guy…..

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Bud Gaffney

Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes

2y

@Alton Pettit if you have 5.3 million cash with no debt live off the interest and enjoy your life.

5 Reply

Bud Gaffney

Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes

2y

@Alton Pettit sounds fishy….

1 Reply

$5.3M to use but 0 experience. Advice...?

$5.3M to use but 0 experience. Advice...?

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