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

Bud Gaffney

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

2y

@Alton Pettit no reason to invest in real estate if you have that cash and 0 debt. Talk to a financial advisor.

0 Reply

Christie Gahan

Investor · Hillsboro, OR · Member since 2016 · 304 posts · 153 votes

2y

Stop talking about your net worth.

The Con Artists will flock to you.

The people who actually know what they are doing won't believe you.

Take a class at a local Jr College on Personal Finance / Investing. Learn about investing in stocks, bonds and real estate. Know how to compare them to each other. Understand Beta. Learn from some one who has nothing to sell to you. Then, dollar cost average in to different types of investments. Make your mistakes with small amounts.

$250k is about 5% of your net worth. I would set the goal to invest $250k in the first year. Do the same in year 2. You will be so much better off at the beginning of year 3! Move the bulk of the money in to US govt guaranteed funds. Buy a huge umbrella policy.

Good Luck

2 Reply

Kristen Petrosky

Lender · Chicago, IL · Member since 2023 · 22 posts · 13 votes

2y

The wealthiest people in the world do not pay cash for real estate. Use other people's money as your leverage, no matter how much money you have. To be honest, 5.3M isn't that much and could be gone in a year if you aren't wise with it. Reach out if you'd like to talk further!

1 Reply

Carlos Ptriawan

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

2y

you could have zero income and collect 6 figures a year and still live in hawaii, it's just located in different zip code for different people, still on the sam island, some area can be cheaper than ohio still LOL ; hawaii is not equivalant to expensive but yes it's best place to live until 115, lot of folks said they live longer there becoz they have much less stress lol

2 Reply

Carlos Ptriawan

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

2y

Quote from @Bud Gaffney:

@Alton Pettit no reason to invest in real estate if you have that cash and 0 debt. Talk to a financial advisor.

one thing that's very funny in this thread is why in the world someone that has multiple successful biz with 5 mil .... is considering to have multifamily to become another rent collector. Something doesn't seems right, the O/P should have more aggressive target lol

4 Reply

Craig Janet

Member since 2019 · 223 posts · 261 votes

2y

This can't be real. You have 5 million and your posting on a internet chat board to invest. Put your money in the bank and live off the $300K a year or just keep doing what your doing and make another 5 mil. Do you really want to deal with tenants and leaking toilets.

3 Reply

Dennis Ojil

Member since 2020 · 1 post · 1 vote

2y

Great success you got there.

Figure out a way Get into Private Lending a lot of RE investors here would appreciate it.

1 Reply

Clarase Mika

Real Estate Coach · Rhein-Nahe Region Germany & Worldwide · Member since 2023 · 23 posts · 14 votes

2y

Hey Orlando Investor,

First off, kudos on your financial success and the ambition to dive into real estate! You have enough to think about linking up with a family office or buy commercial property. Have you considered investing in Europe with a company like August. Here's some tailored advice:

1. Hawaii vs. Mainland

Hawaii can offer a unique lifestyle, but it's crucial to understand the local market intricacies. Consider the balance between appreciation and cash flow, especially in Honolulu with its high demand.

Miami has been a hot market, and Space Coast Florida may offer a mix of affordability and potential.

2. Short-Term vs. Long-Term Rentals

STRs can yield higher returns but involve more active management. In Hawaii, you might benefit from the tourism industry, but be aware of regulations.

- Long-term rentals offer stability. In Houston, the MTR approach aligns with steady cash flow.

3. Self-Storage Business

- The idea of self-storage branding and corporate scaling is intriguing. Research thoroughly, understand the market demand, and explore the feasibility of this venture.

4. Starting Small and Scaling:

- Begin with a manageable number of properties or units, considering your time constraints. Starting small allows you to learn the ropes without overwhelming yourself.

5. Local Expertise

While you have a strong understanding of CRE acquisitions, having local experts like an agent, insurance professional, and loan officer can be invaluable. They bring market-specific insights and help navigate local regulations.

6. Balance and Diversification

Balancing your portfolio with a mix of residential and potentially commercial properties provides a diversified approach.

Consider starting with a few STRs or multifamily units, gaining experience, and then exploring larger ventures.

7. Exponential Growth

Investing in growing markets and staying attuned to emerging trends, like the self-storage concept, aligns with the goal of long-term wealth multiplication.

Remember, a measured approach, thorough research, and leveraging local expertise will be key. It's a journey—learn, adapt, and keep your eye on those 2077 goals!

Best of luck on your exciting venture,

Clarase Mika 🏠💼

2 Reply

Tim Hall

Flipper/Rehabber · Tallahassee, FL · Member since 2014 · 462 posts · 237 votes

2y

@Alton Pettit if I had 5.3m hmmm even if I parked it in a savings account at 5% interest rate I’d have a return of $265,000 and that is totally passive.

I could then become the bank for other savvy more experienced investors that would get you 10-12 percent and that is also relatively passive. You’ve just got to make the connections. You could become part of a syndicate and that also is passive and can see returns at 8-10% These are my options if i want to be truly passive.

If you want a job then you can buy a str, at the moment it’s pretty hit and miss but you’d be busy.

You could buy 1 big multi family and that would give you lots to do too until you systematized it.

You could buy lots of different houses that would give you lots to do too.

You could leverage the money partner up with an experienced re investor and go balls deep. Whoa what a ride.

Depends what you want out of life.

2 Reply

Michael SmytheBusiness Member

Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes

2y

Go multifamily

Logical Property Management4.9454 Reviews

Website View Page

1 Reply

Faustino Castu

Member since 2023 · 5 posts · 3 votes

2y

If I were you, I'd invest in a great Multi-Family A+ property and use the money as the downpayment. There are good opportunities coming to the market in my opinion in the next 12-24 months

1 Reply

Edwin Epperson

Lender · Tampa, FL · Member since 2020 · 202 posts · 116 votes

2y

@Account Closed just a thought, have you considered allocating some of that capital aside to become a private lender? It's a fantastic way to generate cash flow, control assets without the liability or responsibility of owning the asset, and typically can be done so that you potentially have a 25-20% bump in equity if the deal goes South and you have to take the property back. Happy to discuss how you can start a PL company if you find that idea interesting

1 Reply

Senate Eskridge

Investor · Twin Falls, ID · Member since 2015 · 200 posts · 117 votes

2y

@Account Closed If I were you I would keep doing your other business and invest passively in real estate. Now hear me out.

You are obviously very successful with your other business which is kicking off a good amount of capital. I am sure you can repeat that and even do it with less time and effort the second time by putting the right people and resources in place. Look into EOS if you haven't already.

Owning real estate is a business, it is not passive at all it takes time dedication and a lot of work. Also, while it is a great business it is not going to generate the kind of cash your "other' Business made in that amount of time. I am confident with the right mentors and partners you can be very good ar real estate, I have helped over a 100 people buy their first multifamily deal and they all had less money than you are talking about now.

If you find some good indicators to work with and invest with them you can still get great returns. I have several deals that are over 20% IRR and some development deals that are 30% IRR. Diversify by investing in multiple deals with a few syndicators you really trust and double your money every five years. while continuing to generate money with your other business to further compound your returns.

I would be happy to meet with you and go over this strategy in more detail as well as introduce you to some other indicators who can help you.

in the mean time here are a few book suggestions that will help you along this path.

Passive Investing Made Simple: How to Create Wealth and Passive Income Through Apartment Syndications
Book by Anthony Vicino

The Hands-Off Investor
An Insider's Guide to Investing in Passive Real Estate Syndications
By: Brian Burke

2 Reply

Carlos Ptriawan

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

2y

if you can lend me 3 mil with 3% rate I would borrow your money right now.

I will do my hyper-active flip multi property strategy in the Kona and I can safely make myself IRR 40% :-)

Maybe buying 7 mil house and sell it for 9 mil in 9 months, sounds good ? :-)

1 Reply

John FortesPro Member

Multi-Family Syndicator · Abington, MA · Member since 2017 · 603 posts · 347 votes

2y

Sure, I'll follow the bouncing ball here! Let's go!

Congrats on this accomplishment. Well deserved!

Outside of joining local RE meet up groups and going to conferences, investing in online education, and networking. The goal in being active is to shortcut the learning curve. Hiring a real estate coach might be an options. Others refer to them as mentors. I have an issue with that because a true mentor will mentor you if you're lucky to have their time. A coach is someone who you hire to help navigate similar to what a mentor will do but not everyone has access to a mentor in their life. That's just my personal difference between the two.

Here's 5 things I'm sharing for anyone in this situation. I understand that everyone may have different goals.

With your experience in CRE, here are a few options.

1. Talk to a wealth manager if you haven't already.

2. To gain experience in large commercial, identify an operator that does what you want to do, vet them thoroughly, then when comfortable potentially invest with the operator. Lots of options out there with this and you will definitely learn as an investor unless your interest changes.

3. Unless you really desired to purchase anything less than 5 units, then go ahead and do the 1 - 3 STR's but consider using one of those services that helps manage the asset as long as they keep the place booked. You can learn more about those agencies on this site.

4. Going back to the number one, consider allocating a specific amount for commercial syndications. What that number is, is up to you. That way the portion allocated is put to work as you gain experience by investing in these assets.

5. Lastly, consider partnering with a trusted and up and coming operator and KP (become the key principal) on an project. Leveraging your net worth for the debt on favorable terms. You'll learn the business as well by working alongside the operator.

Five options to work with. I'm sure there are plenty more that can be added to this conversation.

Good luck! Now back to the regular scheduled programing!

2 Reply

Luka Milicevic

Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes

2y

@Account Closed

Given your goals I would take RE off the table and invest in paper assets instead.

My opinion - there's no point in buying unleveraged RE.

Buying RE in cash is going to give you the same return right now that US treasuries will.

You can get an EASY 4.5% return today with zero work and very LOW risk. At 5m that's 220k/year which is more than plenty to live on and you won't touch your principal.

Cash RE is going to get you 4.5-7% return over the long term. Not worth it in my opinion given your goals.

3 Reply

Erik Stoddard

Member since 2023 · 5 posts · 4 votes

2y

I'd like to speak with you. I am an experienced small multifamily investor/operator. I bought 3 buildings, totaling 16 units in the Southeast in 2018. I have also gutted and remodeled one house 90% on my own so understand the construction/repair/remodel process (Not a contractor and not interested in doing that work myself). I have since sold (after improving) and moved to Honolulu (Waikiki). So might be an interesting opportunity to partner up as your boots on the ground. Ready to get involved again in real estate, Airbnb stuff is interesting to me.

1 Reply

Carlos Ptriawan

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

2y

Quote from @Bonnie Low:

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.

in reality, LP syndication is way way more active investment than passive. It's always way way more higher risk than actual direct investment.

1. in actual direct investment, all business decision is made by us
2. in syndications, we are buying the economy, so timing the market for succesful return/exit is important. It's more important to time in the market, where in residential we can made mistake, but since we have 30 years to fix errors, time would fix our mistake. In syndication both GP/LP is racing againts time to deliver return while many times, it is againts market direction. For us LL , we dont go fight the market. The market is always with us.
3. For LP that has hundred hundred of investment, every day they worry about their money, what happen to my money, they keep calling and emailing
the GP for the return of their money, everyday, they lose sleep LOL because when it's out, money only comes back when asset is being sold.

Also 80% of LP investment, we as residential investor could also achieve the same result. It ain't that difference. It's a myth outthere that accredited-investment program can outpace residential RE/ or index fund like S&P500.

0 Reply

Carlos Ptriawan

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

2y

it's mind boggling now how crazy it's in the private world of private investment right now, it's just because it's hidden outside public realm so it's not in newspaper yet, but at least some part of it it's in realdeal and some in insider scoop market statistic, you can't find believe what some of the fund operator do to investor ;-) absolutely crazy imo, it's just I can't tell. being poor and basic landlord is good enough for me lol

0 Reply

V.G JasonPro Member

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

2y

Quote from @Kristen Petrosky:

The wealthiest people in the world do not pay cash for real estate. Use other people's money as your leverage, no matter how much money you have. To be honest, 5.3M isn't that much and could be gone in a year if you aren't wise with it. Reach out if you'd like to talk further!

That's completely wrong. The wealthiest people in the world pay cash for real estate. They don't give two ***** about ROI, CoC, and all the other nonsense BP people love. They're putting their cash in a hard asset, they are a big reason why you'll see an even greater divide come Q1 2025.

1 Reply

Kristen Petrosky

Lender · Chicago, IL · Member since 2023 · 22 posts · 13 votes

2y

Quote from @V.G Jason:

Quote from @Kristen Petrosky:

The wealthiest people in the world do not pay cash for real estate. Use other people's money as your leverage, no matter how much money you have. To be honest, 5.3M isn't that much and could be gone in a year if you aren't wise with it. Reach out if you'd like to talk further!

That's completely wrong. The wealthiest people in the world pay cash for real estate. They don't give two ***** about ROI, CoC, and all the other nonsense BP people love. They're putting their cash in a hard asset, they are a big reason why you'll see an even greater divide come Q1 2025.

I respectfully disagree- thank you for your input!

0 Reply

Account Closed

OP

Member since 2023 · 31 posts · 28 votes

2y

Quote from @Matthew Irish-Jones:

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

Free advice is free advice.

1 Reply

Account Closed

OP

Member since 2023 · 31 posts · 28 votes

2y

Quote from @Erik Stoddard:

I'd like to speak with you. I am an experienced small multifamily investor/operator. I bought 3 buildings, totaling 16 units in the Southeast in 2018. I have also gutted and remodeled one house 90% on my own so understand the construction/repair/remodel process (Not a contractor and not interested in doing that work myself). I have since sold (after improving) and moved to Honolulu (Waikiki). So might be an interesting opportunity to partner up as your boots on the ground. Ready to get involved again in real estate, Airbnb stuff is interesting to me.

Sounds like you've got some wisdom. Happy to chat, let's DM

0 Reply

Bob S.

Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ 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.

Spend about 2 mill on rentals with 10% or so net caps, put the rest in bank at 6% and go to the beach,

1 Reply

Account Closed

OP

Member since 2023 · 31 posts · 28 votes

2y

Quote from @Luka Milicevic:

@Account Closed

Given your goals I would take RE off the table and invest in paper assets instead.

My opinion - there's no point in buying unleveraged RE.

Buying RE in cash is going to give you the same return right now that US treasuries will.

You can get an EASY 4.5% return today with zero work and very LOW risk. At 5m that's 220k/year which is more than plenty to live on and you won't touch your principal.

Cash RE is going to get you 4.5-7% return over the long term. Not worth it in my opinion given your goals.

Good advice. Mainly drawn to real estate to potentially have somewhere new to live, like being in one unit of a complex I own for example, and tax sheltering my other income. Got any opinions on levered RE these days? Interests rates scare me, haha

0 Reply

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

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

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