Beginner with Large Capital Access ($10M)

Charlotte, North Carolina
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Beginner with Large Capital Access ($10M)

Scott Eadie
Member since 2024 · 5 posts · 4 votes

Good Morning,

I  have reached out to a wonderful investors real estate agent and have read the book " The Millionaire Real Estate Investor " which has given me a good introduction including Mindset, Charts, an Understanding of Generalized Topics and so much more. However, this book talks about getting a margin of $20,000 to $30,000 off a property off rip and from what my understanding is, the current housing market wont allow for that I will lose that deal most times. Furthermore, I don't know in what direction I should go for decent liquidity as well as profit margin. For instance, an apartment complex would provide good cashflow however, it would be quite difficult to sell in a timely manner if I needed the money. Single family would be easy to sell providing its kept in good living condition but isn't nearly as lucrative as an apartment complex. Then I begin to think multifamily homes and I am unsure of  how well they sell either. Do they sell decently well enough to where if I needed the money for healthcare reasons it wouldn't be a long time of me trying to sell it? Let me know what category you think that I should take a look at! I thank you for your time!

Thanks

-Scott Eadie

2Reply
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Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
2y

Scott, 

A couple of things here: 

1) If this is true, and you will be getting $10M, then you should be cautious - alerting people to an amount of money this large can be dangerous, and you will get advice looking to separate that money from you from very hungry people, who will come off as very polished, but who can really do damage to your wealth.

2) If you are coming into $10M all at once, then depending on the source, you will pay taxes on this. If ordinary income, in NC that will be a tax rate of about 43% between federal and state taxes. About 25% if capital gains. So, your after tax proceeds will be $5.5M to $7.5M. 

3) You must form a hypothesis about what good looks like for this portfolio, on your own. You should absolutely get advice from many directions, but at the end of the day, you need to make the decision. Many financial planners and wealth advisors are going to be super hungry to get you to hand over $5M in investments to them to manage. They have a powerful incentive - $50-$100K per year in fees on a 1-2% AUM fee is enough to make them really pressure you into making a decision immediately in working with them. 

Definitely choose "Fee-only" financial advisors (who have NO AUM incentive!!!) as part of this process. Even if they charge you a few hundred or $1-$2K for a initial financial plan. 

4) On a $5.5M portfolio, something like this would be very appealing to me personally, as a thought starter: 

- $1.25M home, car, and "toys", paid off

- 250K in cash

- $2M in stocks

- $2M in paid off or lightly levered real estate

This is just me, and I'd personally view the name of the game as wealth preservation and maximizing enjoyment of life with this level of wealth, all liquid, all at once. Portfolio should spit out $160K in tax advantaged cash flow per year, easily, and with a paid off home, that will go very far. Presuming RE is important to you, because you are on BP, but know that you will need to devote some serious time to learning the ropes. 

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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    @Scott Eadie

    welcome.

    i'm not sure what your question(s) are.

    can you start with a house hack?  that's the best way to get started.

    https://www.biggerpockets.com/real-estate-investing/house-ha...

    i'd spend 6-12 months saving and looking for a house hack.  then buy a house hack.  then go from there.

    hope that helps

    0Reply
  • Scott Eadie
    OP
    Member since 2024 · 5 posts · 4 votes
    2y
    Quote from @Nicholas L.:

    @Scott Eadie

    welcome.

    i'm not sure what your question(s) are.

    can you start with a house hack?  that's the best way to get started.

    https://www.biggerpockets.com/real-estate-investing/house-ha...

    i'd spend 6-12 months saving and looking for a house hack.  then buy a house hack.  then go from there.

    hope that helps


    Thats the thing, I am going to be getting a check for ~$10M and I need to invest it I just gotta figure out where to put it and how to deal correctly.

    0Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    @Scott Eadie

    understood - that's way above my pay grade since I don't know you or anything about your background or financial situation.

    i still recommend a house hack whether you have $10 or $10M.

    0Reply
  • River SavaPro Member
    Lender · USA · Member since 2022 · 1k+ posts · 1k+ votes
    2y

    Hi Scott, 

    Welcome to BP. Are you are you interested in rehabs or something more turnkey? A house hack is a great place to start, especially if you are looking to get into BRRRRs and/or flips. However, since you will be aquiring a substancial about of cash, you could look for something turnkey/light cosmetic work. Also,I'd recomend starting with a single family or small multi-family before jumping into an apartment complex. 

    [email protected]
    2Reply
  • Scott Eadie
    OP
    Member since 2024 · 5 posts · 4 votes
    2y
    Quote from @River Sava:

    Hi Scott, 

    Welcome to BP. Are you are you interested in rehabs or something more turnkey? A house hack is a great place to start, especially if you are looking to get into BRRRRs and/or flips. However, since you will be aquiring a substancial about of cash, you could look for something turnkey/light cosmetic work. Also,I'd recomend starting with a single family or small multi-family before jumping into an apartment complex. 


     Definitely looking for more turn key because the nature of the money is due to medical reasons. So I cant be swinging a sledgehammer to do demo for reno its all going to be outsourced and have to be worked into part of my margins. Slight cosmetic or even larger cosmetic issues like cabinets and stuff I have no problem negotiating the price down and holding it to complete a remodel to then turn and rent it out or even if I find something undervalued picking that up and rehabbing it and reselling it. again I am WAY new I just finished the book and I am sure my agent will  help me she's wonderful! But I don't wanna be a child she's having to explain every slight detail I want to be able to have an educated discussion with her regarding my investments and business because with that much property I am assuming I am going to have to incorporate maybe even hire somebody. I really am trying to wrap my head around the scaling of things because the book assumes your still in the saving stage.... I am fortunate and don't have to start there but am just unsure of what to do. Definitely will look into more single family homes and such. How much property am I looking at with a $10M investment? 20 properties? 50? 100? 200? because I see the initial investments are relatively small. so I would assume with that kind of capital I can buy a lot? 

    0Reply
  • Maureen McCann
    Investor · San Diego, CA · Member since 2024 · 77 posts · 54 votes
    2y

    Hi Scott,

    Congratulations on finding Bigger Pockets and for beginning your real estate journey! You are positioned very nicely to build a substantial real estate portfolio for long-term wealth generation and monthly cash flow.  I just worked with an investor who had $5M in cash (he sold his tree-cutting business) and I was able to get him into 11 properties in AL and FL.  All 11 were new construction with 8 being SFRs, 1 duplex, and 2 quads that produce an annual income of around $250K a year after all expenses.  With the starting capital you have you can essentially double this. 

    I am happy to show you the spreadsheet I worked on with him so that you can see the ROI, and cash flow just to see what is possible. This may be a nice springboard for you to contemplate how to deploy your capital into a nice annual revenue stream. Feel free to DM me if you would like to check it out.

    I understand it can be overwhelming just starting out and then trying to deploy such a large sum of capital. Hiring a Financial Advisor along with a CPA who are both real estate investors is another suggestion I have for you. I can assist you with those needs too, should you need them. 

    Cheers to Your New RE Journey!

    1Reply
  • Jake AndronicoBusiness Member
    Realtor · Reno, NV · Member since 2019 · 1k+ posts · 938 votes
    2y

    @Scott Eadie

    Welcome to BP! 

    If you're truly getting a check soon for $10M, congratulations!! 

    In my mind with that capital you'd be in a completely different ballpark of investors. Large investors tend to take much smaller risks with larger amounts of capital. 

    At an extremely reasonable 5% return you'd be earning $500K per year. 

    $5mil in RE and $5mil in REIT's/stocks gives you great diversification, liquidity, and cash flow in my opinion. Of course, you have to make the decision for you and your family, and only you will know what's truly best.

    I agree that SF homes are always more liquid than apartment complexes but tend not to cash flow as well. 

    We've built a model for Northern Nevada that analyzes ever single family and multifamily property on the market and ranks them by cap rate. 

    We're looking to eventually expand this analysis into other markets. 

    I'm curious what you end up doing and congratulations again! 

    415-233-1796
    1Reply
  • Scott Eadie
    OP
    Member since 2024 · 5 posts · 4 votes
    2y
    Quote from @Jake Andronico:

    @Scott Eadie

    Welcome to BP! 

    If you're truly getting a check soon for $10M, congratulations!! 

    In my mind with that capital you'd be in a completely different ballpark of investors. Large investors tend to take much smaller risks with larger amounts of capital. 

    At an extremely reasonable 5% return you'd be earning $500K per year. 

    $5mil in RE and $5mil in REIT's/stocks gives you great diversification, liquidity, and cash flow in my opinion. Of course, you have to make the decision for you and your family, and only you will know what's truly best.

    I agree that SF homes are always more liquid than apartment complexes but tend not to cash flow as well. 

    We've built a model for Northern Nevada that analyzes ever single family and multifamily property on the market and ranks them by cap rate. 

    We're looking to eventually expand this analysis into other markets. 

    I'm curious what you end up doing and congratulations again! 


     Thank you! The sum is medical in nature and the reason I would like it to be relatively liquid is if I have any medical needs stemming from said issue. But seeing that yearly income, I really dont think I would need to. its kind of mind numbing to imagine those kinds of funds coming from working for $19.50 an  hour.... I think once I get the money I am gonna meet with a bunch of people and take a minute 

    2Reply
  • Jake AndronicoBusiness Member
    Realtor · Reno, NV · Member since 2019 · 1k+ posts · 938 votes
    2y
    Quote from @Scott Eadie:
    Quote from @Jake Andronico:

    @Scott Eadie

    Welcome to BP! 

    If you're truly getting a check soon for $10M, congratulations!! 

    In my mind with that capital you'd be in a completely different ballpark of investors. Large investors tend to take much smaller risks with larger amounts of capital. 

    At an extremely reasonable 5% return you'd be earning $500K per year. 

    $5mil in RE and $5mil in REIT's/stocks gives you great diversification, liquidity, and cash flow in my opinion. Of course, you have to make the decision for you and your family, and only you will know what's truly best.

    I agree that SF homes are always more liquid than apartment complexes but tend not to cash flow as well. 

    We've built a model for Northern Nevada that analyzes ever single family and multifamily property on the market and ranks them by cap rate. 

    We're looking to eventually expand this analysis into other markets. 

    I'm curious what you end up doing and congratulations again! 


     Thank you! The sum is medical in nature and the reason I would like it to be relatively liquid is if I have any medical needs stemming from said issue. But seeing that yearly income, I really dont think I would need to. its kind of mind numbing to imagine those kinds of funds coming from working for $19.50 an  hour.... I think once I get the money I am gonna meet with a bunch of people and take a minute 

    Yes, getting your ducks in a row makes a ton of sense. There will be people coming out of the woodwork from every direction if/when they find out. If you're able to keep it relatively private, I'd highly recommend it. 
    415-233-1796
    0Reply
  • Colin Faux
    Lender · Austin, TX · Member since 2024 · 6 posts · 2 votes
    2y
    Quote from @Scott Eadie:

    Good Morning,

    I  have reached out to a wonderful investors real estate agent and have read the book " The Millionaire Real Estate Investor " which has given me a good introduction including Mindset, Charts, an Understanding of Generalized Topics and so much more. However, this book talks about getting a margin of $20,000 to $30,000 off a property off rip and from what my understanding is, the current housing market wont allow for that I will lose that deal most times. Furthermore, I don't know in what direction I should go for decent liquidity as well as profit margin. For instance, an apartment complex would provide good cashflow however, it would be quite difficult to sell in a timely manner if I needed the money. Single family would be easy to sell providing its kept in good living condition but isn't nearly as lucrative as an apartment complex. Then I begin to think multifamily homes and I am unsure of  how well they sell either. Do they sell decently well enough to where if I needed the money for healthcare reasons it wouldn't be a long time of me trying to sell it? Let me know what category you think that I should take a look at! I thank you for your time!

    Thanks

    -Scott Eadie


     Hi Scott, congratulations on the influx of cash. I'm hoping for the best for you as you maneuver the healthcare. I sent you a connection request, I have some experience in both lending (traditional and private) and investing (self and professionally employed). I think we can find some common ground to add value. I gave my advise in the connection request!

    0Reply
  • John Mason
    Member since 2024 · 1k+ posts · 351 votes
    2y

    I would have done a JV with a partner who is experienced and you would bring the cash and he the experience and the connections to get my feet wet

    0Reply
  • Scott TrenchPro Member
    Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
    2y

    Scott, 

    A couple of things here: 

    1) If this is true, and you will be getting $10M, then you should be cautious - alerting people to an amount of money this large can be dangerous, and you will get advice looking to separate that money from you from very hungry people, who will come off as very polished, but who can really do damage to your wealth.

    2) If you are coming into $10M all at once, then depending on the source, you will pay taxes on this. If ordinary income, in NC that will be a tax rate of about 43% between federal and state taxes. About 25% if capital gains. So, your after tax proceeds will be $5.5M to $7.5M. 

    3) You must form a hypothesis about what good looks like for this portfolio, on your own. You should absolutely get advice from many directions, but at the end of the day, you need to make the decision. Many financial planners and wealth advisors are going to be super hungry to get you to hand over $5M in investments to them to manage. They have a powerful incentive - $50-$100K per year in fees on a 1-2% AUM fee is enough to make them really pressure you into making a decision immediately in working with them. 

    Definitely choose "Fee-only" financial advisors (who have NO AUM incentive!!!) as part of this process. Even if they charge you a few hundred or $1-$2K for a initial financial plan. 

    4) On a $5.5M portfolio, something like this would be very appealing to me personally, as a thought starter: 

    - $1.25M home, car, and "toys", paid off

    - 250K in cash

    - $2M in stocks

    - $2M in paid off or lightly levered real estate

    This is just me, and I'd personally view the name of the game as wealth preservation and maximizing enjoyment of life with this level of wealth, all liquid, all at once. Portfolio should spit out $160K in tax advantaged cash flow per year, easily, and with a paid off home, that will go very far. Presuming RE is important to you, because you are on BP, but know that you will need to devote some serious time to learning the ropes. 

    Podcast Guest on Show #223
    BiggerPockets
    11Reply
  • John Mason
    Member since 2024 · 1k+ posts · 351 votes
    2y

    First  of all if you already have 10 million what is the motivation  behind RE investing?

    Generational wealth? I would start with maybe 300k and buy a house for LTR in a nice location, Get a reputed PM who can rent out, attend REI meetings and meet similar wealthy individuals and get the cue from them ..but that is just my thought

    0Reply
  • John Mason
    Member since 2024 · 1k+ posts · 351 votes
    2y

    Having that sort of liquid money will attract a lot of attention here:)  so maybe go slow but steady and meet in real life , do vetting etc of your PM .. you know what I mean

    0Reply
  • John Mason
    Member since 2024 · 1k+ posts · 351 votes
    2y

    This is a good book to formulate stragey

    https://www.amazon.com/Building-Wealth-One-House-Time/dp/007...

    1Reply
  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    2y

    @Scott Eadie

    The Millionaire Real Estate Investor provides steps for successful real estate investing, emphasizing understanding market conditions, local knowledge, and liquidity. It suggests strategies like House Hacking, BRRRR Strategy, Short-Term Rentals, Turnkey Rentals, and Real Estate Investment Trusts. The right investment strategy depends on specific goals, risk tolerance, and local market conditions. Working with a real estate agent and continuing education is highly advised.

    Good luck!

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  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    2y
    Quote from @Scott Eadie:

    Good Morning,

    I  have reached out to a wonderful investors real estate agent and have read the book " The Millionaire Real Estate Investor " which has given me a good introduction including Mindset, Charts, an Understanding of Generalized Topics and so much more. However, this book talks about getting a margin of $20,000 to $30,000 off a property off rip and from what my understanding is, the current housing market wont allow for that I will lose that deal most times. Furthermore, I don't know in what direction I should go for decent liquidity as well as profit margin. For instance, an apartment complex would provide good cashflow however, it would be quite difficult to sell in a timely manner if I needed the money. Single family would be easy to sell providing its kept in good living condition but isn't nearly as lucrative as an apartment complex. Then I begin to think multifamily homes and I am unsure of  how well they sell either. Do they sell decently well enough to where if I needed the money for healthcare reasons it wouldn't be a long time of me trying to sell it? Let me know what category you think that I should take a look at! I thank you for your time!

    Thanks

    -Scott Eadie

     If you've got $10 million why do you need/want to start flipping houses>?

    2Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y

    @James Wise

    Exactly

    Still it in a bank account and collect $500k a year….

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  • Aubrey Kelly
    Member since 2024 · 4 posts · 1 vote
    2y

    Do you want to invest in the area close around you or are you looking for other areas and different markets? In my area I know that multi family (4 units and under) tend to sell pretty quick when not over priced. Perhaps those type of multi family would give you more bang for your buck and still be relatively easy to sell should your need arise. Depending on your area of course.

    0Reply
  • Account Closed
    Rental Property Investor · New Braunfels, TX · Member since 2022 · 408 posts · 408 votes
    2y
     @Scott Eadie
    I recommend that you delete your account immediately and don’t make any connections on a public forum after telling everyone you are soon coming into a $10 million payday. There are a lot of good people on this forum, but there are also a lot of people that just want your money….

    Sometimes it is hard to differentiate the two. 

    3Reply
  • Alecia LovelessPro Member
    Member since 2019 · 3k+ posts · 2k+ votes
    2y

    @Scott Eadie In thinking about your portfolio is try to spend some time initially getting good at analyzing deals. Biggerpockets has their rental calculator which is the main one I use to this day. By becoming a Biggerpockets Pro member which is around $400/year you can use the calculator an unlimited number of times.

    I’d practice analyzing both single family houses as well as smaller multi family deals from 2-10 or so units.

    I’ve personally got one single family house that I initially paid cash to purchase and in that form it cash flowed about $900/month after saving for the taxes and expenses. I’ve since refinanced this and now it cash flows about $250/month.

    I’ve got some 3-4 unit buildings that I put 20% down payment on and they cash flow about $250/unit/month.

    This is an average cash flow using leverage. $200-$250/unit/month. Obviously paid off properties should generate more cash flow.

    With a large amount of cash to work with I’d consider buying some properties and putting about 50% down so you’d still maximize tax benefits and not have too much equity starting out from a liability standpoint in case someone sues you for something.

    Obviously I'd suggest putting security measures in place like buying under an LLC. And having an umbrella insurance policy to help with the liability.

    I’d also recommend starting slowly with a smaller property and increasing to additional units or buildings after you get some experience.

    0Reply
  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    2y

    You have access to capital(as in from a lender or is someone providing you equity expecting a return?) or is that your actual money?

    If your net worth is $10,000,000+ congrats.
    Don't do anything super risky, you can live a comfortable life making 5%-8% which is $500,000 - $800,000 annually

    [email protected]917-280-8544
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  • Robert C.
    Investor · San Francisco, CA · Member since 2016 · 338 posts · 444 votes
    2y

    @Scott Eadie, I’ve been where you are deploying a large amount of starting capital. There are no books written for people in your situation, and most people on this forum can’t relate. The door you’ve opened here is too big to even get the right advice. The only few tidbits I would say based on having a lump sum:

    1.) Take your time deploying the full amount. Timing wise there are plenty of low risk places to park the money that will earn you 4%-5% yield with liquidity while you strategize. Start there then move portions of your money to where you feel you’d like to take on more risk. Some amount can also probably be put in an index fund and just leave it. 

    2.) If you are interested in real estate, start how everyone else starts, with something small and learn the ropes. The one advantage you have is using all cash offers to win deals and get the best price. You can refi afterwards if you want to. 


    Just to answer your questions about liquidity, real estate is not liquid and you never want to have to fire sale your properties. So if you have need for a liquid emergency fund for your health, I don’t think you should play with that portion by buying properties. 

    4Reply
  • Malone Kiliona
    Member since 2024 · 1 post · 0 votes
    2y

    Become a private money lender/investor for multi-family & commercial with good people

    0Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    2y
    Quote from @Scott Eadie:

    Good Morning,

    I  have reached out to a wonderful investors real estate agent and have read the book " The Millionaire Real Estate Investor " which has given me a good introduction including Mindset, Charts, an Understanding of Generalized Topics and so much more. However, this book talks about getting a margin of $20,000 to $30,000 off a property off rip and from what my understanding is, the current housing market wont allow for that I will lose that deal most times. Furthermore, I don't know in what direction I should go for decent liquidity as well as profit margin. For instance, an apartment complex would provide good cashflow however, it would be quite difficult to sell in a timely manner if I needed the money. Single family would be easy to sell providing its kept in good living condition but isn't nearly as lucrative as an apartment complex. Then I begin to think multifamily homes and I am unsure of  how well they sell either. Do they sell decently well enough to where if I needed the money for healthcare reasons it wouldn't be a long time of me trying to sell it? Let me know what category you think that I should take a look at! I thank you for your time!

    Thanks

    -Scott Eadie

     Scott everything you wrote is 100% incorrect. Can't make 20k on a flip and you will lose most of the time, you're kidding, right? Difficult to sell an apartment complex, again you're kidding.  Of course you can.  You are all over the place. Focus on what you want to do. Wait you have 10 mill HMM, if so, why are you even here? IMO this reads like a FB post. Why would someone with 10 mill even bother with anything just put 8 mill in the bank and earn about 400k, the other 2 mill buy your toys. IF this is even real .

    0Reply
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