Beginner with Large Capital Access ($10M)

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

2 Reply

101 views

Most Popular Reply

Scott TrenchPro Member

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

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

11 Reply

See this reply in the discussion

40 Replies

Jump to latestLatest

Sort by

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

really " he has 10 mill why would he live with anyone :)
0 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Nicholas L.:

@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.

If you or anyone in the world had 10 mill, you would live with others? Come on,

0 Reply
John Mason
Member since 2024 · 1k+ posts · 351 votes
2y
Quote from @Bob S.:

Quote from @Nicholas L.:

@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.

If you or anyone in the world had 10 mill, you would live with others? Come on,

Depends on the good looks I guess:)
0 Reply
Michael Higgins
Investor · Alpharetta, GA · Member since 2022 · 20 posts · 13 votes
2y
Although a few respondents mentioned it, the first thing you need is a goal and a plan to get there. So, find knowledgeable finanical advisor and CPA to setup and create a balanced investment portfolio. Although i do not know your background, but learn lessons from others who have come into large sums of money and quickly lost it (former professional athletes, lottery winners, etc.). This could generalational wealth or a nightmare.
0 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @John Mason:

Quote from @Bob S.:

Quote from @Nicholas L.:

@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.

If you or anyone in the world had 10 mill, you would live with others? Come on,

Depends on the good looks I guess:)

Lol, funny,
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Scott Trench:

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.

Scott that brings up an interesting question if this is all real.. sounds like this might be a medical malpractice case he won. I wonder if that is taxable or not.. ?? that would be the first question.
then after that buying rental props to me would be the last thing to do flipping even worse.. double tax free muni's 30 day T bills Other very conservative investments.. RE is work and risk.. Unless its something you have experience at and like it..
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
0 Reply
Kristen HaynesBusiness Member
Real Estate Broker · Greater Charlotte NC and Charleston, SC areas · Member since 2017 · 109 posts · 60 votes
2y
Absolutely, go for apartments if you can. Yes, they are more difficult to sell (the average homeowner won't be able to buy them, but other investors ARE constantly looking for apartment building offerings- especially the smaller, easier to manage ones, perhaps you reduce the rent for a handy tenant to be the 'maintenance guy', and a smaller complex he can handle in addition to his 'day job'... with multiple units, you get more rent money 'per door'- and if one or two is in transition (not rented), you have the others to make up the shortfall.
I could provide you with a list of properties nationwide, but I'll tell you that our area (Charlotte, NC) we have a huge lack of inventory (major housing shortage), with 135 people per day moving here- so that would be a great market to consider. Our appreciation rates are superb, and rents 'follow' the housing market. Feel free to reach out to me if you would like to see some potential ideas. :)
New Home Buyers Brokers / Realty Pros55 Reviews
Website View Page
0 Reply
Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
2y
Quote from @Jay Hinrichs:

Quote from @Scott Trench:

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.

Scott that brings up an interesting question if this is all real.. sounds like this might be a medical malpractice case he won. I wonder if that is taxable or not.. ?? that would be the first question.
then after that buying rental props to me would be the last thing to do flipping even worse.. double tax free muni's 30 day T bills Other very conservative investments.. RE is work and risk.. Unless its something you have experience at and like it..

I usually agree with you, Jay, but I disagree with you and Chris with respect to the “throw it all in t bills and relax” advice.

A lot can happen in 50 years and I assume OP plans to live another few decades.

Tax free munis and T bills (fully taxable) at federal level) come with a real risk of losing value relative to inflation long term. I couldn’t stand watching a portfolio of this size lose its relative value because it was 100% “safe”. Further - I think we have to ask if the t bill situation will endure. Rates could stay the same, but they could also rise (hurting equity value) or fall (forcing OP to reallocate).

If he plans to live another 50 years, he needs an inflation adjusted way to protect wealth.

Paid off rental portfolio, skillfully purchased and operated well, is a pretty good way to get an inflation adjusted income stream. And the cash flow may be better than the tax free muni’s (typically 3%) or the t-bills (taxed at 37%, knocks down after tax cash flow to like 3% yield).

No guarantees in life. But residential real estate is as good a way as any I know to have a fair shot at retaining the real value of a piece of this $10M portfolio and ensuring that the income stream is, more or less, allowed to flow with about the same amount of real cash flow for a generation or two.

Housing is 30-35% of CPI, so residential real estate is essentially by definition inflation adjusted. And, a 5% to 5.5% cap rate property will actually produce tax advantaged cash flow - OP may actually harvest close to that after taxes

If I were in OPs shoes, I'd want some REI and not be totally passive and "safe".

Podcast Guest on Show #223
1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Scott Trench:

Quote from @Jay Hinrichs:

Quote from @Scott Trench:

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.

Scott that brings up an interesting question if this is all real.. sounds like this might be a medical malpractice case he won. I wonder if that is taxable or not.. ?? that would be the first question.
then after that buying rental props to me would be the last thing to do flipping even worse.. double tax free muni's 30 day T bills Other very conservative investments.. RE is work and risk.. Unless its something you have experience at and like it..
I usually agree with you, Jay, but I disagree with you and Chris with respect to the “throw it all in t bills and relax” advice.

A lot can happen in 50 years and I assume OP plans to live another few decades.

Tax free munis and T bills (fully taxable) come with a real risk of losing value relative to inflation long term. I couldn’t stand watching a portfolio of this size lose its relative value because it was 100% “safe”. Further - I think we have to ask if the t bill situation will endure. Rates could stay the same, but they could also rise (hurting equity value) or fall (forcing OP to reallocate).

If he plans to live another 50 years, he needs an inflation adjusted way to protect wealth.

Paid off rental portfolio, skillfully purchased and operated well, is a pretty good way to get an inflation adjusted income stream. And the cash flow may be better than the tax free muni’s (typically 3%) or the t-bills (taxed at 37%, knocks down after tax cash flow to like 3% yield).

No guarantees in life. But residential real estate is as good a way as any I know to have a fair shot at retaining the real value of a piece of this $10M portfolio and ensuring that the income stream is, more or less, allowed to flow with about the same amount of real cash flow for a generation or two.

Housing is 30-35% of CPI, so residential real estate is essentially by definition inflation adjusted. And, a 5% to 5.5% cap rate property will actually produce tax advantaged cash flow - OP may actually harvest close to that after taxes

If I were in OPs shoes, I’d want some REI and not be totally passive and “safe”.

I guess I just harken back on one of my investor partners who sold his garbage company for about 75 million to waste management.. He already owned a bunch of prime RE Napa valley TAhoe etc and had zero debt before this event.. So he was a credit partner for me but put no cash in.. Just allowed me to obtain credit for a nice slice of the profits..

The funny part was whenever we were socializing and he would get into a conversation with a stock broker money manager type guys.. He would mention his double tax free muni's and of course the money guy would say .. thats terrible you could make so much more.. And he would just say depends on how many tax free muni's one has.. and he had Lots :) And the Money guy would kind of just be stopped in his/her tracks..

I guess really depends on your age also when you come into these windfalls.. I get what your saying if your 30 yo .. but I think its a different picture if your like me late 60s..
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
1 Reply
Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
2y
Quote from @Jay Hinrichs:

Quote from @Scott Trench:

Quote from @Jay Hinrichs:

Quote from @Scott Trench:

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.

Scott that brings up an interesting question if this is all real.. sounds like this might be a medical malpractice case he won. I wonder if that is taxable or not.. ?? that would be the first question.
then after that buying rental props to me would be the last thing to do flipping even worse.. double tax free muni's 30 day T bills Other very conservative investments.. RE is work and risk.. Unless its something you have experience at and like it..
I usually agree with you, Jay, but I disagree with you and Chris with respect to the “throw it all in t bills and relax” advice.

A lot can happen in 50 years and I assume OP plans to live another few decades.

Tax free munis and T bills (fully taxable) come with a real risk of losing value relative to inflation long term. I couldn’t stand watching a portfolio of this size lose its relative value because it was 100% “safe”. Further - I think we have to ask if the t bill situation will endure. Rates could stay the same, but they could also rise (hurting equity value) or fall (forcing OP to reallocate).

If he plans to live another 50 years, he needs an inflation adjusted way to protect wealth.

Paid off rental portfolio, skillfully purchased and operated well, is a pretty good way to get an inflation adjusted income stream. And the cash flow may be better than the tax free muni’s (typically 3%) or the t-bills (taxed at 37%, knocks down after tax cash flow to like 3% yield).

No guarantees in life. But residential real estate is as good a way as any I know to have a fair shot at retaining the real value of a piece of this $10M portfolio and ensuring that the income stream is, more or less, allowed to flow with about the same amount of real cash flow for a generation or two.

Housing is 30-35% of CPI, so residential real estate is essentially by definition inflation adjusted. And, a 5% to 5.5% cap rate property will actually produce tax advantaged cash flow - OP may actually harvest close to that after taxes

If I were in OPs shoes, I’d want some REI and not be totally passive and “safe”.

I guess I just harken back on one of my investor partners who sold his garbage company for about 75 million to waste management.. He already owned a bunch of prime RE Napa valley TAhoe etc and had zero debt before this event.. So he was a credit partner for me but put no cash in.. Just allowed me to obtain credit for a nice slice of the profits..

The funny part was whenever we were socializing and he would get into a conversation with a stock broker money manager type guys.. He would mention his double tax free muni's and of course the money guy would say .. thats terrible you could make so much more.. And he would just say depends on how many tax free muni's one has.. and he had Lots :) And the Money guy would kind of just be stopped in his/her tracks..

I guess really depends on your age also when you come into these windfalls.. I get what your saying if your 30 yo .. but I think its a different picture if you like me late 60s..

Completely agree with this. $75M at 60, tax free munis all day. $10M at 35-45, not quite that easy.
Podcast Guest on Show #223
1 Reply
Scott Eadie
OP
Member since 2024 · 5 posts · 4 votes
2y
Quote from @Jay Hinrichs:

Quote from @Scott Trench:

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.

Scott that brings up an interesting question if this is all real.. sounds like this might be a medical malpractice case he won. I wonder if that is taxable or not.. ?? that would be the first question.
then after that buying rental props to me would be the last thing to do flipping even worse.. double tax free muni's 30 day T bills Other very conservative investments.. RE is work and risk.. Unless its something you have experience at and like it..
Thats my conern the risk portion of it but I do have to invest the money otherwise my healthcare costs will eat it up and I dont want that. I am going to talk to a CPA and all kinds of people I just know that the housing market in this area houses are skyrocketing and here is a housing shortage which is driving everything up. I have a meeting with an investor real estate agent and she is gonna talk to me about that front and Ill see where I go from there.
0 Reply
Robert Walter
Member since 2024 · 10 posts · 7 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

Hello 👋 Scott Eadie…….
It’s great to have you here on BP…….
And to everyone whose shared there bits and for not judging nor undermining his abilities to survive the ocean waves of RE….
Good thing is everyone believes you can achieve it if you can dream it…
But do ask yourself, are you ready, are you willing to take up the journey?
You’ve mentioned that your medical needs is as crucial as snapping your fingers and getting capitals to sort it out. So ask yourself do you want to start from the scratch learn the fundamentals and basics with a 10-15% cap or would you rather go all in and don’t forget your medical needs in between your decision making. Am sure with the books you’ve read and the information you’ve received you’d already know RE isn’t for the faint heart.
So making the final decisions all comes down to you Scott.
Lastly with that said amount I’d say you put most into liquidity for your health reasons and start out with something you can be able to afford when your health needs best part of so you don’t start worrying much on what to do further causing you higher health risks because RE isn’t a get rich quick…..
That been said, the ball still in your court….!!!
And to me it favors you……….
0 Reply
Alan F.
Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ 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, get a good financial planner and CPA & do like Kristi said. Investing comes with risk, taking care of yourself comes 1st.
0 Reply
James Mc Ree
Rental Property Investor · Malvern, PA · Member since 2016 · 1k+ posts · 934 votes
2y
@Scott Eadie You came to a real estate group, so you are getting lots of real estate suggestions which is expected. That might not be what you need - yet.
You should first think about your goals and what it will take to achieve them. I see at least 2: living income and investment growth. The income may just be a number, but that gets more complex if you need to consider medical expenses, inflation, your own housing, car, life goals like travel, etc. Investment growth is tempered by your risk tolerance.
I don't recommend asking a bunch of strangers (us) what to do with $10M in real estate and then doing it. Instead, I recommend you engage a local financial advisor who will help you with your whole life situation. Financial advisors do this analysis for a living and will very likely recommend multiple types of investments to cover your liquidity and long term growth and income needs.
0 Reply
Peter W.
Member since 2020 · 351 posts · 329 votes
2y
One of the first things to consider is that whatever you are, this money is going to amplify. If you are into drugs and partying you are about to have a drug problem. If you are careless with money you are about to lose all your money. If you are generous to a fault, you are about to give all your money away. So the first thing you need to do is protect your money from yourself. Probably the best way to do that is to pretend you don’t have it for a year. Put it in treasuries bills, high yield savings accounts, municipal bonds, or cds for a year. Keep your job and develop discipline in saying no by saying no to everything. Before you were constrained to say no to everything because you didn’t have the money. Now you have the money but you still need to say no to almost everything because if you don’t that 10 million might be gone without you realizing where it went. There are a few things which might be worthwhile now—paying off your debt including primary residence if you own one. You also might need to set aside some fun money (saying 25k-50k) to do a few of the things you wanted to do if you became rich (whether that’s sex and drugs, vacation or being generous with others)
After a year you will need to decide your financial goals. Namely how much you need to fund the lifestyle you want. and then move into new investments very slowly. Part of learning to invest is making mistakes (this is true for stocks, bonds and real estate) so invest slowly. This has the added benefit of dollar cost averaging your investments over a couple of years so that market timing is less relevant.
I suspect at 5 million cash investing in long term municipality bonds at 3.5% yield (but tax free) which gives 175k/yr post tax is probably your best bet, but it depends on what lifestyle you want. US treasuries will yield something similar after paying taxes. Both are close to risk free. Given how much you have, I expect you should have a heavy dose on those to keep a lower bound on your yearly income. Michael blurry, made famous by the greatest short, personally only invested in us treasuries despite making huge amounts of money doing complicated trades and having a deep understanding of us equity markets.

my experience with windfalls is seeing cousins with large inheritances. I have only had minor ones my self.
1 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.