Investor · Fargo, ND · Member since 2014 · 67 posts · 7 votes
A 40-year old family member of mine is set to receive $1 million in after-tax proceeds from the sale of a business.
Assuming they have additional passive income (eg. don't need the money to live on), how would you invest the $1 million?
I would look to find a couple markets that offer attractive risk-adjusted returns and buy a portfolio of SFR's in 2-3 different markets. Buy properties using all cash in an attempt to slightly enhance returns (negotiate lower purchases prices). I'd then look to refi into a conservative amount of leverage and pursue additional attractive deals.
8-12% cap rates would be my target. Is this too low?
How would you put this money to work? I'm just curious to get other opinions.
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
11y
Whenever you ask "what should I invest in?" you'll get a bunch of answers.
If someone is skilled in X, they will refer you to X. If someone is skilled in Y, they will say there is nothing like investing in Y, it's the best thing around. Then you'll have people telling you no, X and Y aren't where it is, you have to invest in Z, that's where the money is.
There are tons of ways to invest in various aspects of the real estate market just as there are tons of ways to invest in non-real estate.
Brooksville, FL · Member since 2012 · 429 posts · 220 votes
11y
Depends on the person's skill level. If they were investment dummies I'd just put it with multiple hard money lenders and collect the interest. Maybe mix in some crowd funding options etc.
Investor · Atlanta, GA · Member since 2013 · 922 posts · 336 votes
11y
Its funny you ask this question, I was just talking about this to my aunt last nite. The most powerful return that I have seen when it comes to investing is Mobile Home Investing.
The cash on cash return is insane. Not only that, you can create deals where you will literally have investors fall in line and taking back notes for cash flow. Its an incredible business if you understand and know what you are doing. The downfall of this is appreciation? But yet and still, the returns are insane.
Other avenues would be buying units or single family houses that give a nice cash on cash return.
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
11y
Whenever you ask "what should I invest in?" you'll get a bunch of answers.
If someone is skilled in X, they will refer you to X. If someone is skilled in Y, they will say there is nothing like investing in Y, it's the best thing around. Then you'll have people telling you no, X and Y aren't where it is, you have to invest in Z, that's where the money is.
There are tons of ways to invest in various aspects of the real estate market just as there are tons of ways to invest in non-real estate.
Whenever you ask "what should I invest in?" you'll get a bunch of answers.
If someone is skilled in X, they will refer you to X. If someone is skilled in Y, they will say there is nothing like investing in Y, it's the best thing around. Then you'll have people telling you no, X and Y aren't where it is, you have to invest in Z, that's where the money is.
There are tons of ways to invest in various aspects of the real estate market just as there are tons of ways to invest in non-real estate.
Brilliant. I get asked this question all the time. My answer always starts out with, "it depends", which is usually regarded as a wishy washy answer. It isn't. It depends, on the investor's comfort level, desired rate of returns, knowledge base, need for liquidity, etc...
A 40-year old family member of mine is set to receive $1 million in after-tax proceeds from the sale of a business.
Assuming they have additional passive income (eg. don't need the money to live on), how would you invest the $1 million?
I would look to find a couple markets that offer attractive risk-adjusted returns and buy a portfolio of SFR's in 2-3 different markets. Buy properties using all cash in an attempt to slightly enhance returns (negotiate lower purchases prices). I'd then look to refi into a conservative amount of leverage and pursue additional attractive deals.
8-12% cap rates would be my target. Is this too low?
How would you put this money to work? I'm just curious to get other opinions.
Nick, I would follow where the smart money is putting their money. I know a city that several hedge funds are vying for. In a few years, over half of the rentals in that market will be owned by a few hedge funds.
PM me to know which city it is.
You will be surprised. It's not in the fastest growing city list. It's not in the coasts. I discovered it just a few days ago. I am moving my investment capital there.
By the way, is that WARREN in your avatar together with you? Cool!