How to invest 1mil in real estate for a good monthly cash flow ?

9 Replies

well this being a rental real estate site  here is the answer you will get

1. come to my city its great

2. buy multi family

3. buy MHP 

4. buy commercial in the right area

5. pick quality syndicators with very deep experience let them do the heavy lifting

6. Reits 

7. start business around real estate value add for bigger returns quicker. 

Originally posted by @Jay Hinrichs :

well this being a rental real estate site  here is the answer you will get

1. come to my city its great

2. buy multi family

3. buy MHP 

4. buy commercial in the right area

5. pick quality syndicators with very deep experience let them do the heavy lifting

6. Reits 

7. start business around real estate value add for bigger returns quicker. 

Yup. OP will get suggested what works for others or what they are selling.

Invest in what got you the mil in the first place. "Good monthly cf" will depend if the mil is free and clear, borrowed, syndicated, partnered on, etc.   If starting with it being borrowed at 8%, don't. 

just do what you are good at and can control.  Thousands of 'I have $×, what should I do?' postings out there already.  Search.

Since we know the OPs location, what they like, what they are good at and how this mil plays into their overall financial picture, all answers will be superb I'm sure...

Assuming $1m cash and not $1m you have access to the biggest question I would have is if you plan to leverage. I would say most experts seem to think leveraging is better.  I prefer cash purchases as it's simpler and less risky.  If it were me I would not leverage aggressively myself but to each their own.  So maybe buy a $2m or $3m property in a place like Memphis, Birmingham, KC, Indy, etc....  Probably multi-family but maybe even some type of mixed-use property.  How aggressive your risk tolerance would dictate what type of neighborhood as the rougher the neighborhood typically brings higher rents... at least on paper. Good luck to you!

If you have $1million liquid, your could find a broker (licensed and reputable) who does private and/or pooled (commercial / residential) lending and put the money to work.

@Tauseef Ur Rehman a thread like this is sure to attract a wide variety of opinions, misinformation, and some quality advice. It can also be a great source of entertainment:)

As it relates to cash flow, you will want to consider a few key questions:

- What type of assets produce the highest cash flow?  If cash flow is your aim, it makes sense to focus on assets that can achieve a higher yield from income, vs appreciation. 

- What type of assets produce the most stable cash flow? Depending on how long you intend to be invested, it will be important to understand the dependability of the cash flow. 

- What type of assets are the most recession resistant?  If you intent to invest long term, you will want to focus on assets that have the ability to weather an economic downturn.  

Personally, I believe mobile home parks are the best asset for those reasons.  I have a biased opinion in that respect, and am building a portfolio focused on recession resistant cash flow.  

All the best,

Jack 

I would spread it around $50k in a couple dozen LP deals. Doing so would...

1. Minimizing PITA (simplepassivecashflow.com/pita): No more managing tenants, vacancies, maintenance and the managing the manager (who is a $12-20 dollar employee who's conspensation structure us not aligned with your goals) By passing the control of the day to day operations to true experts who are literally partners (direct alignment of compensation and motivations), you can assure the investment is being optimized while you spend your time on what you want which is 1) making more money at your day job, 2) spending time with your family or 3) finding that one off deal that you want to do one your own while pairing with a Limited Partner strategy.

2. Asset Diversification: Many commercial real estate investments have high acquisition prices (think $10M+) where most people don't have access to. You want to get away from these other Mom and Pop invests like these 1-40 units. When I was a syndication newbie and thought I could do everything by myself and did not trust anyone. I then realized in a few months that 1-40 unit deals had horrible pricing because all the ametures were involved and the ones that looked good from a per unit price prospective were under 80% occupied and had ISSUES. Investing passively in a group can allow you to invest in multiple asset classes (apartment/mobile home/assisted living), in multiple locations and with varying business plan duration.

3. Avoid Credit and Liability Risk: Investing passively allows one to avoid being exposed to credit or liability risk. No W2 documented income no problem! You do not need to personally guarantee multi-million dollar loans and and be the fall guy. 

4. Cash Flow: The goal of a LP syndication investor is to create a "ladder" of investment that create accumulated cashflow and cashout at different times. It's like your grandpa's CD ladder strategy but with 10-30x returns.

5. Taxes: All the deprecation benefits of single family home being your DIY direct investing but even better! Bigger deals are able to pay for a cost segregation to squeeze out even more depreciation. 

...

@Tauseef Ur Rehman , great question. Typically being an LP in a multifamily syndicated deal will yield you a consistent cash flow depending on the sponsor. The more capital you can allocate to the passive real estate bucket, the faster you can increase returns and the better the monthly cash flow gets. 

@Tauseef Ur Rehman

You could partner with some Syndicators who need someone with your net worth help them qualify for loans on commercial or Multifamily properties. This would allow you to participate in management and get a share of the Syndicators’ fees and profits without having to invest any of your money. I know several people who have made a business of this model.

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