How to invest $10 million?

FL · Member since 2016 · 912 posts · 107 votes

At some point in my life, I will be getting a huge inheritance. $10 million or more. How to use this in real estate? What provides the greatest returns? I know that even large firms make their greatest by purchasing value added properties and selling them years later. But how to identify them? I'm pretty sure that "buy and hold," even on a large scale, would take 10+ years to see my money back, unless I did BRRRR. What about a $10 million wholesaling campaign? What would you do?

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

there is ONLY ONE thing to buy.. and that is double TAX FREE MUNI's

of triple a rated cities. engage a broker to help you. forget real estate far to much work and risk

if the money is coming to you and you did not have to work for it IE its inherited / given

you can make 300 to 500k a year tax free protecting your principal.. then get a job so you are fulfilled in life.

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Account Closed
Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes
9y
I would buy up plenty of land in New Zealand and grow microgreens.
4 Reply
Patrick Philip
OP
FL · Member since 2016 · 912 posts · 107 votes
9y
Originally posted by @Account Closed:

I would buy up plenty of land in New Zealand and grow microgreens.
Why? That's something I never would have thought of.
0 Reply
Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
9y
Ok sure. Research all the other threads that say I have $x. What to do?
Do some digging while you enjoy all the sales pitches... Maybe finish your profile...
3 Reply
Jacob Blackett
Specialist · Columbus, OH · Member since 2012 · 176 posts · 98 votes
9y
Just buy some municipal bonds & relax... ;) maybe pick up a couple solid apartments.. If you want to learn more about the different real estate options, then use a small portion of your capital to invest in operators with proven track record- use the investments to learn and meet the movers and shakers. Then see what makes sense to you and give yourself time to reflect on what you want to get into- no rush tho, a big "wrong" investment wouldn't taste good.
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Patrick Philip
OP
FL · Member since 2016 · 912 posts · 107 votes
9y
Originally posted by @Jacob Blackett:

Just buy some municipal bonds & relax... ;) maybe pick up a couple solid apartments.. If you want to learn more about the different real estate options, then use a small portion of your capital to invest in operators with proven track record- use the investments to learn and meet the movers and shakers. Then see what makes sense to you and give yourself time to reflect on what you want to get into- no rush tho, a big "wrong" investment wouldn't taste good.
How do you suggest I buy these apartment complexes? If I used cash, wouldn't it take me 15 years to break even? Is the only way to get an immediate return on investment to BRRRR?
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Jacob Blackett
Specialist · Columbus, OH · Member since 2012 · 176 posts · 98 votes
9y
With apartments, I'd recommend purchasing using about 75% loan to purchase, so you'll put down 25%. At a most basic level, you should be able to refi at year 5 to 7 to recoup your entire 25% down payment capital due to principal pay down and rent appreciation. I think if you spent time reading through private placement opportunities you'll start to get a really clear picture of how these apartments are purchased. Crowdstreet has a good flow of opportunities on their site, it's probably worth your time to just read through all of these opportunities & watch some webinars- a lot of transparency & things to learn.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
there is ONLY ONE thing to buy.. and that is double TAX FREE MUNI's
of triple a rated cities. engage a broker to help you. forget real estate far to much work and risk
if the money is coming to you and you did not have to work for it IE its inherited / given
you can make 300 to 500k a year tax free protecting your principal.. then get a job so you are fulfilled in life.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
11 Reply
Patrick Philip
OP
FL · Member since 2016 · 912 posts · 107 votes
9y
Originally posted by @Jay Hinrichs:

there is ONLY ONE thing to buy.. and that is double TAX FREE MUNI's
of triple a rated cities. engage a broker to help you. forget real estate far to much work and risk
if the money is coming to you and you did not have to work for it IE its inherited / given
you can make 300 to 500k a year tax free protecting your principal.. then get a job so you are fulfilled in life.
Muni's sound like the way to go. I think I'd rather travel than have a "job."
0 Reply
Austin Fruechting
Investor · Kansas City, MO · Member since 2017 · 791 posts · 1k+ votes
9y
If you want to travel just invest it S&P500 index funds and use the safe withdrawal rate of 4%. 500k per year for life.
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Ben S.
Investor · Tampa, FL · Member since 2017 · 122 posts · 87 votes
9y
What kind of experience do you have now in real estate investment? If little, then start with a small pot, say $100k - $200k depending on your market, and learn. Put in the rest in a few safe things investments until you are ready for bigger things.
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Patrick Philip
OP
FL · Member since 2016 · 912 posts · 107 votes
9y
Originally posted by @Ben S.:

What kind of experience do you have now in real estate investment? If little, then start with a small pot, say $100k - $200k depending on your market, and learn. Put in the rest in a few safe things investments until you are ready for bigger things.
And do what with that $100-200k? I certainly wouldn't want to tie up all my cash.
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Patrick Philip
OP
FL · Member since 2016 · 912 posts · 107 votes
9y
Originally posted by @Austin Fruechting:

If you want to travel just invest it S&P500 index funds and use the safe withdrawal rate of 4%. 500k per year for life.
I could get more than 4% with municipal bonds.
1 Reply
Patrick Philip
OP
FL · Member since 2016 · 912 posts · 107 votes
9y
Originally posted by @Jay Hinrichs:

there is ONLY ONE thing to buy.. and that is double TAX FREE MUNI's
of triple a rated cities. engage a broker to help you. forget real estate far to much work and risk
if the money is coming to you and you did not have to work for it IE its inherited / given
you can make 300 to 500k a year tax free protecting your principal.. then get a job so you are fulfilled in life.
I would just hate to miss out on a hot stock market by tying 100 up in bonds.
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Patrick Philip if you have no experience in real estate.. its a great way to lose your money.
just buy blue chip financials get with a fund manager that only charges by the year not by the deal. they will keep you vacationing year round and protect your principal.
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2 Reply
Brian BurkePro Member
Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
9y
I agree with @Jacob Blackett's suggestion--invest the capital with an experienced operator with a proven track record. I don't say that just because that's the business I'm in (full disclosure), but because that's what I would do if I were in that situation.
First, you get to leverage an experienced team, you also leverage their contacts and network, and most importantly their time. You get to live your life the way you want to and not be tied down to looking for deals and managing assets, financing, reporting and dispositions. And because you are just a limited partner, you contain your liability to the amount invested in any one deal.
Now if you were to say that you had tons of experience investing in real estate and wanted to spend your time "in the biz", my advice would be different. But most folks coming into windfalls such as this don't fit into that category.
Another option I'd consider, if it were me, is triple net properties. Typically lower returns but you can do this by owning directly and it's fairly hands-off so you still get to live your life without being tied to your real estate.
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2 Reply
Austin Fruechting
Investor · Kansas City, MO · Member since 2017 · 791 posts · 1k+ votes
9y
@Patrick Philip - you would get more than 4% in the S&P500 index funds too. Historically 7%.
4% is well known as the safe withdrawal amount to weather the ups and downs. Also known as the 25X rule. For an indefinite retirement 25X annual spending invested in index funds is the recommended amount.
You'll average 7%, but only plan on withdrawaling 4% and you'll never have to worry.
0 Reply
Bryan Hancock
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
9y
With that sort of dough I don't really understand your motivation to be in any way active in real estate. You can make in excess of 20% on your money after accounting for your time if you are active, but who wants a job? Invest your time in what is meaningful to you and enjoy yourself. You can't ever get the time back.
I'd do some Fama/French type allocation like what the AssetBuilder folks offer:
AssetBuilder Portfolios
They uses Dimensional Funds and science-based techniques to allocate their portfolios. Portfolio 8 has a nice, safe blend of investments that includes REITs for real estate exposure. This is their safest portfolio.
Right now it looks like they've done 7-8% in that portfolio over the life of the fund. This seems like a fine investment to me given that you don't really need to chase high yields. You also have plenty of liquidity in this type of investment and exposure to domestic and international markets.
2 Reply
Patrick Philip
OP
FL · Member since 2016 · 912 posts · 107 votes
9y
Originally posted by @Bryan Hancock:

With that sort of dough I don't really understand your motivation to be in any way active in real estate. You can make in excess of 20% on your money after accounting for your time if you are active, but who wants a job? Invest your time in what is meaningful to you and enjoy yourself. You can't ever get the time back.
I'd do some Fama/French type allocation like what the AssetBuilder folks offer:
AssetBuilder Portfolios
They uses Dimensional Funds and science-based techniques to allocate their portfolios. Portfolio 8 has a nice, safe blend of investments that includes REITs for real estate exposure. This is their safest portfolio.
Right now it looks like they've done 7-8% in that portfolio over the life of the fund. This seems like a fine investment to me given that you don't really need to chase high yields. You also have plenty of liquidity in this type of investment and exposure to domestic and international markets.
Maybe being active in real estate is what's meaningful to me. Can you offer any clues as to how I might get that 20% return? What kind of return could I expect if I gave it to a private equity firm?
0 Reply
David Thompson
Investor · Austin, TX · Member since 2013 · 933 posts · 1k+ votes
9y
Patrick,
Agree w/many folks above, but w/a little different approach. You could be a hybrid investor. First, I'd seriously look into syndications and solid sponsors that have a good track record in the following 3 areas (value add apartments; self storage and mobile home parks). Diverisfy by sponsor, niche and geographies - thanks Jeremy Roll. Get the cash flowing so you can live the lifestyle you desire. If you really like real estate and now have money and time to do some active investing, pick a niche, study, get a coach and do for it. You have the luxury to have choices. By all means, study, talk to a lot of folks that know what they are doing, get referrals, invest slowly and don't be in a hurry.
1 Reply
Patrick Philip
OP
FL · Member since 2016 · 912 posts · 107 votes
9y
Originally posted by @Brian Burke:

I agree with @Jacob Blackett's suggestion--invest the capital with an experienced operator with a proven track record. I don't say that just because that's the business I'm in (full disclosure), but because that's what I would do if I were in that situation.
First, you get to leverage an experienced team, you also leverage their contacts and network, and most importantly their time. You get to live your life the way you want to and not be tied down to looking for deals and managing assets, financing, reporting and dispositions. And because you are just a limited partner, you contain your liability to the amount invested in any one deal.
Now if you were to say that you had tons of experience investing in real estate and wanted to spend your time "in the biz", my advice would be different. But most folks coming into windfalls such as this don't fit into that category.
Another option I'd consider, if it were me, is triple net properties. Typically lower returns but you can do this by owning directly and it's fairly hands-off so you still get to live your life without being tied to your real estate.
What kind of return could I expect if I gave it to a private equity firm? Can you suggest how I might find a good one?
0 Reply
David Faulkner
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9y
Well Patrick, you have a bunch of RE guys telling you to NOT buy RE ... so you can't say we're all biased towards REI :)
I agree with Jay on muni bonds ... I'd do that 50%. I'd also do 45% blue chip stocks from the "Dividend Aristocrats" list, and 5% cash ... live off the interest and dividend income so you never need to liquidate any assets ever unless you choose to. Stocks will provide growth to keep pace (and likely exceed) inflation which is important if you will be fairly young when you get this inheritance, cash is in case there are any bumps in the road. All hands off passive investments allowing you to work, travel, contribute time to charity, whatever.
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Patrick Philip
OP
FL · Member since 2016 · 912 posts · 107 votes
9y
Originally posted by @David Faulkner:

Well Patrick, you have a bunch of RE guys telling you to NOT buy RE ... so you can't say we're all biased towards REI :)
I agree with Jay on muni bonds ... I'd do that 50%. I'd also do 45% blue chip stocks from the "Dividend Aristocrats" list, and 5% cash ... live off the interest and dividend income so you never need to liquidate any assets ever unless you choose to. Stocks will provide growth to keep pace (and likely exceed) inflation which is important if you will be fairly young when you get this inheritance, cash is in case there are any bumps in the road. All hands off passive investments allowing you to work, travel, contribute time to charity, whatever.
But what if I WANTED to stay in real estate with some of it. How would I get it to grow at faster than 6%? I see two options:
1. Invest in a private equity firm
2. Learn how to do this myself.
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Account Closed
Johnson City, TN · Member since 2014 · 586 posts · 705 votes
9y
4 million in stocks. 2 million as a hard money lender. 2 million for emergencies and 2 million for hookers and blow.
2 Reply
Patrick Philip
OP
FL · Member since 2016 · 912 posts · 107 votes
9y
Originally posted by @Account Closed:

4 million in stocks. 2 million as a hard money lender. 2 million for emergencies and 2 million for hookers and blow.
Hard money lending would certainly be a nice option. Would I have to start my own company or just give money to an existing company?
0 Reply
David Faulkner
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9y
Originally posted by @Patrick Philip:

Originally posted by @David Faulkner:
Well Patrick, you have a bunch of RE guys telling you to NOT buy RE ... so you can't say we're all biased towards REI :)
I agree with Jay on muni bonds ... I'd do that 50%. I'd also do 45% blue chip stocks from the "Dividend Aristocrats" list, and 5% cash ... live off the interest and dividend income so you never need to liquidate any assets ever unless you choose to. Stocks will provide growth to keep pace (and likely exceed) inflation which is important if you will be fairly young when you get this inheritance, cash is in case there are any bumps in the road. All hands off passive investments allowing you to work, travel, contribute time to charity, whatever.
But what if I WANTED to stay in real estate with some of it. How would I get it to grow at faster than 6%? I see two options:
1. Invest in a private equity firm
2. Learn how to do this myself.
If you WANTED to stay in real estate with some of it, then you can start now, you don't need $10M ... learn how to do it yourself with more limited funds, buy a simple cosmetic fixer as a primary house hack and you can learn, grow, and answer your own question that way and have the knowledge and experience by the time you get the money. It won't be passive, as mentioned, at least not at first ... passive and RE would be an REIT for a newbie passive investor or if you have the knowledge and experience for the due diligence a private placement with an appartment syndicate, note fund, etc. Don't try the private placement route without some hands on knowledge and experience 1st.
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