What would you do if you had $1m ?

24 Replies

If you had $1m...

Would you rather

1. LEND IT
at 7% interest 1st TDs or 15% 2nd TD with equity, or whatever you have agreed with the Borrower

or 

2. LEVERAGE IT
And use portions of the $1m as down payments to acquire other properties 

Ex: $500k as a 25% down payment on a $2m commercial property that you'll reposition, add value, up to $500k net profit

or

3. LEND IT AND LEVERAGE IT

Lend it to a Borrower who will then leverage it to buy the $2m property

or

4. Buy a Bugatti

or 

5. Bet it all on one hand at the Blackjack table at Monte Carlo in Monaco 

I could never do number 5.  I could never live with myself if I lost.   

My option would be #2 all the way. 

Although #1 looks good too, I've just never done that.

#3 seems pretty sweet if you don't want to do much.

#2- $1m down payment on $4m apartment building at 8% CAP. I would be very happy living off of that cash flow.

6. Along the lines of (2), invest as a passive investor in an apartment syndication. You could spread that amount over up to 20 deals to mitigate risks even further. It's not uncommon for these teams to target an equity multiple of 2.0+ on a <10 year hold. That's double your money in less than a decade!! Not to mention a monthly or quarterly cash flow distribution with minimal to no effort. Here's something to read and think about:

https://www.biggerpockets.com/blogs/10191/66365-8-...

Good luck if this is your situation, it'll surely be a fun ride. Let us know what route you choose!

Absolutely lend it, either as a Hard Money/Private money lender and make 10% or more on the loans you have out backed by property. The other thing to look into would be notes, becoming the bank is the absolute best. You get monthly cashflow with little to no expenses and again you are backed entirely by assets. 

The option to lend on some sort of syndication or larger multifamily project is also not a bad way to get 10% or better on your money. Basically if you have a million dollars you can't easily lose it if you're half aware of real estate. You will have your liquid money backed by real estate as an asset, likely with cashflow every month with minimal effort.

I choose to keep doing what I'm doing. Invest 10 to 20% "skin in the game" in our apartment syndications, raise the rest of the equity through accredited investors and have the lender pick up the remaining 80% of the stack. 

@Chris Puglisi 1 four million dollar deal doesn't have enough cash flow, scale and diversity for my taste.  You need more units to minimize downside risk and maximize forced appreciation.

@Michael Bishop on a 10 year hold you should look to get closer to 3x your $$!

@Zachery Buffin beware. Learn how to vet sponsors! you can lose your entire investment with minimal effort if you don't know/understand how to evaluate deals.

Ivan Barratt

This isn't bad advice at all and you're not wrong but this was more a throw away post. No one here could actually have a million dollars liquid and not have some kind of plan for it. 

Scenario One - someone has, through hard work and dealmaking, MADE the million dollars in which case they are very well aware of how to analyze a deal to see if it is something they should lend on or not. 

Scenario Two - Someone has inherited a million dollars and has no experience at all in which case they DO NOT need to be seeking internet advice from strangers, haha, they need to speak to an accountant to square them away. 

Anything in-between these two extremes has probably got enough experience to be able to analyze deals and the tone of the original post was more one of joking experience (at least that is how it read to me) on a hypothetical. If you're here and you know enough to ask the questions posed in the original post then my "minimal" effort comment was comparable to fixing and flipping, wholesaling, land-lording, or the other methods of wealth generation from real estate. 

It sounds like you have quiet a bit of experience with these upper echelon deals, if this was a serious inquiry from the original poster i would definitely talk to Ivan!

@Manuel Angeles

I'd put:

- $500k into my own flips (I love what I do) earning 20%+ ROI

- $250K into diversified ETFs that earn 8-15% ROI

- $250K leverage into multi-family acquisitions or syndications

@Ivan Barratt agreed! I simply put <10 years to be conservative (because doubling your money in 10 years is still an incredible achievement compared to other investment options). ~2.0x equity multiple is more commonly projected on 3-5 year holds if I'm being more precise.

I would probably go with option #2. Although @Shawn Ward I like your plan as well. Diversifying the money into multiple options.

I'd bought houses for that $1M with 25% ROI.

Then I'd have enough money by the next recession to buy houses with 40% ROI ;)

This is the most exciting game, nothing beats it :D

Originally posted by @Zachery Buffin :

Ivan Barratt

This isn't bad advice at all and you're not wrong but this was more a throw away post. No one here could actually have a million dollars liquid and not have some kind of plan for it. 

Scenario One - someone has, through hard work and dealmaking, MADE the million dollars in which case they are very well aware of how to analyze a deal to see if it is something they should lend on or not. 

Scenario Two - Someone has inherited a million dollars and has no experience at all in which case they DO NOT need to be seeking internet advice from strangers, haha, they need to speak to an accountant to square them away. 

Anything in-between these two extremes has probably got enough experience to be able to analyze deals and the tone of the original post was more one of joking experience (at least that is how it read to me) on a hypothetical. If you're here and you know enough to ask the questions posed in the original post then my "minimal" effort comment was comparable to fixing and flipping, wholesaling, land-lording, or the other methods of wealth generation from real estate. 

It sounds like you have quiet a bit of experience with these upper echelon deals, if this was a serious inquiry from the original poster i would definitely talk to Ivan!

@Manuel Angeles

There are lots of investors with a million dollars in available capital looking for investment opportunities and they have the same, or more, challenges in deciding how to invest it.

Note business for a good portion either existing or new originations. and if you can get a LOC so you can leverage your HML business.. not uncommon or it used to be common to get 4 to 1 or 5 to 1 leverage.

so 1 million gets you a 5k million HML company conservative returns as a HML in most areas of the country are 15% or higher with early payoffs.. so 750k income a year on 1 million invested... it works I have done it.. and though when markets change or if you run into a 08 scenario like I did I also lost millions so got to be careful in the timing of this and asset classes etc.

but times they seem pretty good right now for this activity.   However its a business as well your running a business your not a passive investor by any stretch.

Take $200k put it in liquid assets, $500k and buy my own property that cash flows decently well in a market I like and think has a decent chance at appreciation (but not banking on it), $300k spread across 6-10 different deals sourced through crowdfunding/sponsor deals, across different regions, across different assets, across different “plays” (value-add, development, cash flow, appreciation, etc.). I think it is very unwise to throw all your eggs in one basket and ideally I would like to diverse more, but I figure if I had $1 mil tomorrow there’s plenty of time in the future to spread out risk further.

None of the above.  The reason for that is because every solution you gave were "stand alone" uses.

The keys to REI are:

1 - Never, ever, under any circumstances..."spend your seed money".  You want to "use it" to infinity, but never "spend it".  HUGE difference.

2 - Commit this sequence of numbers to memory = 1073741824, and base all of your REI decisions on them.

You must have a self sustaining, repeatable system in place that allows you to do the above.  Here's mine:

1 - Take part of the funds and use them as a DP on a NNN property that gets you a limited # income (this is to make you feel good).

2 - Flip the rest of the cash (seed money) at least 3 times per year over the first year.  I said "flipping the cash", not "flipping the properties".

3 - Reinvest all the profits (friends) made from the flips back into the "original seed money" making it grow to where it is at least = "$?????????" bigger than when it started.  How much bigger depends on what's needed for the next step.

4 - Take that "surplus cash" (the $$$$ greater than the original seed money) and use it as a DP on a cash flow property.

5 - Every time Step #3 is repeated, you repeat Step #4.

6 - When you decide to stop, take all your of your original seed money (plus yet unused friends/profit)...and go home.

Take a look at the above.  How much money did aI spend?

If you don't like this, you can lend it to me at 10% simple interest and I'll do the steps above with it.

well I'll tell you what we did exactly

1. Paid off all of our bills. 

2. Had a house built cash with upgrades in case we sell ever. 

3. Bought 3 buy and hold homes and they were rented before we even closed on all 3 at the same time. 1 tenant for 2 years and 2 tenants for 1yr.  With the intention of doubling the amount of rental properties as soon as we can with the appreciation , goal being to have 20 homes renting in under 7-10yrs. 

4. Bought a couple of practical cars cash so we are pretty much debt free. 

5. Put the rest away in the bank and now I'm in real estate school and I am also interested in learning as much as I can in real estate investing. I have been putting together a team of trades for rehabbing and I would like to start aiming to flip homes and adding on to our portfolio and experience. So here we are debt free with nothing else going on but dedicating time to move forward with REI.

I always read great things on here and hope I can add my experience after I get things rolling. 

The same thing if you had $1,000
You go look for an opportunity that is not too large for you to chew

I would agree with others and go with option #2. 

There are many witty replies here! Specially those brought up by Ivan and Joe in this thread. So, I gather from your responses, that most of you, if not all, would love to have the $1M and start investing utilizing some of the smart strategies mentioned here. Well, this may be your chance to get in on the ground floor of something very unique that would do just that, but It's for people who have heart of nobility and desire. And if that's you, take a look at this 7 minute video which presents the opportunity to get to $1M in a short amount of time. And, if you see the cause and the need, send me a message. 
https://tinyurl.com/y7naglnb 

"What would you do if you had $1m ?"

I would want to know where the rest of my money went.

Originally posted by @Joe Villeneuve :

None of the above.  The reason for that is because every solution you gave were "stand alone" uses.

The keys to REI are:

1 - Never, ever, under any circumstances..."spend your seed money".  You want to "use it" to infinity, but never "spend it".  HUGE difference.

2 - Commit this sequence of numbers to memory = 1073741824, and base all of your REI decisions on them.

You must have a self sustaining, repeatable system in place that allows you to do the above.  Here's mine:

1 - Take part of the funds and use them as a DP on a NNN property that gets you a limited # income (this is to make you feel good).

2 - Flip the rest of the cash (seed money) at least 3 times per year over the first year.  I said "flipping the cash", not "flipping the properties".

3 - Reinvest all the profits (friends) made from the flips back into the "original seed money" making it grow to where it is at least = "$?????????" bigger than when it started.  How much bigger depends on what's needed for the next step.

4 - Take that "surplus cash" (the $$$$ greater than the original seed money) and use it as a DP on a cash flow property.

5 - Every time Step #3 is repeated, you repeat Step #4.

6 - When you decide to stop, take all your of your original seed money (plus yet unused friends/profit)...and go home.

Take a look at the above.  How much money did aI spend?

If you don't like this, you can lend it to me at 10% simple interest and I'll do the steps above with it.

when you lending your money your not spending your seed money.. no different than the BRRR at some point you have some cash tied up for some amount of time until you refi it out.. or the loan you made pays you off..

Originally posted by @Jay Hinrichs :
Originally posted by @Joe Villeneuve:

None of the above.  The reason for that is because every solution you gave were "stand alone" uses.

The keys to REI are:

1 - Never, ever, under any circumstances..."spend your seed money".  You want to "use it" to infinity, but never "spend it".  HUGE difference.

2 - Commit this sequence of numbers to memory = 1073741824, and base all of your REI decisions on them.

You must have a self sustaining, repeatable system in place that allows you to do the above.  Here's mine:

1 - Take part of the funds and use them as a DP on a NNN property that gets you a limited # income (this is to make you feel good).

2 - Flip the rest of the cash (seed money) at least 3 times per year over the first year.  I said "flipping the cash", not "flipping the properties".

3 - Reinvest all the profits (friends) made from the flips back into the "original seed money" making it grow to where it is at least = "$?????????" bigger than when it started.  How much bigger depends on what's needed for the next step.

4 - Take that "surplus cash" (the $$$$ greater than the original seed money) and use it as a DP on a cash flow property.

5 - Every time Step #3 is repeated, you repeat Step #4.

6 - When you decide to stop, take all your of your original seed money (plus yet unused friends/profit)...and go home.

Take a look at the above.  How much money did aI spend?

If you don't like this, you can lend it to me at 10% simple interest and I'll do the steps above with it.

when you lending your money your not spending your seed money.. no different than the BRRR at some point you have some cash tied up for some amount of time until you refi it out.. or the loan you made pays you off..

 When I put cash into a deal, and get it back ASAP (within a year), I would describe that as using it.  When I put money into a deal, and it stays there, relaxing in my house, I call that spending it.

No 2

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