Came into a lot of money - What should I do with it?
I recently inherited a big chunk of change. I'd rather not disclose the full amount but I do pretty well in my day job (software sales), and it's about 8x the most I've made in a year. For now a sizable portion of it is locked up in a fully paid off brownstone in Boston, but I expect to sell that within a year or so. About 15% of it is liquid now.
Here's my question: What should I do with it?
Points of consideration:
-My family and I don't need the money or cash flow from real estate we'd use it on right now. We live below our means already, have very little debt (70% equity on our primary home, 1 rental property with about 60% equity), no credit card debt, and bought our cars in cash.
-I love real estate. I love the idea of having someone else pay our mortgage and gaining wealth through cash flow, appreciation, and debt pay down.
-However, the current real estate market feels super overheated...nothing cash flows except in Detroit, Ohio, or Memphis. Yuck on the appreciation front.
-Cap rates are absurdly low, and there has to be a correction at some point. But interest rates are also crazy low, so even if prices drop, could lock in a low payment.
-I've done a ton of research into multi-family syndications (interviewed 15 of them) and invested in 3 of them so far. Big national syndicators, many on the BP forums.
-I live in the Bay Area and am from Boston...I don't really know other areas of the country aside from some basic knowledge of places like Indianapolis and Phoenix.
-I'd like to retire in 12 years (at the age of 52)
Scenarios I've played with in spreadsheets:
-Highest long-run returns - Investing it all in syndication deals. IRRs of 14-16%, which seem pretty conservative, provide a huge amount of wealth if I just keep re-investing it.
-Taking 1/3 of it and buy 5-6 properties with 50% down and 15 year mortgages. The income alone from those properties would be enough to live on in 15 years and they'd be cash flow neutral for the first year or so. Take another 1/6 and buy a MF here in CA on a 30 year mortgage...cash flow neutral to start, but gets me into the high appreciation market of CA. Take the other 1/2 the money and do syndication deals or invest in the stock market.
-Do some combination of the above but leave 1/2 to 2/3 of the money in cash and wait for the downturn for some cheap real estate. I love the idea of getting cheap real estate but am I just missing out on gains until the downturn? What if we have low interest rates, low cap rates, etc. for 4-5 more years and I miss out on the appreciation, debt paydown, and cash flow?
I'm sure there is no "right answer" here but would love everyone's input.