General Manager, Publishing at BiggerPockets · Denver, CO · Member since 2017 · 459 posts · 642 votes
How would you invest one million dollars if it was given to you free? Why would you invest that way?
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Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
6y
Howdy @Katie Miller! In that scenario I would use a construction loan to purchase a multifamily property around $4,000,000, seeking to be "all in" at that level, but achieve an appraisal value of around $6,000,000 within 18 months through the right value add renovations, stabilization through excellent management, and other strategies to add to the Net Operating Income "bottom line".
Then, I'd pull as much of the initial $1MM back out as possible, then rinse and repeat this a few times in the next decade.
It'd be a lot of hard work and many bumps along the way, but I would likely end up with about $25,000,0000 in real estate holding AND the $1MM in cash at the end of that decade.
Investor · Indianapolis, IN · Member since 2015 · 764 posts · 953 votes
6y
People "given" 1 million dollars often lose it rather quickly. My advice for someone receiving such a gift would be to keep it in the bank and get financial education. But beware; choose your teachers wisely.
Plano, TX · Member since 2012 · 43 posts · 10 votes
6y
If i had a long time line I would dump it into hardmoney lenders earning 11-14% per annum doubling it ever seven years so around 42 years later I would have accumulated $64Mil sit back an retired in luxury.
Investor · Phoenix, AZ · Member since 2015 · 346 posts · 170 votes
6y
@Katie Miller
I’d invest in 11 4plexes for 330k each one. Each one financed with 25% downpayment of my capital and the rest financed with a bank loan with a low interest rate.
The rest 92,500 will be on a business savings account in case of any capital expenditures might arise.
Investor · Boca Raton, FL · Member since 2019 · 1k+ posts · 159 votes
6y
I would buy as many properties as I could with the intention of using the BRRR method. To give you a heads up, the BRRR method is when you buy a property to fix it up, improve its value, and then refinance. You are, in effect, borrowing against the value of the property at its highest. If you become an expert in this method, you can recover more frequently, all of the money you invested in the property. The acronym for BRRR is BUY, REHAB, RENT, REFINANCE. Many of the Millenial generation are using this method and also "house hacking" whereby you buy a property and rent out a room or several rooms, therefore paying all your expenses, including your mortgage payment hopefully. I'm sure lots of Bigger Pockets subscribers are familiar with both these strategies. Cash flow is king at the moment.
I would buy a high producing laundromat to maximize my cash flow and use the cash flow to purchase commercial retail and multifamily real estate. I have found that laundromats produce far higher cash flow than most rental properties (20-35% unleveraged returns!) with only slightly more management.
Real Estate Agent · Fullerton, CA · Member since 2016 · 140 posts · 103 votes
6y
@Kevin Cross I own a couple and have a website with a bunch of information and resources. Let me know if I can be of any help or if you want to check out the site. Best of luck. Exciting times!
@Kevin Cross I own a couple and have a website with a bunch of information and resources. Let me know if I can be of any help or if you want to check out the site. Best of luck. Exciting times!
Looked into laundromats for a while. The proformas are quite tempting, but after researching it for some time, I ultimately decided it wasn't for me....unless I was able to find a mat with real estate. The Los Angeles market is very strong for laundromats, but the trend seems to be consolidation into a few large shops. I was blown away by the mat on Main and 88th in Los Angeles called Tolon Laundry. This is a mat opened by the manufacturer. Here in the Mid-Wilshire area where I live, there are also a few gigantic stores that have opened up. I just don't see how the smaller mats can compete with these large stores that have cafes, play areas for kids, etc. Also, I recently looked up some of the mats I was considering several months ago. None of them have been sold are still sitting on the market... kind of makes me think I made the right decision. Where did I go wrong in my line of thinking? Are laundromats NOT the shrinking industry I thought they were?
Real Estate Agent · Fullerton, CA · Member since 2016 · 140 posts · 103 votes
6y
@Tony Kim you're not wrong. I'm in the LA market, too and own one not too far from that 88th street laundromat.
The trend, at least in the larger urban areas, is definitely going larger with me amenities. However, like and business and investment, it's all about the numbers. Laundromats are somewhat unique in that the majority of (walk-in) customers will come from a certain radius around the laundromat. The larger the laundromat and the more attractive the amenities, the larger the radius it will likely draw from.
However, markets like LA are so dense that there is a lot of room for multiple laundromats in a small area. The advantage the smaller laundromats can have is that they can be located more in the neighborhoods, making them more convenient to get to. This is a huge advantage within a big city market.
Expenses are also much higher with the larger mats, so they are less resilient to fluctuations in income. While profit potential can be higher with the larger laundromats, a 2,500 square foot store can still thrive.
All that to say, larger laundromats are definitely the trend in LA right now.
Real Estate Syndicator · Portland, OR · Member since 2014 · 453 posts · 312 votes
6y
Everyone has opinions on what they would spend it on, but from reading these there is a common theme. They would spend it to receive cash flow and income. From the answers above there are a lot of different ways to do this. In reality, one may not be better than the other. In short, using the money to create value through leveraging other financing is the correct answer.
This all depends on what my level of real estate investing is. If I am a newbie, I would invest a bit in educating myself. I would also find those who have successfully invested in real estate and offer to buy them dinner. There is nothing better than talking one on one with an expert. Then I would take a small portion of my money and begin investing.
If I am an experienced investor, I would scale up and use the majority of it to purchase a property with partners.
Investor · Whitefish, MT · Member since 2011 · 4 posts · 3 votes
6y
I HAVE CASH TO INVEST, seeking investors with deal flow who need some additional cash/ a partner.
A hybrid between hard money and doing all the work myself - I am here to diversify in a few markets.
I am experienced in fix and rents and flips (did it all out of state, the property's located Denver/ Southern Colorado, etc). I like markets where jobs/ populations are growing. ONLY that will cashflow really well. Think mid/ upper teen's +. Deals that are scary/ need a lot of work... for a lot of upside, bring em on!
I will invest anywhere from $10-50k+ per deal (or more depending on the deal).
Prefer 2-4 unit building but will also look at SFRs and larger multi, it's about the deal and who I'll be partnering with.
You will need to have the cash to put into the deal and some experience, know that I am happy to jump in and roll up my sleeves. Love finding deals and rehabbing/ unlocking value!
PM me with a little about you and a deal you have for us to discuss (also, why you love this market/ location/ etc - get specific)
Investor · Marietta, GA · Member since 2015 · 382 posts · 258 votes
6y
@Katie Miller
@Brent Crosby
@Jordan Berry
Let’s not forget about Uncle Sam and monies due on the Gift Tax. Lots of great ideas here but I really didn’t see a lot of tax planning in the responses except for Brent.
I personally would likely donate 10% to charity / schools (scholarships) , keep 30% relatively liquid (for eventual tax burden)and spread the rest over several syndication deals:
1. Self storage / boat & RV hybrid deals
2. Mobile home (land / park infrastructure only and not actual trailers)
Would also explore potential affordable housing investment .
Now I think I’ll go listen / read up on Laundry Mats
Rental Property Investor · Member since 2019 · 304 posts · 462 votes
6y
Given the current uncertainties, I would probably buy precious metals, evenly split between gold and silver and wait for the next correction. Inflation is around the corner. The question is, how bad will it be? Once the correction comes, I would buy a self sustaining farm as far away from major urban centers as practically possible.
Rental Property Investor · Indianapolis, IN · Member since 2020 · 562 posts · 554 votes
6y
@Katie Miller
I would buy 8 $100k SFR's cash which would generate around $4800/mo.
Then I would buy 8 $100k SFR's with financing which would generate around $1600/mo.
Total cash flow would be approximately $6400/mo. Use the cash flow to pay down the mortgages one at a time, then sell them all in about 10 years and never work again.
Springfield, MO · Member since 2017 · 158 posts · 114 votes
6y
@Katie Miller if I had $1 million dollars to invest I would acquire an apartment complex and convert it into section 8 housing for single parents, ex convicts (nonviolent), and veterans who struggle with being homeless. My “Why” for this is because I have personal exposure to all 3. My mother raised myself and 3 siblings as a single parent and we lived in a trailer park. Her income after taxes each year was below $18k but we survived. My father (who left my mom when I was 3) is an ex convict who always had to work odd jobs in construction or maintenance and could never get a place of his own because of a felony conviction. Finally, I am an Air Force veteran and know that some military members struggle with depression and not having a purpose when they leave the military. Some become homeless because they lack the right help to transition from military to civilian life.
@Katie Miller my answer is different today than it would have been yesterday. Yesterday, I listened to one of the recent podcast episodes where David and Brandon eloquently explained their philosophy on giving. In short, giving feels good, does good, and, crucially for an investor, frees you from a scarcity mindset.
- $100k to Medecins Sans Frontieres.
- $900k to BRRRR deals.
BRRRR will maximize the velocity (and therefore growth) of that money. If there's a more efficient way to allocate I'm all ears.