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?
By responding here, you're allowing us to print your name and response, if chosen, in the next issue of BiggerPockets Wealth Magazine! Haven't heard of the new magazine? Check it out and subscribe today at www.biggerpockets.com/magazine Woo!
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.
I would definitely try to leverage the $1MM, or buy something all cash so as to get a good discount in this market (since sellers are afraid of deals falling through) and later refinance.
Specialist · Plano, TX · Member since 2020 · 2k+ posts · 861 votes
6y
Great question. I would invest in passive apartment syndication. It fits best with my lifestyle and the idea of having money work for me sounds the most appealing.
Glen Burnie, MD · Member since 2020 · 12 posts · 8 votes
6y
Being a brand new real estate investor, I would probably invest it in the stock market, borrow against it to do a single family home in the market where I live, and learn a whole lot from all my mistakes. Repeat and scale up over time.
Rental Property Investor · Melbourne, FL · Member since 2017 · 114 posts · 108 votes
6y
@Katie Miller multifamilies...I already plan to buy apartments, and with other investors in syndicated deals, depending on size and values, $1m of my own money should last for more many deals and provide for great long term cash on cash returns.
Omaha, NE · Member since 2020 · 611 posts · 665 votes
6y
If I was gifted one million dollars, I would offer my capital as incentive to partner with the most accomplished real estate flipper I could find in exchange for the opportunity to learn from the partner and split profits 50/50.
Once I had a firm grip of how to identify, act on, and execute a flip, I would use the original money and gains to invest in several single family homes that needed rehabbed. I would rehab and rent those houses, refinance the money back out and hold them as cash flowing assets for my children.
With the remaining money, I would seek the best apartment complex I could find to purchase in my local market, purchase that complex, quit my job and focus my time and energy on writing novels.
The passive income generated off of those investments might not make me the richest person around, but it would support my family and allow me to pursue my passion without concern for how to pay bills.
Rental Property Investor · Rockford, IL · Member since 2019 · 471 posts · 342 votes
6y
With one million$, I would walk with direction and caution.
You see, this new guy on the block sees 1M$ as a pretty hefty sum. Perhaps as much as I felt about that 1st $100 bill I was able to hold in my hands. That was a nice feeling I still remember.
Not having the teams of the A&E type investors, I would expect my costs and lumps because of the lacking experience might be larger than the average investor with a solid portfolio.
I would look for two 4-family units within an hour's driving distance of my home. They would be solid structures in a growing area, but perhaps a bit under maintained and a bit under the going rent for the area. Buying one unit at a time, I would be open to house hack each, with the mindset to monitor and compare the options of a long term hold, or a buy and refinance and sell option. I could house-hack both, as the purchase of each, would not need to be from the same buyer in my team.
Ideally, the units would be fully rented. The drive would be to get each in a lease agreement, and to work to renovate the buildings and properties. As the renovations happen, first with the exterior of the buildings and the grounds, tenants would be worked with as unit modifications come.
Everything done, would be done to show that better times are coming. As the renovations shape up, and there is something to use for "Before and After" pictures, new investors will be brought in, and systems put in place to help more of the same commence with a greater ease and profit margin.
My intent will be to use creative financing, along with lower interest bank financing to use more credit than cash. The "Money-In-The-Bank" will help investors and banks alike, as they get on board the direction I plan to travel.
Renovations would be done in phases. Each phase would be separated by area and trade, as to better find if a team or management system is functioning well. The idea is to learn from each phase and trade, make adjustments, and bring that knowledge to the next project. If things go as well as expected, perhaps as renovation stages are complete on one unit, they can move to the next. I would wish to keep a good team together and employed as much as possible.
So much to think about, and so much that has been learned in the past from being that worker hired to make the owners money, and keep them happy so you can stay working, but still feed your kids and have the nice things in life.
This was fun. I don't have the funds for this at the moment, but I AM looking for the properties!
I am looking to buy and hold multi-family houses that have room for expansion or improvements. That 3 or 4BR-two story home with a small yard you just made a duplex may not be what I am looking for. However, that duplex or quad on some land needing a bit of extra love and care, may just be my ticket to the game! I have to like the home enough to want to live there with my wife, and be comfortable enough to have the grand kids over at times.
The longer game would be to assess after 10 years, if the property should be sold to buy another, or continue the renovation and holding of a solid and growing innvestment.
Port Richey, FL · Member since 2016 · 129 posts · 48 votes
6y
I'd re-balance my over-all portfolio. Which would dictate the purchase of 1-2 more multi-family property with cash, hold a small cash reserve, and the remainder would go in to Vanguard stock index fund for long term...
Rental Property Investor · Mesa, AZ · Member since 2019 · 138 posts · 144 votes
6y
$800k on a luxurious house in an affluent neighborhood, $100K on a super luxury car, and $50K on designer trendy clothes. Then I'd build a network of multi-millionaires by utilizing the remaining $50K to join millionaires clubs and build relationships at exclusive golf courses and fine dining establishments. This will give me access to tens of millions of dollars to invest in real estate. "Fake it 'till you make it"
Rental Property Investor · Topeka, KS · Member since 2017 · 56 posts · 137 votes
6y
@David Abbate that phrase is from the Bible. I love giving away money because it helps people. I don’t do it to get rewards, rather because God loves a cheerful giver (biblical statement) and I love God. The verse in its entirety says,
19 “Do not store up for yourselves treasures on earth, where moths and vermin destroy, and where thieves break in and steal. 20 But store up for yourselves treasures in heaven, where moths and vermin do not destroy, and where thieves do not break in and steal. 21 For where your treasure is, there your heart will be also.
The key for me is in the last sentence: keeping my eyes on God rather than selling out everything for wealth. I am sorry you seem so angry about my answer.
Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes
6y
I used to think there was a best answer on this age-old forums topic, but as I've answered it each time I've realized more and more that it's highly dependent on what the individual wants for their portfolio & how their lifestyle preferences play into their financial goals.
For me it's easy: I'd use the million bucks to build a money printer.
I'm the enterprising type, and my answer is going to be very stereotypical of this. If I didn't have much money, I would build a business. I'd start small and keep a heavy cash reserve so I could experiment and screw up. It would have to be scalable. I probably would not buy much in the way of assets. I would use the money to build a money machine of active income, since I have the time and desire to chase revenue. When this business was stable and took me to my income goals, then I would start investing everything above my desired "cash reserve" to keep my business operating with a nice safe buffer.
Ironically, most people don't just come into a million bucks in cash without having already accomplished what I've mentioned above, usually with a much smaller amount of money to start.
Real Estate Agent · Baltimore, MD · Member since 2016 · 520 posts · 379 votes
6y
Put 50k in gold and 50k in low risk bonds just in case.
Put 200k in stocks being tech or healthcare as well as index funds.
Put 500k in a 8 to 10 unit in my market in a B+ asset which includes value add which I would manage.
Put 100k into a B+ SFR that will be a room rental near colleges including value add which I will manage myself.
Keep 100k for reserves.
Investor · Chicago, IL · Member since 2016 · 20 posts · 15 votes
6y
I'd buy a few 4-plexes, let the equity build, and eventually 1031-exchange into more cash-flowing units. I'd outsource the stressful parts to a property manager and just sit back and enjoy the passive income. I would spend my freed-up time seeking out better investments.
Investor · Chicago, IL · Member since 2016 · 20 posts · 15 votes
6y
I'd buy a few 4-plexes, let the equity build, and eventually 1031-exchange into more cash-flowing units. I'd outsource the stressful parts to a property manager and just sit back and enjoy the passive income. I would spend my freed-up time seeking out better investments.
I am averaging 45% annual returns on my equity portfolio for the past 10 years. So I’ll definitely use those skills to invest a significant part of the $1 million. I’ll also selectively angel invest in startups that make sense to me. Those payouts could be massive.
San Francisco Ca · Member since 2020 · 30 posts · 17 votes
6y
I would see if I can purchase someone's rental portfolio who is looking to liquidate their assets. Sounds like the easy way out but it will provide already steady cash flow from existing tenants and would most likely hold onto it for 5-7 years to exit out.
I would develop a RENTAL PUD and have my RE office manage the units as rentals and help my renters get into position to purchase a home of their own through FICO counseling and free use of the on site moving trailer. I would allow each renter to break their lease if they use me as their buyers agent. I would keep on staff a handyman and retain a legal assistant. In my dream world, once this was fully profitable, I would love to develop a gated community for abused women and children escaping violence in need of housing and assistance. Start a non profit and have a security guard on site and a full time legal assistant and therapist. Provide affordable housing and get them employment and education and the help they need to start fresh and provide their children with a safe and healthy environment to grow up in. Once on their feet, help them purchase a home of their own.
Investor · Fontana, CA · Member since 2017 · 95 posts · 59 votes
6y
Great question! I have dreamed of that scenario for a while now. I would diversify, but I would first start by investing in myself, networking with others that can help me in different masterminds and/or coaching programs. Next, I would invest in a Short Term Rental by putting a downpayment on 2 STR for strong cash flow. Then I would invest passively in multiple multifamily syndications. I would keep 100K for reserves at all times, then use 100K to try and partner with a group of investors to put together my own syndication.