General Manager, Publishing at BiggerPockets · Denver, CO · Member since 2017 · 463 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.
Real Estate Broker · San Joaquin county · Member since 2020 · 6 posts · 0 votes
6y
I have been in real estate for 37 years and I would find one or two new young agents who are hungry to learn and mentor them in the real estate and investing business while helping their dreams come true. I would work with those agents, to invest most of that money to create greater wealth to help others in any way I could through charity and donations.
I would Invest lend 900k in a hard money loan earning at least 10%. I would use the 100k to put down on a fix and flip. Then I would leverage the hard money loan to all out cash if any expenses came along.
Accountant · South Bend, IN · Member since 2020 · 6 posts · 0 votes
6y
@Katie Miller, I’m new to this, so I’d keep it simple. Flips in my city and a couple rentals for residual income. My long term goal that has been on my heart for a long time, is to work with low income households to provide them with quality homes. I believe that home is where success starts, so I’d love to see my dream come true & give people quality housing.
Stock Market....Where we live it would probably get you a condo of 2 bedrooms, and not too interested in any other state. Just me other than California and with all due respect we can't live anywhere else. California has its flaws but the weather and what it has to offer is not matchable.
Although stock market trading is not for everyone, the return far exceed the real estate and its headaches.
Boise, ID · Member since 2020 · 84 posts · 87 votes
6y
Buy 10 SFH and convert into 50 bedroom rentals. (About $4M with leverage) Would produce around $120k per year cashflow after expenses, and with 9% appreciation locally would create a 61% return per year CoC. Enough cashflow/equity to buy a new property every year.
At 10 years $1M has bought $10M in real estate cash flowing $300,000 per year.
People do side business to become free of 9 to 5 job. When they get to a point of freedom they work 80hrs on their business to earn more and more.
If I have a million, I would go to a residential house contractor and cut a deal to buy 6 houses for $150k each (Texas). That should give easy $1000+/- per house cash flow after taxes in rental income since house is paid. Thats a 6k income/month which is 72k/year. Hence every 2 years I can buy 150k house from rental income. Repeat this cycle. Once I get at 10k/month, I am retiring and travelling.
Stock Market....Where we live it would probably get you a condo of 2 bedrooms, and not too interested in any other state. Just me other than California and with all due respect we can't live anywhere else. California has its flaws but the weather and what it has to offer is not matchable.
Although stock market trading is not for everyone, the return far exceed the real estate and its headaches.
Weather, beaches, and surfing are better in Hawaii. Taxes are lower too. I don't think a lot of people would debate these things either.
Investor · Tampa, FL · Member since 2016 · 681 posts · 288 votes
6y
Hello BG followers. This is an open question, "How would you invest a million dollars?" I was surprised that so many suggested investing in Stocks. Think...you have a Million Dollars to start with right now. OK. The Leverage we use with Real Estate Investing involves using Other People's Money. I just sold my 15 year, 3/1 Rental on 4 Commercial lots for $377,000. I paid off all of my outstanding Debts...yeah!! and I am buying, All Cash, a like new, 3/3 Townhome with one car garage in a small, quiet Community with Pool and low HOA, outside of the Tampa City Limits. As soon as I change my license and lights and move in I can get a HELOC for 80% Loan to Value at 3.75%. I am Selling my 12 year Rental home that I have been fixing up for two years as a Tax-free Sale of my Residence and clear at least $50,000. My neighbor is Selling me his two houses on the same lot next door, Financed by the Owner, for $50,000 Down and he wants me to hold it at 6% for 3 years. Over the years I have done 3 Duplexes in S. Tampa with him and this one will work very well as a Short Term Airbnb Rental. The one big thing you always have to consider is with the Taxes and this one will allow me to continue to use Deductions. Where I am moving to is a town with lots of fixer upper opportunities. I have an Off Market 3/2 with two car garage and pool that I will also buy with whats left of my HELOC and Cash. It needs some inside paint, trim some trees and fix up the pool to Rent for $1800 or more a month. That's almost 1% of the Sale Value for the Rent. Soon as it is a Seasoned Rental I can go back to the Bank and get a Mortgage at the low rates we have now and still have the big problem with, "what to do with all the Cash?" Now, talking about Stocks and Leverage...I am 72 and Single and I studied for 20 years and now trade the ES Futures and Options on the SPY in the mornings, on my laptop at home. I can make up to $500 an hour using the Leverage afforded with trading the Futures and even more with the Options on the SPY. My Daily Cash Flow is trading online for my retirement. I always managed my own Rental Portfolio, but, now I will hire for my Buy and Hold, a Host Manager to run the Airbnb etc. I will need to travel to Brazil where I have a Million in paid off properties that I will fix up and begin Selling as their Economy recovers in a few years. I want to have all the bills on Direct Debit from the Bank account, so I have no worries each day as to missing a light bill or the HOA fee or a Mortgage payment etc. And that still brings me back to the "safe place" to "park all the Cash and still make some Yield without any Risk. That for me is my practical Blue Print that will leave me on "Cruise Control" and let me travel and spend more time in Brazil. "Different Strokes for Different Folks" depending on their needs and education.
Stock Market....Where we live it would probably get you a condo of 2 bedrooms, and not too interested in any other state. Just me other than California and with all due respect we can't live anywhere else. California has its flaws but the weather and what it has to offer is not matchable.
Although stock market trading is not for everyone, the return far exceed the real estate and its headaches.
Weather, beaches, and surfing are better in Hawaii. Taxes are lower too. I don't think a lot of people would debate these things either.
I disagree, too hot and humid. Far from everything also. There is a reason why California is the most populous state and not Hawaii.
Rental Property Investor · Norfolk, VA · Member since 2020 · 1 post · 0 votes
6y
@Katie Miller Hello my name is Donte Hall I am a newly Real Estate investor through Fundrise; I would invest half of the million dollars into multi family properties and the other half would go into a Real Estate Trust.
Stock Market....Where we live it would probably get you a condo of 2 bedrooms, and not too interested in any other state. Just me other than California and with all due respect we can't live anywhere else. California has its flaws but the weather and what it has to offer is not matchable.
Although stock market trading is not for everyone, the return far exceed the real estate and its headaches.
Weather, beaches, and surfing are better in Hawaii. Taxes are lower too. I don't think a lot of people would debate these things either.
I disagree, too hot and humid. Far from everything also. There is a reason why California is the most populous state and not Hawaii.
Hawaii is not humid at all. 55% relative humidity typically which is very low. Hawaii(Oahu) had 5-10 days a year where it feels "hot". 70-85F year round is ideal climate. A lot of my CA friends complain about 50s and wind in SF and SD.
"everything" like what? HI is closer to Asia, CA is closer (yet still very far from) Europe.
Most populous state is multifactorial. CA leads the US in net OUT migration at the moment .. not a great time to mention that lol
Attorney · Raleigh, NC · Member since 2008 · 4k+ posts · 1k+ votes
6y
Given to me free I would recognize first that this is a windfall. It is not the result of anything I did or any skill I had. It goes right away into a very basic low to no risk interest bearing account. Maybe even a 401k to shield it. Then I play with investing the interest. Never touch the principle. Don't fool yourself into thinking you rubbed 2 brain cells together to create that money and know how to recover spent principle. You don't.
Lets say it's generating 3-5%. That's 30-50k a year to play with on higher risk investments. Keep your day job, risk well, see if something hits. You can play stocks, crypto, whatever.
I would invest in a range of properties in UAE where 1 million dollars can get me a lot more. With the market in its 6th year of declining prices, I would find premium, high end properties and affordable housing for a steal. The market has also shown a steady rate of rental returns, especially in the affordable housing market and the high end designer properties that Dubai has to offer.
With the short term rental market finally starting off in Dubai, as people get over the craze of 7 star hotels. There are many projects with payment plans being offered to investors that are being developed to cater to this niche. Furthermore, with no property or income tax in the UAE, I can enjoy 100% of my rental yields.
Property Manager · Salt Lake City, UT · Member since 2020 · 11 posts · 5 votes
6y
@Katie Miller
If I were given 1 million dollars this is what I would do.
Save $250k as a security budget
Leverage $500k on a $2,000,000 apartment unit with around least 20 units renting out at $1,000 a unit giving me a cash on cash ROI of 13.92% after paying a property manager.
Leverage the remaining the remaining $250k on duplexes or nice single family homes.
Leverage 50k on five different 250k duplexes or nice single family homes.
Hypothetically in my area (Utah):
Homes 1, 2, and 3: Duplex rent both sides for $1,000-$1,200 yielding a cash on cash ROI of 13%-21% to have someone manage it you would be closer to 13%-16% ROI
Homes 4 and 5: Nice single family homes rented for $2,000-$2,250 yeliding a cash on cash ROI of 13%-21% to have someone manage it you could be around 13%-16% ROI
My idea of investing is super hands off and I would be able to hire and outsource all the work without losing money. Since the $1,000,000 was gifted to me I would pay it forward to charity, so after it was invested I would give 10% of the profit from that $1M to charity as an ongoing donation. Obviously as I make more money from my investments I would continue investing in rental properties using leverage.