How would you invest $1 million?

191 Replies

And after the "rap" video (where u opined about all u have) and after telling me how much in error I am because how I answered the forum question - u still never answered my question/ the forum question ("how would u invest $1mm). Cheers, Michael!

Sorry about that Norris Wright. We are both from Tampa and if you had owned Rentals in 2008 here in Tampa with mortgages, you also would have lost 60% of your properties value and had Tenants who immediately lost their JOB's or had their Hours or Pay cut and could not pay you that months Rent. You also would have to wait 10 years for the properties to get back to Breakeven and Positive. If you had a Brokerage account invested in the S&P or Stocks in the DOT.com Crash you would have lost %50, which is where I got out of Stocks after making doubles in lots of my Stocks. If you were long, like a Hedge Fund owner I know, on Black Friday, you would have lost everything with the Margin Calls and had to shut down the Hedge Fund. I think I missed your Question. My point on Bigger Pockets is that the Markets run in UP and Down Cycles and I am warning that when we are at a Top like right now, "The Bigger they are, the Harder they Fall." Mark Cuban was saying last week that its great to have the Government bail him out with his 100 different companies that are in trouble because of the Virus. There's no place like the good ole USA. If you "know" the S&P and are confident with Cost Averaging Down, instead of Cost Averaging UP... with part of that hypothetical Million Dollars, over the long term, I am saying that you Drank the Kool Aide. You have been convinced by Conventional Market Knowledge that your Money is going to be "Safe" with Investing over the long term in the S&P going the wrong direction. I wake up every morning and look at my charts online to see which way the S&P Market is running if at all. The Market wants you to park your Money and not pay any attention to your Portfolio Value over the years. All Markets only go UP, DOWN or SIDEWAYS. You are thinking that you are going to benefit from "Compounding over a long period of Time" which you may not have. I am saying that you have to Dollar Cost Average going Long and Dollar Cost Average going Short, depending on the Direction of the Market. That is the difference between a Trader and an Investor. That's all. I am a Trader with the S&P. I am an Investor in Real Estate. Bigger Pockets is a cheerleader for going Long Real Estate. They give the Newbie the impression that the Goal is to own 100 Doors. Just like, "What would you do with $1 Million Dollars." The Goal is really to learn enough about Real Estate Investing, to be able to quit your JOB, with Real Estate Investing of any kind that you are able to understand and have a good life.

I would spread that investment across two or three multi-family rentals, and perhaps be more open to rehabbing a distressed structure that otherwise wouldn't qualify for a typical loan.  Perhaps I would be open to new cities beyond where I currently own.

But I would definitely restrict my investments to states and communities that have democratic governors that take corona virus seriously and which have the most stringent rules in place to combat the spread of the virus.  Leaders that make decisions based on fantasies are going to see their states financially ruined by the consequences.  People will flee them.  Values will plummet.  Perhaps we should close blue state borders and not let in immigrants from red states?

Hjiorst Fjioords, This is not a political debate. Your ideas sound backwards to me. You ever been to Caracas? Havana? Tehran? Kabul? Capetown? Bogota during the Drug Wars? Why would you consider Multi-family Rentals if your going to vote to lose your Private Property Rights? Makes no sense. 

Hello Norris Wright. I found the example of what I was trying to tell the Bigger Pocket members that the Market suggests, that you can "Invest" in the S&P Market or Stocks for the long term and based on Historical Averages, over the long run you will be guaranteed to make up to 10% on your Money. Everybody knows "The Oracle of Omaha," and Warren Buffett LOST $49.7 BILLION DOLLARS in the first quarter this year...The Market is 80% traded by ROBOTS, not Human Beings. Banks are trading with Your Money and losing every day. You think that Banks are smarter traders with their Robots? Conventional Market "Wisdom" teaches individual traders and investors to Cost Average Down for the Long Term and don't worry about the Day to Day Value of their Portfolios, 401K, Simple IRA etc. This is the conundrum. Who do you Trust? Where is it "Safe" to park my Money? "How would you Invest a Million Dollars?" Investing means to Hold for a Long period of Time. Trading means to manage the Cycles of the Price on a Daily, Weekly or Monthly basis. I am a Trader of the S&P on a One Second Basis with my charts. Second by Second I manage my Trade using my charts and when they give me a Profit, I'm Out. I am a Daytrader who gets out and does not Hold any Futures Contracts or ETF's of the S&P Overnight. That is my Daily Cash Flow Vehicle for 20 years. I can make about $500 an Hour with "Trading" the ES or the SPY with a $5000 trading account. My Buy and Hold Vehicle has been Rental Property for 30 years, which is the reason I pay attention to Bigger Pockets Tampa Florida blogs. I'm 72 and right now I am Selling my last Rental house in Tampa as my 2 year Residence for a Tax-free Profit. I should clear at least $50,000 as we are at the top of our Market and it has been time to get out. I just sold my 4 Commercial lots with a 3/1 house that I rented for $1000 a month for 15 years. I paid off the rest of my Debt and I paid Cash for a 3/3 Townhome with garage and pool outside of the Tampa City Limits where it is Safer and less Noisy with construction and beggars. I will be looking to get a HELOC with my Townhome and take the Money to buy a Pool Home to fix up where I am living to Rent for six months and then get a Mortgage and my Money back. I now, just want One Residence and One Rental. In 2 out of 5 years you can Sell your Resdidence, Tax-free and move into your Rental and do the same, buying another fixer upper to rent for the rest of your life with less Tenant problems etc. I could also do 1031 Flips and make the Rental into an Airbnb for increased return on my investment. I also have property in Brazil and I plan to raise some 60 head of Cattle when I get down there besides fixing up and selling off my properties one at a time to move to a better beach town. These are the Real Time, Been There and Done That, Long and Short ways that I would continue to Invest a Million Dollars. Here is the WSJ article that showed Warren Buffett as an incredible Loser in the first quarter...

https://www.wsj.com/articles/warren-buffetts-berkshire-hathaway-reports-49-7-billion-loss-in-first-quarter-11588422311

Hello Mike Moraski, I just read the today's BP article on, "Is it better to Flip or Rent," that went into Leverage and Appreciation and Short Term over Long Term advantages with Real Estate over Stocks. Very comprehensive and understandable, after I read it twice. I am a very, slow, learner and after 72 years I realize and can readily see and explain to my trading partner etc. how difficult it is to understand any lessons and advice on Investing. You are a R.E. Coach. I had 8 Duplexes and Rental Houses in S. Tampa for 30 years that I managed on my own. I used Low and No Money Down methods that I learned from Carleton Sheets, with Financed by the Owner for most of my aquisitions. Later on I paid the Down Payment and used my girlfriend's Credit to get Mortgages on three Rentals with her. I Refied for lower Interest Rates to fix all my properties up to start Selling until the 2008 Economic Collapse hit us in the gut. At that time the "two edged Sword" of Leverage tried to wipe us out in Tampa. I know a Developer who just built 500 Apartments and Townhomes in S. Tampa who was completely wiped out in 2009. I know a Builder who had 120 Rentals and lost them all. My Insurance Agent was working for a Company that lost 125 Rentals. My neighbor's wife works for a Company that Buys and Sells Hospitals that has lost many Hospitals to the Crash. What I see from most of the articles and blogs on BP are hot topic words like, "A Million Dollars" and "100 Doors" and "Easy to get Started." Its like going to a Tony Robbins seminar and all that stuff goes in my one ear and comes out the other without any concrete, substantative ways to actually Start to Invest in R.E. from a humble beginning. My comments are not directed at the Pros on BP. I am trying to say something that would make sense to a person off of the street who "thinks" that R.E. Investing would be a good idea and how do I get started. My dad was an Engineer and I am no good at Math. My mom could listen to a song and tap it out on the piano and I can't play a guitar. My trading partner is a Fearless Gambler and I have a major problem with Fearfully Trading online. I talk with people that I meet about Real Estate and tell them about the simplest method that I know, after 40 years of owning properties. I tell them that you have to somehow Save enough Money for a Down Payment and just Buy your own Home...and their eyes glaze over. I had 8 Rentals in S. Tampa for 30 years and I can't remember one of my Tenants who ever had a Checking Account. For me to take one of them and try to act as their R.E. Coach and hand hold them from a "know nothing about R.E." and get them to figure a way to get the Down Payment, much less on How to Buy My First Home with Low and No Money Down...Ekh. I have been following BP blogs for over a year and from the comments I read I think I see the Newbies with Stars in their eyes, are talking about what is better to Invest in. They want to know if Single Family is better than Multi-Family when they don't even Own their own Home! Who cares about using Leverage and if you have more advantages with its use with Stocks or Real Estate? If you talk with Robert Kiyosaki he currently will tell you that it is "Better to Rent and not to Buy" your own Home. He was Chief Mate with my Masters Mates and Pilots Union and didn't sail on the ships. Smart as can be and a professional Promoter leading a lot of people down the road to the use of Leverage to the max...until the next Crash or Virus. I am not trying to make Another Million Dollars. I am saying that you can easily buy your First Home with all kinds of help from the City, County and Federal Governments. Live in it for 2 out of 5 years and when you Sell, it is essentially Tax-free Profit. Buy a fixer-upper house during that time and move into it and Do It Again Sam. That is one Method that I used to Make a Million Dollars.

@Michael 

@Michael Haynes I have had my experiences and lost big in real estate too. But I am sure others have lost in the stock market as well and we are both still in. For me I love real estate. 2008 -2009 and so forth were the worst economic challenges we have ever seen. No one saw it coming. I listened to a podcast a couple months back and the idea was invest in index funds for the long haul. There are many ways to make money and different beliefs. You have to follow what you love and are passionate about. If you focus on real estate follow the smart money watch the ebbs and flows and have a strategic exit plan you can build wealth. I like small multifamily deals 2-4 units for 1. the economies of scale 2. ease of acquisition 3. ease of purchase 4. learning and getting your feet wet 5. Lower expense margins.

We all have our beliefs good or bad who are we to say about others.   Best of luck if I can help and there are specific questions reach out.  

I'd spread my risk and not put all my eggs in one basket.  

$250K - Index Funds

$250K - LP investments in Multifamily Syndications in high growth markets

$250K - cash to buy real estate locally with leverage 

$250K - Cash and short-term precious metal trades.  Available to buy if (when) the next stock market collapse. 

Hello Mike Morawski, Not to beat a Dead Horse, but, the guys from our Cornerstone Investment Club in Tampa, did see the Crash that started in 2007. I had Refied all my Duplexes to fix them up and start Selling for my Retirement. I could not sell them fast enough to avoid the Collapse. My friend's Mother told him to get out. He had just paid $250,000 Cash for a Penthouse apartment with an inside Tampa Bay view in South St. Petersburg. He lowered his sale price $5000 a week until it sold for $150,000 and he moved to the Phillipines. I ended up working for six years with a Lawyer to do 5 Short Sales and I recieved Letters of Forgiveness for the Debt from the Banks to save my Credit. The way it worked out for me was that for ten years I used the Refi loans to put on new roofs etc. and live on. I fixed up a 2600 sq. foot home for my girlfriend/trading partner and we made it through to 2016 when, with the recovery of the R.E. Market in Tampa we started to sell off the remaining rentals at good profits. I got to use my Carry Forward Deductions for the first sale and split $100,000 with her, from the sale. We moved into our rental on the River and after two years we split that Tax-free sale for $150,000 profit. Each time paying off Debt. Then, I sold a 12 year rental house and made $80,000 profit last year when my Lawer and Agent both died in the same month. I just sold 4 Commercial lots for a $340,000 profit and paid off the remainder of my Debt. This was because the R.E. and Stock Markets have been on an Uptrend for the past 12 years and that is only apparent if you look at the Cycles on the Charts and not just take the advice of the "professionals." You have to be aware of the Market Cycles to know where you are. I have one last Rental that I am moving from now, that will sell in the next two months and make me another Tax-free profit of at least $50,000. The 7 to 9 year R.E. Cycle took 12 years this time because of the extraordinary Monetary Stimulus efforts of the Federal Reserve. It's all Artificial Uptrends, but, it saved me for now. Make Money while the Sun Shines. Then, one podcast does not make Index Funds the place to be if we are going to be stuck with this Virus Economy heading flat to down until we can just go back to work and school. There are many "ways to invest," but, when you are trading with real Money, there is no place for "Beliefs" or "Hopes." You either know what you are doing, minute by minute or stay out of the Markets. The Conventional Counceling advice is to, "find what you love to do and then your JOB will be fun." That's what got all the Millenials studying Social Studies and Art and Yoga...things that they can't get paid to do and they ended up with enormous Student Loans that they want us to pay for. I tried to go to Foothill College for a few months in California where I grew up in Palo Alto. The Counselor was a lady and when she finally called me in to talk she asked, "what do you want to go to College for?" I told her that I wanted to learn How to Make Money." She said that was not a reason to go to College and I quit the next day. I had saved $25,000 by that time. I was 19 and I knew that I wanted to end up as an Investor by the time I was 15. The problem was that at that time we did not have charts and the Internet and Trading Courses that you could study on your own in 1970. There were no Real Estate seminars. I decided to hitch hike around the world for a year and ended up in India on my way to Australia. The thing about BP is that they are good about showing the Newbie all the different methods to Invest in Real Estate. From there I fault everyone with not showing the simplest method to start which is to just buy your First Home. This is not the time to take on any Risk. I suggest learning how to buy your First Home and one Rental. I learned from my travels to almost every country in the world that you have Tax Advantaged ways to start Businesses and Invest in each Country. If you talk with a smart Lawyer or Accountant they all know the Tax-deferred and Tax-free ways to Invest in each Country. For me it is insane to start a Restaurant and take on the hardest JOB to try to make a living off of and pay full taxes. No one teaches the young ones to learn how to work smarter and not harder. After trying a hundred small things to make Money, that is my advice. My Plan for Retirement was to accumulate a Portfolio of Rentals and then fix them all up to Sell one off every two years and go surfing and sailing and take care of my Health. I did that here in Tampa and Rio de Janeiro, which is where I am headed next. Like we used to say in the 1960's...Peace.

@Norris Wright   My answer would have had a few options before the eviction moratoriums... didn't see that coming at this level, nor did I see the mortgages stalling.  

Right this minute, I would go all in on becoming the bank.  Only back properties that you would be good with keeping and that the numbers work as rentals typically because I do believe the rental market is going to come back stronger soon as the current state is unsustainable, and hope you don't get them back.  Then wait and see what happens.  I would also put into marketing to take over payments in sub2/creative financing deals.   

@Michael Haynes thx for updates. I appreciate your/all the insights regardless of whether I always agree or not. As I’m sure the Millenials do too. To a point u made above, I’m sure there are plenty of Millenials out here genuinely curious about how to make money (as I understand you were as a teenager/early adult too). I’d venture that many are not looking for a “get rich quick scheme” but in my opinion, are just seeking to learn “how”? “How do I birth my American dream”? We could all agree that no public education system is teaching any of them about personal finance nor anything about investments.

So they come to BP to learn (the podcast, forums, the video lessons, books, etc.).

So kudos to Josh Dorkin, Brandon Turner and the entire BP family for providing this much needed education - kudos to u too and everybody that selflessly shares (the good and bad). (just remember a lot of us are learning still, including me)...your wisdom and patience is much appreciated always!

Hello Norris Wright. For an update on my current venture. I sold the Commercial property in S. Tampa after renting for 15 years and paid Cash for a Townhome in Valrico to have a quiet place to live on cruise control. I'm 72 and I have to travel. Yesterday I had to hustle and get in an Offer on the type of pool home that I have kept on my list of potentials for four months. It's a 3/2, 1500 sq. feet, 2 car garage with a screened in pool that takes up the backyard. Nothing but cosmetics and roof repair so far, asking $167,000. It is one mile from my Townhome and will work to move in there and keep the Townhome for my one Rental to get more than the Bank will give me on a CD. Was just listed two days ago. All day, back and forth to the new Agent in Brandon and get in my Offer into Fannie Mae, after a walk thru with the Broker at the pool home. There were 29 Offers on this property in two days. The two day period for offers was ending and I had to run to get mine in. Fixed up, the property is worth $250,000. If I have to put in $20,000 to make it look like new, I will still have Equity with my Offer for $201,000. Trying to beat out the people who need to make a Bank Loan as I will be All Cash. In the Stock Market the whole, round numbers attract, that is why you price your property for sale at $199,900 and not $200,000 for the people that do Google Searches. I went to $201,000 to beat out the $170 and $180 and $190 and $200,000 Offers. The Flippers cannot make Offers on a Fannie Mae home as it has to be Owner Occupied...one of the Government rules that helps First Time Home Buyers to get into a HUD type property. If there are two offers accepted they have to make their last Highest and Best Offers and see who gets the property. To continue with my process, I got my Bank to raise my Rewards Credit Card limit from $5200 to $15,000. With the Sale of my Commercial property, I am now "Debt Free!" My Credit Score went up from 730 to 741 and the Bank is giving me a HELOC at 80% Loan to Value on the paid off Townhome. So, I will be getting a Debit type card for the HELOC with $140,000 to use on the pool home and keep most of the remaining Cash from the Commercial Sale. If I don't get the pool home, I am still looking for the next one in the right Location to keep making offers until I do get the second property. I only need one Residence and one Rental to take advantage of all the Deductions and Deferred and Tax-free methods available to play "musical houses" in the USA.

Put it into the bank and use it as an asset to borrow against so that I am not using my own money for starts. When you have good credit and money its easy to get a loan! There is a lot of land in this country that is sitting in dynamite locations waiting to be purchased for a reasonable price. Find the best location and put some properties on that land for sale/rent. Depending on the State/County, location you could build new SFR, MF, Condo's, Apartments.

I would do one more deal along side what I already do in my RE syndication. It is insanely profitable: 

1) I find and place a vacant single tenant commercial property under contract with a 45 day due diligence (to inspect the property with no obligation to purchase it) I need only $5,000 for Earnest Money Deposit that's refundable

2) I contact a list I created of 4000 national tenants (I follow a very specific system) and get one of them committed to lease the space for 10 or 15 years with a NNN lease (NNN means: Tenant pays the lease plus taxes, insurance and maintenance) and a corporate guarantee (lease is guaranteed for the duration and backed by their financing bank like Wells Fargo) and I would offer them some money to offset some of their TI (Tenant Improvement for the location) I can offer up to $100,000 to sweeten the deal and get an LOI to lease from the National Tenant

3) I take the cash I have (in your example $1,000,000) and buy the property all cash (say for example $900,000 and $100,000 additional will be going toward the rehabilitation of the commercial space for the tenant as agreed) 

4) After I close on the property and the Tenant signs the 10 or 15 year lease I go to the bank and get the property appraised It usually appraises at 1.5X what I purchased it for when it was vacant. (Under contract for $900,000 vacant and now with a national tenant in it with the NNN 10 year lease with the corporate guarantee and escalations etc it would be easily $1,500,000)

5) I cash out my $1,000,000 which is less than 70% LTV and keep the tenant to make the PITI plus gibbing me positive cash flow with no hassles, no marketing, no management or any addition al work

6) I reap the process and continue to build my fortune doing it part time with no down side (if I cannot line up a nation al tenant within the 45 days due diligence, I simply cancel the contract and get my $5,000 earnest money deposit back) 

The reason I put only $5,000 EMD is because I am able to show proof of fund for the $1,000,000 sitting in the bank account.

Hope this clarifies how I would use the $1,000,000 and I continue to do this even during covid-19 (I even do it as joint Venture partnership with people who only have the $5,000 and can partner with my fund) 

 





@Cherif Medawar Often times investors come up with these elaborate plans and they sound far fetched.  I must say I like this plan and concept no doubt you have put some time and thought into this.  It also appears you have had some success with it.  Awesome... The proof is always in the execution.