Inherited 6million dollars, what would you do?

30 Replies

I have some experience flipping as well as LTR SFH, but have always wanted to move into bigger commercial multifamily...

What would you do with 6million dollars?

Would you buy smaller all cash or use that money as a Dp for a bigger whatever??

@Tanner Enderle the first thing you do is not post it online. That is asking to be inundated with scammy people. 

My suggestion is to go talk to the highest end commercial brokerage in your area work with them to build a portfolio. 

With that kind of funds you are set for life and can earn 300k/year easy 

also suggest talking to a good attorney and financial planner to decide how much to invest, and in what market. 

I am sorry for your loss. Feel free to PM me as I went thru something similar. 

@Theresa Harris I like your thinking.

@Tanner Enderle If I was in your situation, I'd definitely go for commercial assets, but my background has always involved commercial assets and I personally prefer them.  If you don't have a background dealing with those types of assets, they can quickly become liabilities (as can any poorly managed asset).  So it's probably best to assess your personal skill set and go from there to determine what your best move is.

Get 6 million dollar bills from the bank and build the worlds first paper mache money house.

@Tanner Enderle before you move into commercial and multi family you need to educate yourself thoroughly. You can earn a better return on cash development and flipping single family right now vs commercial or multi as CAP rates are very low in most areas right now. You want to be opportunistic and wait for the right deal and be ready to strike when the time or right.

First, as @Greg Dickerson mentions, educate yourself.

Decide what type of investment you want - passive or one where you play an active role (or where you fall on that gradient).

Depending on the above, your path will vary a bit but start reviewing all the deals and PPMs you can.

Review at least 50-60 deals before making your first investment. This will give you a sense of what the common themes are and what may differentiate a better opportunity.

Lots of information on BP and other sites.

PM if you have any specific questions I can help answer.

@Tanner Enderle I would use the 6 million as seed money to create 10 million within a 2 to 3 years by researching different markets until I found 2 or 3 that fit my goals the best. Then I would build a team in one market first to perfect the system and I would start purchasing single family residences under market value where my all in would be about 75% of the ARV and I would make sure that that number was 150k or less (really I would have 1 or 2 assistants doing a lot of the work). Then I would sell the homes on lease options to tenant buyers and get a premium rent and a higher sales price with a fraction of the repairs, maintenance, and management.

Then I would package the properties into groups of about 10 to 20 and get portfolio loans on each group of 10 to 20 properties in the name of a different LLC for asset protection and to get the majority of my money back out.

By following this method, after a couple of years I would likely own about 200 or more homes, have 20 to 30 million dollars worth of real estate, leveraged around 70% so I would have around 6 to 9 million worth in equity and I would still have about 4 to 5 million dollars in cash in the bank and I would be bringing in around $40,000 in passive to semi-passive income per month (around a half a million dollars of tax advantages income per year) and around $24,000 in monthly mortgage pay down.

At that point I would retire and buy a nice home in Gilbert, Arizona and couple of acres in Atenas, Costa Rica where I would have a main house surrounded by 4 or 5 guest houses that I would rent out on Airbnb. I would live there part of the year and I would have my friends and their families come and stay with me on my property often. I would also have a very nice cabin in the woods with 8 or 9 bedrooms where I would would stay sometimes along with friends and family. At that point I would have financial freedom and time freedom to make a difference in my community through meaningful service to others.

That’s what I would do, and those are some of my dreams which may be very different from your goals and dreams (I find starting with where you want to end up can help you with your decisions along the way).

If you ever want to learn more about the lease option strategy we have a meetup in Mesa, Arizona every month that I publish in the events page on the networking tab of BiggerPockets. Here is info on the next meetup:

As someone who has invested millions in Multi family it is not that hard :). The key is to find excellent CRE agents to help. They have spent their careers doing just this - investing into multi million$$ deals and making money for their clients.

I know of some folks who inheritied $$. Some of the folks went the CRE (multi family route) and others went SFH.... the folks that went to CRE have more than doubled their wealth, are retired, etc while the SFH folks have done ok, but nowhere near the CRE investments.

You now are wealthy.  You can set aside a small amount to have fun with, but get prof help with the rest. You are set for life and your family is set for generations if you do this correctly. 

Sorry for your loss.

I also would suggest you go back and edit the amount out of your posts and subject line.  It can attract the kind of attention you don't want.  

We, too, started in real estate because of inherited money.  Obviously, you want to educate yourself before you invest a dime and get expert advice.  Personally, I would advise you not to put all of your financial eggs into a single proverbial basket.  Nobody ever knows what's going to happen.  

Originally posted by @Tanner Enderle :

I have some experience flipping as well as LTR SFH, but have always wanted to move into bigger commercial multifamily...

What would you do with 6million dollars?

Would you buy smaller all cash or use that money as a Dp for a bigger whatever??

I would look to invest it passively in a multi-family deal. Once I get the knowledge on how the deal and property are being operated then I would start to purchase more property. You could purchase a $25mm property with a 20% LTV. Multi-Family is the best route to go in my opinion.

I would not put it all into real estate first off.

really depends on your experience level and understanding of real estate. if you have none and you came to BP to get some.
then i would skip this.. and go right to a professional money manager that you hire on a fee basis.

its more about protecting principal than getting the highest returns..  

And for sure it depends if you want to be passive or your looking to start your own real estate investing business that you run and control

This is an incredibly broad questions and your ultimate answer is what is the lifestyle and things you need/want to accomplish in your life? You should definitely look into some sort of annuities stream your funds can offer you and roll a portion of that into real estate investments. It would be unwise for you to throw it all into RE as you should diversify your investments and given the large amount that you have, look into more active or other passive streams also. 

Ultimately you should self evaluate and ask yourself what does your daily life looking like in 24 months? Are you actively working or participating in projects? Are you required to show up somewhere? How much funds do you need to make sure you live 'for free'?

I would find the best real estate professional near you whom you find trustworthy and begin working with them to build a healthy investment portfolio which allows you to retire. I would also advise meeting with a financial planner to help you organize this whole process. Best of luck and be smart with it. With good decisions this might be the last work you will have to do in your life. 

@Tanner Enderle

Do whatever will bring you the greatest peace of mind, the least stress, and the most fulfillment.

I know people who are very unhappy trying to manage all the BS their money has ‘allowed’ them to get involved in.

All the Best

@Tanner Enderle I would definitely be thinking larger as you have the economies of scale working for you - more than you do with SFH.

First and foremost getting educated in your specific niche whatever that may be. This will give you a solid foundation to now know in what direction you need to head.

Me for instance I would go multifamily and jump into syndication. You can go fast alone, but if want to go far you gotta do it with some one else. Strength is in numbers. Go bigger!

@Tanner Enderle I would start with a team of professionals that includes an Attorney, a CPA and a Financial Advisor.

Once you have a solid foundation, structure , and plan in place I would then begin my investment path with part of that being in real estate. The needs you have, your age, your goals, your desire to be active or passive will likely determine much of the balance of the funds use.

No two of us are alike, you are unique and as such will have unique needs and wants. Dig in and find those answers first.

If this is real, congratulations.

I am not an all my eggs in one basket type of person.

First I would talk to my financial advisor and invest a certain percentage of it.

The rest would be divided between MFH and SFH. Having access to this kind of capitol could allow you get into some decent value add deals that require extensive rehab, but would increase the value.

@Tanner Enderle I would suggest spending some of the 6mil on education if you want to buy bigger deals. I would also stay patient as now isn't exactly the best time to buy with extremely compressed cap rates. The old saying was, look at 100 deals to buy 1. It well north of 100 deals to buy 1 in today's hot market. After you get educated "assuming you want to go buy larger apartment complexes", I would suggest investing passively with a high-end operator to see a deal in real-time develop and transition. After you feel comfortable with the process I would suggest finding a market and studying it so you can execute on a good deal when it comes around. I would look for semi large apartment complexes so you could possibly buy 2-3 of them instead of sinking the full 6mil in just 1 deal. 

It completely depends on your goals.  Here's what I would do:

  • Invest it in a conservative 60/40 investment portfolio. (make sure to invest in a tax efficient manner)
  • Start doing Mega-Back Door Roth 401(k) contributions and Roth IRA contributions to put away about $50+ per year so its never taxed.
  • Use the investment portfolio as collateral to do real estate deals.
  • Possibly set up a donor advised fund for charitable giving and managing taxes.

1.  live full time on a cruise ship, traveling around the world

2.  give seminars to your shipmates on how to make it big in real estate

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