Long Post: What Would You Do With $2M Proceeds? 1031 Exchange

[Joe NA]

Hello, I hope whoever you are wherever you’re at that you’re off to a great day!

I’d like to get some advice on what to do with proceeds from a sale, I am open to any and all opinions and I do respect and understand we all have different views. I’d like to include as much detail as possible so that you know where we’re at. We expect to clear $2 million dollars from the sale of some land we purchased a while back and paid off and now a government entity has offered to buy it for fair market value. The appraisal is just over $2 million. We expect this to happen within the next few months. I do feel nervous as we are not used to this amount of purchasing power and I need advice from all on what possibilities you see and more importantly what you (as an experienced investor) would do if you were in our position.

Our financial situation is okay, I do work a full time job but would like to do real estate and renovations full-time. We have worked hard to have a house where the mortgage is covered by renters and a few other rentals that make enough for us to survive if I quit my job but not enough where I would confidentially take on larger projects (like more BRRR SFH's/STR's) instead of my job. We live off of $2,000 a month right now as far as groceries and whatnot are concerned and we feel comfortable staying there and not inflating our lifestyle at all. Vehicles are paid off and we have no debt except mortgages that are paid for by tenants.

We have flipped a handful of houses and it’s work that I very much enjoy doing myself and with others. We have kids that are coming of age to help out and I would really like to get them involved in renovations to teach them the trades. My top priority is spending time with and teaching my kids even if that means taking a lot longer on a project rather than subbing it out.

The question is super vague but basically “What would you do with $2M if you were us?” I am about 30 years old and can see going full time renovating houses. I realize a growth portfolio would make sense and it’s tempting to leverage this into something a lot larger but after some contemplation I’m thinking a good and somewhat predictable (dare I say safe?) approach could be to 1031 exchange the $2M proceeds into a small multi-family property (like an 8 plex or several duplex) and pay for them in full. The idea would be that we have it all paid off and could then pull a sizable line of credit against it to use as kind of a personal hard money loan to buy a project with cash and renovate it and then refinance that project and repay that line of credit back. I’d hunt for the right deals and then jump on them. Not the quickest or most leveraged approach at all, however it seems like the least stressful order of operation to me that our family would actually enjoy. We’d have constant cash flow to cover the line of credit payments and live on as well as save from the income of whatever we buy with the $2M 1031. Maybe we’d eventually save enough to pay cash for deals and not need that line of credit but rather have it as an emergency fund.

I hope to hear your thoughts and outlook on the situation. I value everyone’s input and perspective. I’ll follow up on this periodically to answer any questions. Thank you so much for reading this!

[Melissa Justice]

@Joe NA,

Hey there,

First off, huge congrats on the land sale. Turning a past investment into $2M in equity is no small feat, and the fact that you’ve done it without inflating your lifestyle says a lot about your mindset. You're in a strong position financially and philosophically, and I really respect that you’re focused on family, teaching your kids real skills, and building something meaningful.

You asked, “What would you do with $2M if you were us?” Here’s how I’d approach it in your shoes, given your goals, age, risk tolerance, and the desire to go full-time in renovations while staying as stress-free as possible:

1. Strongly Consider the 1031 Exchange

If the land qualifies as investment property (which it sounds like it does), using a 1031 exchange makes sense to defer taxes and that’s a powerful tool. A tax bill on $2M could eat 25–35% depending on your basis and state, so preserving that capital gives you way more buying power.

2. Buy Solid, Paid-Off Multifamily
Your idea to buy a quality 8-plex or a portfolio of duplexes debt-free is smart, especially if:

* You want predictable cash flow,

* You’re risk-averse with this large windfall,

* And you want to access equity later via a line of credit instead of starting with leverage.

With paid-off multifamily, you’d have:

* Stable monthly income

* No debt pressure during downturns

* Plenty of collateral to pull a LOC (Line of Credit) later for flips or BRRRRs

  This is exactly the kind of “calm foundation” approach that can free you to do more creative investing without risking the farm.

3. Use a LOC to Fund Renovations & Teach Your Kids

You've already done flips. You enjoy it. You want your kids involved. So this is "your zone." Pulling from a LOC secured by those paid-off rentals means:

* You’re buying flips with cash (easier to get deals, close fast)

* You’re not depending on partners, lenders, or hard money with crazy terms

* You can take your time on rehabs and really build something with your family

It might be slower than leveraging hard, but it’s a lot more sane, and you get to enjoy the process.

Optional Add-On Ideas:

1. Keep some liquidity--Maybe park $100K–$200K in a HYSA or short-term treasuries/CDs as a buffer or emergency fund. You never regret liquidity.

2. Build a "renovation war chest" – Set aside $100K–$250K in a business account to float rehab projects or snap up wholesale deals without needing to dip into the LOC each time.

3. Buy one STR (short-term rental) in a place you and your family enjoy. Think of it as a business/retreat combo. If it breaks even, that's a lifestyle win.

Optional: Partial Leverage Model:

If you’re open to slightly more scale, consider this:

* Instead of paying cash for $2M worth of rentals, buy $3M worth and use a 30–40% LTV loan (super low leverage).

* That keeps payments low, gives you cash flow, and frees up $1M+ to deploy into flips or BRRRR projects.

But only if you’re very comfortable with a bit more management and complexity.

In Summary:
If I were you--age 30, renovation skills, $2M coming in, no lifestyle creep, and a desire to be close to family, I’d:

* 1031 into strong, low-hassle multifamily (paid off or low leverage)

* Use a LOC as a "personal bank" to fund flips/BRRRRs I love doing

* Keep a 6-figure liquidity buffer

* Build slowly but confidently from there

This keeps you safe, cash-flowing, flexible, and living a life aligned with your values. Not the flashiest plan, but one that gives you peace of mind, time with your kids, and a very solid foundation to grow from.

Happy to dive deeper if you want help modeling numbers or comparing LOCs vs. other structures. You’re in a rare and powerful position! Well done on getting here!

Best of luck, 

Melissa