If you had a million dollars cash what would you do?

38 Replies

I find myself in an interesting position. I'm a total newbie with access to a million dollars. I know it sounds ...well, actually I have no idea how it sounds. A million dollars might sound like an outlandish sum of money to some people ( me) and to others maybe its standard. Where to begin? I can imagine starting off with little to no money in a wholesaling enterprise. Conversely, if I felt comfortable with the financials and had experience I would start building a portfolio small apartment buildings? Maybe? I don't know. I'm incredibly excited about starting my real-estate investment career. I'm itching to make a move. But which direction do I go? 

Goals: To turn 1 million into 5. That's what I've got. I'm open to any strategy that gets me there. 

I live in a college town. I just relocated here. It's a desirable area with a lot of deep pocket folks who are ready to scoop up deals. Property usually sells for $100,000 over its assessed value. There's usually a bidding war. This is not the town to find deals. 

Close by are a few small cities with great deals and a lot of problems. Holyoke MA, and Springfield MA. There are other areas, West Springfield MA, and Easthampton MA, that seem promising but I don't know much about. I'm in the process of learning those markets.  

I don't want to be a passive investor. I want to work, learn, and grow as a entrepreneur. Some entrepreneurs I'm currently inspired by are Clayton Mobley of Spartan Investment in Birmingham Alabama, and Seth Weisman of CityShares in NYC.  Both have an extensive business background. These guys are smart as hell. 

I've been reaching out to local investors for advice. They're not responding. So, I put the question to you. If you had a million dollars what would you do? 

Well, first, I wouldn't advertise that I had a million dollars.  That will attract every scammer on the planet. 

Second, since you have already done the above, what does "access to" mean?  I have access to lots more than I own.  Private investors, mortgages, etc, give us "access" to lots more money than is actually ours.  

I would build a portfolio of rentals by leveraging that 1 millon to borrow 4-5 million.  But don't jump in unprepared.  Learn all you can about analyzing and managing rental properties.  

Do a search on BP for "favorite books" and read some of those.  My favorite on buy and hold is Real Estate Investments and How to Make Them by Milt Tanzer. Then read them again.  Read everything you can on BP:  forums, ebooks, articles, blogs, and listen to all the podcasts.  Even if it doesn't apply to what you might think you want to do.  Because you might change your plan as you acquire more knowledge.

Read and plan first.  For months.  Then start to take the steps.  

I'd be careful of Holyoke and Springfield.  

First.  Congratulations!!

Second, don't tell people you:

a - Just came into a $1M
b - You don't know what to do with it
c - "'...if I felt comfortable with financials..."

These statements tell those with wild ideas, and/or predatory goals, to aim directly at the "bullseye" you just put in front of them.  There are probably 1000's of investors here, including myself, that can show you how to take that $1M and turn it into $5M...probably more, in a short period of time.  Without the education to work with, to be able to filter what you are about to be deluged with, you are susceptible (highly) to being led into no money at all...in a shorter period of time.

Here is what I would suggest you do with that $1M. Spend at least $5000 on educating yourself on at least the basics of REI. If you don't, you will most likely be looking at trying to make decisions of where to put it, without the knowledge to make those decisions.

Did you ever see the movie, "Brewster's Millions"? If not, go find it and watch it. Please! Then, after you've gotten at least the basic knowledge base of REI, come back with that $1M (don't tell anyone you have it) and find out where to invest it.

I've watched many investors that came into money, go into REI investing without the proper knowledge base, and lose it all. Don't be that person.

BP is a great place to start gaining that knowledge.  There are other places outside of BP to expand it.  I'm sure there are many here, again, myself included, that would be able to suggest to you where some of their favorite places are/were to learn.

Learn first...invest 2nd...be happy 3rd.

Joe Villeneuve

Let me add this.  I noticed that @Ann Bellamy  said the same thing I just did, and is also from your own State of Massachusetts. If I were you, I'd connect with her and pick her brain.  Eventually the two of you may work together...or not, but at least that would be a great place to start.

Joe V

When working with clients I count their DIRECT CASH.

I hear all the time I have access to etc., etc. It means nothing. Basically what it means is people are getting a loan tied to conditions from a third party to try and do deals.

That's not the same as your own money today to do freely as you choose.

Welcome to the site. 

If its Cash, I would not put all your eggs into one basket, meaning real estate. Diversification is everything. Stocks, Bonds, Real Estate, Business Franchise, etc. No single smart investor just owns real estate or just stocks or a business.

How did you get your money in the first place? Why not keep doing what you did to get that?

Hi Robyn, it's great to read your post and question- "if you had a million dollars"? Myself and my wife relatively new to investing but have had some good luck investing in Brazil (which catapulted us both into the idea of RE investing as a regular part time business) and are now involved in closing on a deal in NW Worcester MA area.

So to your question. Since you want to learn and be an active investor real estate you can take away from our plan of combination of äctive\passive investing as you see fit. Our goal involves using active wholesale marketing to find deals and create profits wholesaling with which to acquire buy and hold properties (which will also be found through our own wholesale marketing efforts). The main premise is this; the investor who is really in a position to perform well in all kinds of real estate niches is the one who knows how to truly find the deals and control those deals. So, even though a million dollars would go a long way towards our goal of simply buying rental property (as well as finding wholesale deals, fix and flips etc)- I would be splitting that million with a certain small part of it focused on becoming an expert in marketing and developing my skills as such, as well as my "brand" as one of the best wholesalers in the business. If you use some portion to invest in yourself in that way- you will have many options in real estate. You'll be able to rehab, buy wholesale, have your own deals for lease options- whatever. In other words, you'll be the one who has access to the best deals in your market and have learned how to close on those deals for your own investments as well as the ability to make money selling the great deals left over to fellow investors.

Marcia and I want to wish you luck and look forward to watching you learn and grow.

Her's BP latest free resource called

"Real Estate Rewind Starting Over"



Mike and Marcia Shaffer

Congrats!   Don't want to be a downer and please don't take it that way.  Speaking from experience  money that come easy goes easy.  If you didn't bleed, sweat and barley survive making that million your tenancy will be to not be careful enough with it.   That is just how it works it seems.  

Read or listen to several books, get a mentor or two and put most of that money in a safe account until you have a handle on starting investing.  START SMALL, I dove in head first and made a huge splash when I got started and dang near drown.  

Phrase  from Robert T. Kiyosaki .  Is real estate a good investment?  I don't know, are you a good real estate investor?

Set a guideline of Cash on Cash return for your money and stick to it.

I wish you the best of luck!

@Robyn Coady  Welcome and congrads.

If the mill is in the form of one of these Transactional Funding letters from New Zealand or an Offer from Publisher's Clearing House with Ed McMann, then go for it!

If it's cash, then I like @Patrick H. advice 

"Phrase from Robert T. Kiyosaki . Is real estate a good investment? I don't know, are you a good real estate investor?

Set a guideline of Cash on Cash return for your money and stick to it."

Personally, I'm now diversifying with Notes.

@Robyn Coady 

buy a NNN type investment or A class Multi or A class Mobile home park.

If you want to stick with RE... Lending could be an option hook up with a good mortgage broker... Also Hook up with a really good developer builder and make profits on top of interest.. Leverage your self into 5 to 7 Subway sandwhich  shops that would bring you 500k or more a year net..

Lots of options.. don't just think RE  People think of RE because they can get into it especially in parts of the US with next to nothing capital and it looks good on paper but they are paper tigers fraught with all sorts of ups and downs.

I feel your pain dealing with local investors b/c I have had the same problem. They dont want any competition so they dont offer any advice hoping you will not make a move and it's frustrating, I know. 

You could go in any direction but hopefully you have enough knowledge of real estate to keep you from making poor choices as to what a good deal is before you make your move. PLEASE take the the time to make sure you know how to evaluate properties before you make a purchase of any kind. 

I agree most of the above comments too, be careful what you do and who with! 

When you say access to 1M it really depends on if that means cash or loans to give you any guidance at all on this question. I would most likely own an apartment complex or many single families but have rental management handle either of them for me in your case.

I hope you find the guidance your looking for.

The best advice I've heard for people who come into a windfall of money is to do nothing with it for a year. In that year, educate yourself! And educate yourself about several different approaches you could take. 'Real estate' has many options contained within that one descriptor: private lending, multifamily, NNN, mobile home parks, even a large portfolio of SFRs. Analyze all of them! But also look in to stocks and bonds and other potential investment areas.

For a good solid overview of issues and financials involved in buying RE I always recommend the books “Insider Secrets to Financing Your Real Estate Investments” and "What Every Real Estate Investor Needs to Know About Cash Flow... And 36 Other Key Financial Measures” by Frank Gallinelli. 

good luck!

Thanks everyone for your thoughtful and helpful responses! 

@Robyn Coady  It looks like you are getting a good start with a mentor and a job that gives you exposure to RE.  

I'm still a newbie to the kind of RE investing most investors here do but have made a lot on RE, in the stock market, and buying/starting businesses.   So far, you've been getting good advice here.

As someone who has lost $1M, I can tell you from personal experience how quickly it can disappear.  In my opinion, how you use your access to $1M depends entirely on how thick a hide you have.  Can you lose $100K and it doesn't bother you because you can see the end result?  Or would that loss kill your enthusiasm for investing?

Sometimes the loss will be an education, sometimes it will be the means to an end.  But I'd be surprised if there are any successful investors who haven't lost a considerable amount of money.  

Personally, if I suddenly had access to $1M in cash, I'd invest very conservatively to get my feet wet and learn what I was doing.  At the same time, I'd read everything I could to see what niche feels good for me.

I have spent a year looking for how I want to get into RE more than what I've done in the past.  I've settled on mobile homes (for now) and am surprised how quickly I've found a couple of deals.  I don't think I will but, if I lose money on these, I'm not too concerned because I will learn from them.

Thanks Harold. I'm keen on mobile homes as well. Now, are you renting them? Are you investing in parks? Or single standing? 

You've gotten some really good advice here so I don't want to duplicate some of the good advice you have already been given. Instead, I want to add something different. You could also find a partner. Look for someone who has some experience to compensate for the fact that you don't. You will have to give up part of the deal, but there should be some safety in the fact that someone else with a good track record is also willing to invest in it. It would also be a great way to learn. Just make sure they have a good reputation, a good track record, and that you like working with them. This business is full of people who only care about the deal, and money does crazy things to people's sense of what is fair and right.

if I were you, I would buy a beach house somewhere way south of Massachusetts.

With the rest of the money, Build a rental empire close to the beach house. 


Don't do anything for a year.  Then take 5-10% and splurge on yourself.  The rest decide how to allocate between stocks/bonds/cash/real estate.  As for stock and bond indexes a 65% stock to 35% bond ratio will serve you well.  Go 70% to 30% if you like as well and want a little more risk.  Most advisors will crush me for that, but it works and will continue to work.  If you are really savvy and can endure the pain read the intelligent investor by Ben Graham.  I never recommend the book because it is a tough read, but he was smart and his philosophy has been proven over and over again over the decades.  

I had a similar experience in late 2012, after the sale of software. We immediately invested the money in early 2013 with a reputable financial advisor and got a 24% return last calendar year.

Then, this year, my wife and I decided to purchase some buy and hold rental houses as a way to diversify. Don't dump all your money into real estate.

The one issue I'm having is that having cash doesn't necessarily make you attractive to lenders. 

Even though our money, for the most part is in taxable brokerage accounts, reaching out to lenders for rental property loans...they mostly have looked at our W2 income on the past 2 years. We refied our primary home with a 10 year mortgage in hopes of paying off before our 1st child goes to college. 

That's the only debt we have and still our debt to income ratio was "too high" to purchase additional rental property. 

I own my own business, and typically reduce my W2 income as much as possible, but that has hurt me....even with having access to cash.

So...you may want to start small, but you need to start soon....especially if before you new cash that you had a regular paying W2 job. 

One thing I did was to partner with another person who had a very low DTI ratio and we did a 75/25 LLC, where I would pay 75% of down payments on the rentals we purchased. He was happy to reduce his exposure, but still have some cash flow and diversify.

I would honestly try to purchase a midsize apartment complex. Something in a good location with about 50+ units. It would need to be big enough so that it would have an onsite and full time property management team, But small enough so that you can still purchase it with the $1m, or still being able to leverage what you can't pay cash with. Still leaving enough for reserve, you should see a nice cash flow from that. That is what I would do, but then again, I am a gambler. That would be me making an "all in" move, and putting all of my eggs in one basket. Of course, being the analytical geek I am, I would do thorough research before making the purchase. 

Without knowing your circumstances better Robyn my question is what do you want to do for the rest of your life and why do you want to turn 1 mil into 5.

If you had a mil in cash for example you could buy enough real estate in my city of Memphis to give you a genuine net return "in your jeans" of around 110K per annum. Over time that would increase of course but you could retire on that.

Just a thought!

Hi Robyn, congrats on the windfall! If it were me, I would definitely put that money to work with diversification. I'd go with stocks (but I wouldn't dump them in a particular fund or holding all at once. I would take advantage of weekly purchases and dollar cost averaging and then the next big correction or drop, I'd put the remainder in that I had allocated for stocks). I'd see what I could afford with RE investments in a stable community outside of a stable city (that would also make enough money to pay for management). Then finally, I'd buy a lower cost franchise or two that seem to do pretty well like subway or dunkin donuts. I, personally have always had a passion for exercise and recreation, so I also wouildnt mind a gym franchise like planet fitness. 

So I'd pick totally passive instruments like Buffet type stocks (nothing sexy, just tried and true staples), RE investments where you would be more active, and also something I was totally passionate about in a day to day business!

@Robyn Coady

The wisdom here is to invest in what you have great wealth of knowledge in. I have a friend from college who grew up from a solid middle class family who made his first million from scratch. He now possesses the financial IQ and investing experience of the how to turn his first million net worth into  $3M, then to eventually into $5M. He is a man with a financial plan. I have another friend from college who inherited a million dollars from his wealthy Asian parents overseas and grew up from a affluent household of privilege. He ended up spending and losing much of his million dollar inheritance from bad investments in both equities and real estate. He lacked the financial IQ and investing experience that my other friend possessed.

If i won the lottery, and suddenly had access of $1,000,000 dollars in tax free money. I would allocate this money the following way, but not invest all of the money at once. I would carefully allocate the money in a gradual manner.

30% allocation: $300,000

My own business (S Corporation) - highest risk, highest reward. If there is a business idea you are passionate about and you have great wealth of knowledge and industry experience in the business you want to start, I would give it a shot. This is one category, I believe one can quickly accelerate their networth faster than real estate. I would expect a return anywhere between 25 - 50% annual. 26% annual return will double your net worth in 3 years.

30 % allocation: $300,000

I would allocate this amount to building a solid single family homes rental portfolio in a "A" school district zone in a high growth emerging area. I would expect average returns of 15% - 18% from my real estate investments. 

20% equities and stocks : $200,000

Right now the stock market is over heated and is not a good time to buy now. I would wait for a substantial correction in the DOW or S&P 500 and take a buy and hold strategy. If you have no investment knowledge in the equities market, I would recommend buying the S&P Index 500 which will beat the performance of 80% of all fund managers over the long run. If you are an experienced investor and believe you are among the talented top 20% who can consistently outperform the S&P 500, I would create my own hedge fund. Investing in the S&P Index 500 I would expect an average return of 11%/year over the long term horizon.    

20% cash and money market : $200,000 

Cash is king when we are headed into a deflationary market environment. Cash in hand will give you peace of mind if the market suddenly turns for the worse.

Easy.  I could buy $1 million worth of property and turn that into $20k/month (maybe upwards of $30k).  I'm pretty sure for 99% of the folks here, that's not only enough money to live on but enough money to continue to build your real estate empire from there.  It just depends on your goals.

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