What would you do with a million dollars?

141 Replies

I'd buy 1000 houses in Detroit and suburbs!

Would they all perform as well as the one I bought for $806 all in last December that was rented to a 3 1/2 year tenant for $650 per month? Probably not but it would still be an investment with returns you could duplicate NO WHERE else for the for seeable future. In BOTH appreciation AND cash flow.

I would use it for fix and flips here in michigan until it was doubled and then use half for buy and hold and half for flips til doubled again....then move into higher number of units buy and hold and keep doubling in this fashion.

@Richard Dunlop , @Kevin Holmes , @Marcus Phillips , Wow! these are some really great ideas. However, I live in California and don't know anything about the Michigan RE market other than it's very depressed as you have indicated. 

Additionally, I wouldn't feel comfortable about investing in an area that I couldn't readily manage myself on a day to day basis and I don't know anyone in that area that I would trust to partner with at this time.

I would keep $100k in a money market.

I would take $500k to use as a private lender.  I would hope to turn the money at least twice a year.

I would set aside $200k for BRRRR (did I get the letters right?)

I would invest the remainder in the stock market.

@Hugh Ayles , Not sure what BRRRR means but I'm liking what you're saying about the overall distribution with the exception of putting more than about 10% in the stock market. Especially right now.

It was easy money back in '09 when the market tanked by more than 50 t0 75%. If you could fog a mirror and had money in the market you made bank. But that ride is over. Now ti's a little different story. 

The market has peaked by comparison and new potential bubbles or at least corrections are looming. Just my 3 cents worth adjusted for inflation. LOL!

Originally posted by @John Arendsen :

@Elliot Lamson, That's a real good idea and one that I've been doing some serious thinking about. We already own a few in some North San Diego Beach communities that we're thinking about doing that with. Do you have direct hands on experience with this type of investing?

I have two places now in LA that i rent and then sublet them on Airbnb. I plan on accruing a dozen more in LA and Brooklyn in the coming months. I have a friend who has bought 13ish homes in the last year all over the country only to use them for short-term rentals. He's in the middle of raising a fund to acquire another 25 homes or so. A great website is AirDNA it breaks down statistic you need for a certain area. I think now is the time to take advantage of the popularity of AirBnB, and if you do it right you can see great returns. PM me if you have anymore questions. Good Luck!! 

Originally posted by @John Arendsen :

If you had a million dollars and it was the only million you had sitting in a money market account drawing less than 1% per year how would you invest it?

At this point in the cycle here in CA (I'm just down the road from you), I would do the following with the real-estate portion of the overall portfolio:

1. Take the $1M and build a muni bond portfolio to borrow against.  That locks up $200k.

2. Keep $300k semi-liquid in your choice of cash-like investment (something that can be turned to cash in <3 days.

3. Diversify $500k into chunks of syndicated real estate projects in various markets and time lengths.

4. Opportunistically buy when a local deal presents itself, leveraging the cash position in #2.

Expect total pre-tax returns in the range of 13% ("low" risk) to 17% ("medium" risk) and enjoy being totally hands-off your investment portfolio.

Now, if you WANT to have things requiring your attention every day, I'd take #3 and #4 and go much more active either in our area or out of state, depending on long term goals.

@Elliot Lamson , I'm very impressed that you are actually sub-letting your own rentals. Obviously there are no sub-letting or vacation rental restrictions or stipulations on these properties. 

I'll look into that link you so kindly forwarded to me. Thank you once again for some very astute and thought provking ideas.

@Justin R. , Wow! great info. Where abouts are you in SD? Perhaps we could meet for coffee sometime. Thanks for the great breakdown. It really makes a lot of sense and looks like it has the potential to make some dollars as well. Look forward to meeting you sometime.

$80k-20% down payment on a $400k property with land as my primary residence. Rent out my existing residence. Cash flow around $500/month

$70k-Cash/savings

$150k-Paper assets (Mostly stocks)

$600k-Down payments on multi-family properties, SFR, and Air Bnb properties.

$100k-Property reserves

Originally posted by @John Arendsen :

@Luka MilicevicThanks for the HU! Those are some great fundamental ideas.

 It's funny that you ask this question because I think I've asked it 1000 times to my friends. I probably ask my wife every week what she would do with a million dollars.

It's very interesting seeing everyone's responses.

Depends on how active or passive of an investment you are looking for.

You could buy from foreclosure and tax Lien auctions. Rehab and sell.

Lend private money/hard money.

And not necessarily related to real estate you could do short term loans like contract funding or factoring.

I do a combination of all of the above.

@John Arendsen Being builder/developers, I would put it in on a project. Either SFR, MFR, or a medical office project we want to do.

I'd also consider using it to help finance the properties we are completing, and keep them for vacation rental properties. They're ideally situated for that use, and the area brings in high dollar amounts on rentals. 

For your purposes, I would say, stay in California, not too far from home. I know there's the out of state crowd that touts our high prices, but at the same time, there's a reason prices are high. There's various options on types of properties, depending on what you like. That amount of money allows you to get in on various types of properties, partner with others, etc.  Here's the reason I love this area, and why we relocated here when the market crashed.

Southern California:

  • Strong, broad based economy
  • Perfect year round weather
  • Strong property values
  • High demand
  • Some of the best universities, colleges, medical facilities, sports teams, recreation, amusements, beaches, shopping, etc. available anywhere
  • Good property appreciation
  • Vacation rentals often provide strong cash flow, and demand top rental amounts
  • Qualified renters, buyers, etc. 

Need I go on? Where else has all of these benefits? 

Originally posted by @John Arendsen :

If you had a million dollars and it was the only million you had sitting in a money market account drawing less than 1% per year how would you invest it?

In a way that turned it into 2 million, then 4 million and so on.

Einstein said the 8th wonder of the world was the power of compounding.

That's good enough for me.  :)

Simple.