What would you do with 2 million in Cash?

Innovative Strategies
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What would you do with 2 million in Cash?

Greg P.
Los Angeles, CA · Member since 2009 · 717 posts · 50 votes

If you had two million in cash right now, what would you do with it? Would you buy a distressed commercial building; put tenants there and refinance? Would you buy a fully functioning apartment? Would you rehab houses, or rent houses? I'd like to know your thoughts. Thanks!!

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Stacy Nettinga
Contractor · Mitchell, SD · Member since 2011 · 47 posts · 7 votes
15y

I'm sorry, did you need an address to send the check to?

3Reply
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  • Richard S.
    Contractor · New Haven, CT · Member since 2009 · 46 posts · 5 votes
    15y

    first and foremost, a small vacation would have to be in order

    2Reply
  • Stacy Nettinga
    Contractor · Mitchell, SD · Member since 2011 · 47 posts · 7 votes
    15y

    I would get as many SFH's and smaller apt. bldgs as possible. That amount of money would buy alot of property where I live.

    1Reply
  • Stacy Nettinga
    Contractor · Mitchell, SD · Member since 2011 · 47 posts · 7 votes
    15y

    I'm sorry, did you need an address to send the check to?

    3Reply
  • Ophelia Nicholson
    Involved In Real Estate · Hyattsville , MD · Member since 2011 · 298 posts · 256 votes
    15y

    Thats easy- I'd buy 14-16 rehabs- $100k to $125k each.
    Then I'd rehab, stage and sell them from $200- $250k depending on location. Then I'd use some of the profits to get some rentals and use my original 2 mil and rinse and repeat.

    1Reply
  • Jason S.
    Investor · Diamond Bar, CA · Member since 2009 · 446 posts · 233 votes
    15y

    It depends on my overall financial health. Is this my only money and I have no other assets or is this money over and above? You can never answer such a question without knowing the big picture.

    1Reply
  • James Martin
    Property Management · Memphis, TN · Member since 2009 · 667 posts · 362 votes
    15y

    I would invest 1 million in a corporate bond and 1 million in my credit union. I would look to draw close to 5% interest on each and live off of it.

    2Reply
  • Greg P.
    OP
    Los Angeles, CA · Member since 2009 · 717 posts · 50 votes
    15y

    I like everyone's responses, but wouldn't doing SFH's be a lot of work to make money with? Wouldn't it be easier and simpler in the long run buying the Hotels and not Green houses faster? I can't remember who I heard this from but they said if they could do it all over again, they would go bigger faster. Keep the responses coming! please.

    1Reply
  • Jim M.
    Real Estate Investor · Charlotte, NC · Member since 2011 · 252 posts · 56 votes
    15y

    500k in commercial property, 500k for rehabs, 500k for hard money lending and the other 500k in a bond account. Live off the income from the commercial property and all profits from hard money and rehabs go to purchase cash commercial buildings. Once the business is running well then you start refinancing the properties to buy more properties.

    1Reply
  • Brad Williams
    Real Estate Attorney · Ridgeland, MS · Member since 2011 · 22 posts · 15 votes
    15y

    I would really like to hear from someone who actually has invested 2 million in cash. We can all speculate and dream but, is there anyone willing to share how they actually invested a nest egg.

    BTW, my speculation is take 500,000 and invest in real estate, diversify the rest in some other investment type, including something that provides an income stream. Work to turn the $500,000 invested in real estate into another 2 million by reinvesting all profits.

    1Reply
  • Cheryl C.
    Investor · Reston, VA · Member since 2011 · 683 posts · 191 votes
    15y

    The problem now with commercial is the REITs and Vulture funds. They have a ton of money and are over-paying for these assets. And I doubt 2mil would put you in the game for quality properties. Perhaps buy some REITS - some of the returns are quite compelling, but you have missed the boat on the best entry level on share prices.

    As said before, much depends on your overall situation. Do you already have a portfolio that is diversified? Clearly CD's are abysmal. Me? I'd probably take half for mutual funds/REITS/Metals/cash, etc., and then leverage the rest into quality RE.

    1Reply
  • David Wedemire
    Real Estate Investor · Bellingham, WA · Member since 2008 · 407 posts · 90 votes
    15y

    Leverage it and turn it. In to $10 million

    0Reply
  • Ali Shah
    Real Estate Investor · Las Vegas, NV · Member since 2008 · 127 posts · 10 votes
    15y

    @ Greg,

    yes bigger and faster is good but at the end of the day many SFH's will be easier to liquidate much faster without having to sale the entire portfolio if you needed some quick cash. if you owned a hotel or a commercial building you couldn't just cash out if you needed to unless you sale the whole thing with SFH's you could sale one or two individually and keep the rest back in your portfolio.

    0Reply
  • Greg P.
    OP
    Los Angeles, CA · Member since 2009 · 717 posts · 50 votes
    15y

    How does one get into the developing game? Sounds interesting and I've heard of younger guys doing it and making a killing.

    0Reply
  • David Wedemire
    Real Estate Investor · Bellingham, WA · Member since 2008 · 407 posts · 90 votes
    15y

    Use the 2mill to buy a owner distressed undervalued commercial property. Leas up and improve the property and resell for a quick profit. Do that enough time and you will soon forget about the 100 SFR you wanted to buy.

    1Reply
  • Greg P.
    OP
    Los Angeles, CA · Member since 2009 · 717 posts · 50 votes
    15y

    I agree David. That is exactly what I was hoping to hear. I'm sure with the 2mil you could find a distressed commercial property, fix it up, lease it up, then refinance or sell and cash out big time and/or holding it for the long haul with a strong long term tenant paying for your mortgage or cashflow. I've never heard of a billionaire who buys single family homes; instead they all buy Commercial.

    0Reply
  • Greg P.
    OP
    Los Angeles, CA · Member since 2009 · 717 posts · 50 votes
    15y

    Just another thought. I really think Monopoly is a great game since it really teaches a person how to negotiate but also have the mind set of getting to the red hotels as quick as possible. We all know once we get the red hotels, we make more money and win the game. The problem with the game was even though we had enough money in the game; the rules were we had to buy 4 green houses first then we could move onto the red hotels. The nice thing about real life is that you can start buying red hotels and skip the green houses.

    0Reply
  • Ed L.
    Residential Real Estate Agent · Hattiesburg, MS · Member since 2011 · 475 posts · 141 votes
    15y

    I asked my dad one time what he would do with 10 Million Free & Clear...

    Without hesitation, he said he would be looking for a Hundred million dollar deal.....

    At that moment I realized he hasn't worked in the past 15 years.... His favorite hobby is investing and there is nothing else he would rather do...

    I personally would be happy living off interest for the rest of my life...If I could net 5% annual on 2 million I would be set..

    I'd finish college, My Brokers Courses, and my pilots license... Free time would be great IMHO..

    0Reply
  • Oliver Trojahn
    Kansas City, MO · Member since 2008 · 143 posts · 41 votes
    15y

    Besides two chicks at the same time?

    I would do nothing.

    I would relax sit on my *** all day.. i would do nothing.

    ^^Office Space^^

    2Reply
  • Ann Bellamy
    Lender · Tyngsboro, MA · Member since 2009 · 3k+ posts · 2k+ votes
    15y

    I think I'm with David: Leverage it, lend it out, live off the interest. This strategy doesn't allow you time to sit on your ***, however. You have to look at a lot of deals to find deals you want to lend on.

    0Reply
  • Oliver Trojahn
    Kansas City, MO · Member since 2008 · 143 posts · 41 votes
    15y

    In all honesty now i would do the following at first glance:
    Become a full time investor.
    Invest $1,500,000 - Purchase Municipal Bonds at 7% tax free interest = equivalent to 10% year over year return in a taxable bond. This will provide my salary of $105,000 a year tax free distributed two times a year.
    $500,000 - since I have so much time on my hands I would consider either using this money to trade stocks daily (scary in this market) or with my 105k distribution and the newly found time I have on my hands I would start investing in long term rental properties and potentially flipping properties full time. I would even consider conventionally financing some of them to really make a dent.

    0Reply
  • Mark UpdegraffBusiness Member
    Real Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 692 votes
    15y

    "leverage it" is the easy answer. Try doing it with no track record. Good luck! In today's economy and the state of bank lending, you are NOT going to "get into the development game" without cash financing it yourself, or syndicating it with others who trust your experience. 2MM with NO EXPERIENCE?!? You're going to need to start small, work your way up. Learn how to invest smart and start building a track record. When you have one (and it looks good), maybe you'll find private investors... the banks... HA HA HA HA HA HA HA HA HA HA
    Unless you've already got one on board, the easy money game is over. IMO anyway!

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    2Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    15y

    Greg in another thread you mentioned 200k.Do you have 200k or 2 million?

    I use to fantasize all the time.Now I just look at realistically where I am at and where I want to go and take action.Often the small steps needed to really get somewhere are grueling and not all that fun to think about.

    This is why many people fantasize about one day being a millionaire but doing nothing about it.

    I can tell you also that sit on your *** with the money sounds nice but it rarely happens. I took a few years off before and became bored out of my mind. Felt like I had no purpose and was not giving back value to the world.

    People typically that have money will get involved in causes and charities to stay busy.My Uncle invented the cleaner Goof Off decades ago.He has been very wealthy for awhile.

    When he sold off the company and he took a few years off but after that he was sitting at home bored and started inventing hand cleaners and other stuff again.

    If I had that kind of money personally I like CTL's (credit tenant loans) that are triple net.

    CVS,Walgreens,Rite Aid's,etc. You can get a credit tenant loan at much higher LTV's from lenders because they see it as less risk.With the seller holding back a second you can get in for not much down.Hit a CAP of 7 to 9 going in and with triple net sit back and collect mailbox money.

    The downside is rent increases are set in stone and may not rise as fast as inflation diminishing returns.Also you have to pay special attention to the vintage of the lease.Typically they go for 20 to 25 years total.A newly signed lease has more security after the store has been built than a vintage 15 years in.

    They could decide not to renew and when you rent out to the new tenant as a second or third generational space the price per sq ft will typically be lower.

    So with 2 million I would do some safe CAP properties and then mix in the distressed multifamily for aggressive growth.

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    2Reply
  • Greg P.
    OP
    Los Angeles, CA · Member since 2009 · 717 posts · 50 votes
    15y

    I'm doing rehab flips and have approx 200-300k. I'm thinking about doing rentals, but another side of me wants to keep flipping for another few years to create 2mil cash then move onto bigger and better things. Thanks Joel.

    0Reply
  • Uryss Mitchell
    Wholesaler · San Antonio, TX · Member since 2011 · 23 posts · 5 votes
    15y

    Depends on the story behind the money. I mean,do you have to pay it back and if so how soon? If it's free and clear then I would leverage $1mil. The second mil. I would do different real estate investments in residential and commercial. Especially since here in San Antonio the Defense Base Closure and Realignment Commission's building bonanza wrapped up and many of the city's 2010 jobs announcements are bearing fruit. San Antonio will host home to the nation's largest military base in the nation meaning more families more jobs. That second mil. will help invest in the much needed revitalization of residential and commercial properties in the surrounding areas of Ft.Sam Houston here in my city.

    0Reply
  • Jeff S.
    Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
    15y

    After quitting my job I'd travel to different parts of the country and buy properties in areas I liked. I'd set up my own property management and travel around as needed to take care of the places. Keep it small and enjoy the nicer climates. Very little leverage with cash flow and slowly reinvesting unneeded capital.

    0Reply
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