You just net $1 Million dollars game

74 Replies

Hi all,

I know it's been played before, but there are tons of us new to the site, so thought I would play it again.

You just won something that gave you an after tax, free and clear $1 MILLION dollars to do as you please.

If you are younger then 40..please indicate...if older than 40...admit it, over 55 admit it, think about your end game or when you might stop or do you plan to be actively investing till the last breathe?

How would you invest your money or would you? Would you differ than your current methods? If you are a sub$30 buy and hold, do you go up in values or maintain? Would you invest all 1 million in real estate or only a portion? Would you leverage or not (especially with your over 40 or 55). How many would suddenly start participating in private money lending of some sort?

For those of you that would just leverage and buy $4 million dollars worth of buy and holds, why would you NOT do other things?

Okay, let's here what you would do.

I am 27 and I would leverage my money and get some buy and holds to make more money. 

I'd buy several lots and get bank (or private money) construction loans to build on them. Maybe 5 lots, build 5 two family homes, set up in condo association in order to sell individually. 

Spend the $1,000,000 on land

Spend $2,000,000 (borrowed) on construction

Sell all $4,000,000

This is pretty much what I'm doing now, so no change in strategy. 

I'm in the middle age group.  

What would you do, Kelly?

I would take the $1M and lend it to @Jon Klaus  as construction financing  (at a reasonable rate as Jon stays on track) ;-)

Once I had my principal and interest back, hopefully the froth will have come of the multi-unit universe and I can find a nice mid-sized apartment complex or three.

I too am in the "middle" age category

what would I do...I have to admit I'm conflicted. 

I'm in the middle age group. So I think I would do a combo of things. Time is my "reason" and wanting out of conventional 9-5 J O B.

I would take about $200,000 to buy around sub$30 rentals at 1.5% for cash flow to keep my household afloat while I become a full time investor. Don't need a ton to make ends meet with my spouse.

I would take $300,000 to leverage for more rentals and keep re-circulating funds to grow that group. 

I would take $300,000 and find some way to get started or involved in private lending. Taking those earnings to supplement my leveraged rentals, maintaining my principal in this area.

 The last $200,000 I think I would keep liquid, not in real estate, but like in Vanguard fund for emergencies.

I'm under 40.  I would honestly probably by 4 houses with cash from 125k-160k to net 4 houses for roughly 600k.  I'd rent them for average of $1,500 x 4 = $6,000 month.  

200k into some kind of stock fund(probably index)

take 100k for downpayment on future home.  (would rent current house when i move)

100k in liquid funds, cd's, money markets etc while continuing to pursue more real estate deals.

Originally posted by @Account Closed :

I am 27 and I would leverage my money and get some buy and holds to make more money. 

 Welcome to BiggerPockets, Brandon.

I am under 40. I would take $500k and buy $2 million of property in Chicago at a 75% LTV and then I would take $400k and buy $2 million of property in Milwaukee with a 80% LTV. Then I would take $100k and travel

I'm over 40. A cool net $1,000,000 would be enough to push me over the edge, I"d be done, retired.

Sorry boring, but the finish line is within site.

@Brie Schmidt

Let's say I want to do your plan...how many houses do you believe you would end up buying (price range) and are you re-investing or using it for cash flow to float all that traveling?

I think for someone like me who has yet to do the first deal (soon though, no excuses) the idea of leveraging is scary. Plus to be new, you still have to old down that dorky JOB while you find all those homes.

I love your idea, but my fear would cause me to pause...I should get over it.

Great question. I will be 21 in May, and will plan for longevity; but first replacing my current 9-5 Salary.

I would rehab 3 properties my first year in the $190,000 range, to net about $265,000-$275,000 each.

Then I would use the profits generated to purchase my first buy & hold property, and then repeat the process for years to come, buying one buy and hold property, from the profits of my rehabs. I would also invest in some duplex's/Multi-Family, but believe SFR is the way to go; especially in Long Island, NY

Any thoughts?

Buy 30-- $30,000 SFR ....put $50K in reserve, give $40K to multiple charities, 10K a little spurge...monthly travel all over the world.....PM necessary at this point...

I'm noticing the trend here which is why the age part of the question is so important.

For the ones under 40, you create a new career, keep investing, stay actively involved day to day, and as an entrepreneur those days are much longer than a 9-5 but more fun. Those of us over 40 start doing things closer to the passive income side (not all, @Jon Klaus is an exception). 

Like @Mike Finley, the end game is near...want my time, like @Brie Schmidt to do what I want with reoccurring income.

I ask this question of people all the time. I would love to have this problem, and hope to someday. Those who are not investment minded just say "I'd retire" without thinking of how long the money would last. Investors think differently. 

It's a hard question because if you were to net $1million, I think the natural reaction of a newbie is "don't lose it" and we would get stuck in fear of making huge mistakes. Those of you that have been active in this world all seem so secure in your answers.

I appreciate you all playing the game again. As I see in the related discussions area, we all ask the question. I don't care about net worth, I only care about income and security.

What about those of us that already have it.  I have had more than a million for most of the past 16 years.  I am 56 now.  I am happy to tell you what I did do if you are interested.  It is a fairly long story.

Originally posted by @Mike F. :

I'm over 40. A cool net $1,000,000 would be enough to push me over the edge, I"d be done, retired.

Sorry boring, but the finish line is within site.

 Under the mattress, then?

Incredibly interested, so long is good! 

Originally posted by @Steve Olafson :

What about those of us that already have it.  I have had more than a million for most of the past 16 years.  I am 56 now.  I am happy to tell you what I did do if you are interested.  It is a fairly long story.

 Start a new thread or blog post, Steve. We'd love to hear about it. 

Here, tell us what you'd do with another million in cash. 

This is something I am trying to work out in my head.

If I had a million cash... 1 million is not enough to retire on at age 51, in Maryland, 3 kids in grade school.

Stocks... I feel like I am handing money over to a system and crossing my fingers.

As a builder I could buy lots but at the end of the day you own dirt, banks are not beating the door down to loan you money on dirt. Add in the impact fees for new construction (Montgomery County can push the $40,000 per lot), storm water management cost, commissions, closing costs, new home warranty and whats left? 

As an buy and flipper, still looking into that and researching a big hurtle in my mind, lead based paint and the EPA.  Again Maryland adds another layer into the mix.

As a lender, still looking into that. 


 

 

"I don't care about net worth, I only care about income and security."

The thing about this is that net worth is the platform that provides passive income, and net worth provides even more security than income does, because income is more likely to be interrupted.

The thing about this is...okay, it's a partial sentence I will clear up.

I want to maintain the principal amount, appreciation is secondary and not my sole investment purpose in a buy/hold scenario. I certainly don't want to lose principal.

@Steve Olafson, if you start a new thread (please do) I will read with great interest

I'd probably put it into private lending/partnerships. Find people who have skills and aptitudes that I don't, and enable their projects.

BTW way I do kind of take exception to the idea that being over 40 or 50 is something that needs to be "admitted" rather than indicated. What's that about?

(And I'm 51.  So get of my lawn, ya darn kids)

Sorry, didn't mean to create any bad will with the "admit it" statement. But the reality is, our age bracket very easily influences the path we select. As well as when we started out investing, stage of experience, etc, etc. 

Totally agree that one's age can, and should, have an influence on financial decisions. And really, I'm not trying to be a jerk; I was  just struck by the interesting choice of language.

@Jon Klaus  

I may have to rescind my construction loan offer at the top of the tread.  I just checked the USDCAD spot rate and I could repatriate 1-million USD today and make ~240K on the transaction.  The taxman would take close to half, but I'd still pocket 125 - 130K (12.5 - 13% profit).

We might have to partner on those houses ;-)

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