You just net $1 Million dollars game

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You just net $1 Million dollars game

Kelly Foydl
Sacramento, CA · Member since 2015 · 34 posts · 10 votes

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.

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Steve Olafson
Scottsdale, AZ · Member since 2014 · 659 posts · 536 votes
11y

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.

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  • Steve Olafson
    Scottsdale, AZ · Member since 2014 · 659 posts · 536 votes
    11y

    The big money is about chunks of cash, not simply cashflow.  The cash that you could generate from a cashflow property is reasonable.  You could get a 5-10% return on a reasonably stable commercial project or apartment building.  So a million dollars could get you a $3M deal with cashflow. 

    On the other hand, you could buy a half empty commercial building that is in a nice area.  Perhaps the owner cannot rent it out because they have no money left for leasing fees and tenant improvements.

    It is a risky move if you have not done this before but it just takes common sense and planning.

    Buy a property that would be worth $3M if it was leased up.  Perhaps you could reface the property or just clean it up a bit.  If you could get something like this at $1M and put $500-$700K into it, then sell it for $3M.

    That is some reasonable money.  That is what I would do with 1M.  I'm certain that I could get some bank funding for part of this transaction.  Certain because I have done this before.

    1Reply
  • Gregory H.
    Real Estate Agent · Philadelphia, PA · Member since 2013 · 451 posts · 369 votes
    11y

    25 years old here. 

    1. I would take $50K and put it in the bank, nothing like a little cash. 

    2. I would then take $200K, buy myself a place to live, cash. 

    3. I'd then take $250K, spread it evenly across 25 dividend growth stocks. 

    4. I would then take the last 500K and conservatively lever to buy myself 4 buy & hold rentals worth $1mil.

    1Reply
  • Bhekizwe M.
    Bulawayo, Zimbabwe · Member since 2015 · 1k+ posts · 253 votes
    11y

    Under 40.i would buy into money market instruments then later (several years) when the rates normalize and liquidity improve, i would switch to buy and hold single family houses in ideal areas.

    0Reply
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    11y

    @Kelly Foydl -  Actually, my vacancy in Chicago is WAY LESS than in Milwaukee.  The rents are higher, the units are all granite and stainless and I rarely get turnover.  Milwaukee is lower income clean units with laminate and I have 2 leaving this month because they can no longer afford rent.  

    Both markets have their pros and cons which is why I would not invest all the money into one of them,

    Podcast Guest on Show #132
    Second City Real Estate4.821 Reviews
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    0Reply
  • Account Closed
    Residential Real Estate Broker · Birmingham, MI · Member since 2014 · 179 posts · 54 votes
    11y

    I would buy 20,000 barrels of oil at $50/barrel and find a partner to help me store it in an offshore oil tanker for a small equity stake. Second option- arbitrage in the Forex markets.

    1Reply
  • Account Closed
    Steubenville, OH · Member since 2015 · 10 posts · 1 vote
    11y

    23, years old here. I would probably try to buy about a 3mm multi family property and then a sfh to rent. In 15 years I would have a very nice nest egg and would pay off student loans and invest in high yield bonds with the rest. 

    0Reply
  • Justin Kling
    Investor · Franklin, WI · Member since 2013 · 24 posts · 11 votes
    11y

    One option: I have a new construction duplex that cashflows 800/mo.  Having 5 of them (5X185K=925K spent, no leverage) would cashflow 1500/mo each.  That would bring me in 7500/mo along with my current 1000/mo (current duplex & other propery) would get me 8500/mo in cashflow.  I'm under 40 & don't plan on retiring soon so I'd keep building up the cash at 102,000 a year and keep adding duplexes/tri/quads to my portfolio using that cashflow.  Eventually I'd have 20-30K/mo in cashflow from all the properties and call it good.  

    Another option: figure out how much I could make if I leveraged the money by buying an apartment complex.  I'm not as familiar with these so I don't have any numbers to compare, but if I have a million bucks in my bank acct I'd find out in no time!

    0Reply
  • Rod Coleman
    Real Estate Agent · Chester, VA · Member since 2014 · 59 posts · 5 votes
    11y
    Originally posted by @Jon Klaus:
    Originally posted by @Rod Coleman:

    I would leverage the million then buy a enough rentals so that i can net profit of 270,000 monthly. with that money pay off the debts then go commercial with shopping centers strip malls, etc. Then retire and be a private lender. travel the world, focus on my family

     How would you net that much monthly, Rod?

     between commercial, residential, its more then possible 

    0Reply
  • Habibah Horne
    Greenville, SC · Member since 2014 · 12 posts · 0 votes
    11y

    definety i envestment  in real estate 

    Like rent home

    Vacation home

    Commercial  building , and more 

    0Reply
  • Doug St. John
    Rental Property Investor · Denver, CO · Member since 2015 · 8 posts · 0 votes
    11y

    29 years old. I lean towards buying and holding or long-term remodel and sell.

    Set aside $50k in a safe investment and then:

    1) Buy a duplex that I can live in and remodel one side and rent the other.

    2) Buy 5 condos in an industrial area near downtown Denver which will be the hottest real estate area for the next 5 years. I'd rent them for awhile and then refi to get cash for other projects.

    3) Buy and hold a few profitable 2-4 unit properties

    4) Save a little cash for emergencies and for investing after the next market crash

    0Reply
  • David Krulac
    Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
    11y

    $1million in Berkshire Hathaway class A stock

    $1million in gold and silver

    $1million in municipal bonds

    Covers, income, inflation hedge and taxes!

    0Reply
  • Ed Neuhaus
    Real Estate Broker · Austin, TX · Member since 2014 · 97 posts · 26 votes
    11y

    But a plane and take a few months off, then start it all over again.

    0Reply
  • Kevin Harrison
    Investor · Woodbridge, VA · Member since 2015 · 476 posts · 197 votes
    11y

    I am 27 and already have my first rental under my belt. I would buy in a rapidly growing area of Ga near where I plan to retire with my wife in the long run. I could pick up 8 home for about 900K all said and done each cash flowing at about $1200 dollars a month (all in same A- starter neighborhood). take the last 100K as reserves minus a small vacation for me and the misses and still be cash flowing just under 10K a month after paying the property management fees, save what I don't need and re-invest the rest. best part is I will have to deal with almost no tenant headaches... thinking about this for the right APR I could do this and pay off whoever fronted the money... anyone got a million to spare??? jk

    0Reply
  • Tyson Taylor
    Denver, CO · Member since 2014 · 56 posts · 68 votes
    11y

    Ok I'll play. One Million Dollars! I'm 40 and already have some irons in the fire, so this would put me over the hump.

    Step 1. Quit day job

    Step 2. Pay myself $100k for year 1 salary.

    Step 3. Put $100k, $50k per kid, into a college fund.

    Then the fun part.

    I'd use $300k for a down payment on a property that will return 10% cash-on-cash. A nice little rental worth $700-$800k that I can count on.

    The remaining $500k I'd keep liquid to buy land with cash and keep enough to pay for the entitlement/permitting process. Then go get construction loans and build. I figure I could live comfortably on 2 or 3 development projects a year.

    0Reply
  • Ray Slack
    Investor · White Haven PA · Member since 2014 · 362 posts · 221 votes
    11y

    Well, 

    I'm in an interesting position for this post,  as I just sold a couple of properties and ended up with a bit over your fictitious "payday".  So, I would be doing exactly what I'm doing now!   I'm flipping houses.  I buy Flips with profits after all expenses that work out to 10%-20% return on paper. I would say I average 15%.  My average turn around time is 3-4 months.  So, I can use the same "Money" 3-4 times per year..  Earning a 40-50% annual return..  I'm currently working on 6 flips and have already completed 5 earlier this year.. Based on my conservative numbers on the properties I have already bought my 1 million will turn into 1,475,000 by the end of the year and that's not including any new property I buy between now and Jan 2017.

    1Reply
  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    11y
    Originally posted by @Ray Slack:

    Well, 

    I'm in an interesting position for this post,  as I just sold a couple of properties and ended up with a bit over your fictitious "payday".  So, I would be doing exactly what I'm doing now!   I'm flipping houses.  I buy Flips with profits after all expenses that work out to 10%-20% return on paper. I would say I average 15%.  My average turn around time is 3-4 months.  So, I can use the same "Money" 3-4 times per year..  Earning a 40-50% annual return..  I'm currently working on 6 flips and have already completed 5 earlier this year.. Based on my conservative numbers on the properties I have already bought my 1 million will turn into 1,475,000 by the end of the year and that's not including any new property I buy between now and Jan 2017.

     Where are you doing your flips, Ray?  What price range homes?

    0Reply
  • Ray Slack
    Investor · White Haven PA · Member since 2014 · 362 posts · 221 votes
    11y

    John,

    Right now I buy properties in Miami Beach Florida and Also in Maryland (DC surburbs) Miami Beach are running at about 10% profit and Maryland is 15%.  Average purchase price is $210k / average Renovation $40k/  and sales price $300k. 

    2Reply
  • Eric Duran
    Handyman · Denver, CO · Member since 2015 · 16 posts · 3 votes
    10y
    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.

     please share. I would like to read!

    0Reply
  • Michaela G.
    Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    10y

    Very interesting thread. 

    I would definitely invest more in Atlanta, close to the Beltline - Maybe 500K

    As they say to buy the smallest/crappiest/cheapest house in the best neighborhood, I believe that the Beltline is sort of one of the best neighborhoods in a few years, once more of parks are built and they start laying the tracks.  And I buy in the crappiest part for 10-20K/house or duplex. 

    The really bad ones I would board up and just hold on and the ones that need less work I would rent out. 

    I believe in a few years those houses will easily be worth 100K each. 

    And take the other 500K and do some rehabs in my local area, south of L.A., which I really miss.

    0Reply
  • Fitzgerald Hall
    Wholesaler · Atlanta, GA · Member since 2012 · 243 posts · 103 votes
    10y

    I'm 24. If I had 1 million, I would: 

    1. Pay myself 100k for 1 year salary. 

    2. Connect with @Jon Klaus or another experienced developer to invest, and learn the development side of business simultaneously. 

    3. Take on another development project, most likely residential or multi family. 

    4. With the proceeds from second development project, invest in a particular niche of commercial real estate that I will eventually dominate (already have one in mind). This niche will provide monthly cashflow and sustainability. 

    0Reply
  • Cody L.
    Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    10y

    Buy a $4m 8 CAP apt complex with 75% LTV. With 5% cost of funds that's a 8% return on your $1m down, but a 3% return (8 CAP minus 5% cost) on the $3m of borrowed funds.

    Comes to $80k/year on down payment + $90k/year down on the borrowed funds.  Or $170k/year return from your $1m in.

    Basically a 17% return before other goodies like tax savings, appreciation, etc.

    8 CAP properties all day long in Houston.

    Source: That's what I do now.

    0Reply
  • John HornerPro Member
    Flipper/Rehabber · Columbus, OH · Member since 2013 · 1k+ posts · 655 votes
    10y
    I'm 30, I would continue flipping with private money, leverage this cash into discounted rentals and buy a Porsche (kidding.)
    0Reply
  • Logan Star
    Investor · Denver, CO · Member since 2015 · 8 posts · 1 vote
    10y

    I can say from experience that 1 million doesn't go as far as you think it does. I recently sold my company and am in this position. For me it's not enough money to retire, but I also live in Boulder CO which isn't a cheap area. Personally I have paid off one of my rentals, put some money into dividend stocks and am wholesaling properties as I like to keep my cash flow coming quick. I don't personally like locking up all my cash in rehabs.

    0Reply
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