Knowing what you know now...(is that all we can ever know?) How would you invest $1M? I'm interested in hearing answers and explanations from everyone so chime in!
I've never been one to dwell on "if I won a milion dollars...." Or "if I had million dollars...." It may be fun, but feeling good about looking at point Z is a distraction when you need to be focusing on getting to point B.
So how are you going to earn a million dollars and what is the next step, your point B, that you can take today?
I would probably open a couple restaurants or convenience stores that I know would do well and also buy about 20-30 rental properties. I would keep about half in the bank and let it collect interest.
@Larry T. I'm totally with you in that dreaming BIG is necessary in order for us to create the appetite and motivation to achieve those things but that daydreaming can detract us from reaching our goals. I asked the question as I am new to real estate investing and am curious to hear the answers from experienced friends such as yourself. Instead of reinvesting that $1M in my regular business...I would like to diversify and try something new. Perhaps the way I phrased the "subject" of the post made it feel like one of those lotto fantasies I'm sure we all have from time to time haha.
@Jassem A. thanks for your answer! Which reminds me, haha...
I'm interested in how everyone would invest that in real estate or businesses associated with it. Thanks BP family.
I have no experience with them but I'd probably buy some parking lots. Every time I pull into one and have to pay $20 for the day I just imagine how much, easy money the lots make.
I would buy two $2 million apartment buildings with 20% down on each one. ($400,000 each property).
I'd then use $100,000 on a spec building deal.
Finally, I'd use the remaining $100,000 to renovate my house.
I'd figure out what I wanted to get out of it "after I invested" it. Then, chose the best way to get there. What I would do is a combination of what some have said above.
I'm lucky here that the market allows me to invest in SF rentals and get very high returns. I'd start there, since you can put your cash into it, but never really spend it since you could recover it all refinancing it, and re-use it on the next deal. That establishes my base monthly income to cover my monthly expenses. How far I go depends on my monthly expenses, but here it would take anywhere near the entire $1M.
Next, I'd take the other $800K +/- and use it as a down payment on a NNN single tenant commercial deal. Then I would setup my daughter to do the same thing.
I do agree with @Larry T. . To many people are dreamers and not enough action takers. I guess that is good for us Go Getters.
I'd pay off some rental properties to bring my monthly cash flow to about $17K. I would also continue to buy on the courthouse steps and offer owner financing on many of the deals.
I don't want a million dollars... I want the income I can get from a million dollars. :)
With $900,000, I'd probably buy a commercial property or two, or an apartment block or two and some SFH so I could live easily off the cash flow.
With the remaining $100,000, I would "go to flipping school". I've always wanted to embark on this. Being able to buy rundown and beat up houses for cash will put me in a strong bargaining position. I'd be able to get houses for cheap and start fixing them up. Maybe just 1 or 2 to start with until I gain confidence and feel like I know what I'm doing.
I like your answer @Wendy Noble haha.
@Account Closed I'd build residential new construction in Orange County coastal areas, or possibly use it to build a medical office project. We have very solid values here, great broad based economy, and everything imaginable to do, along with perfect year round weather, higher education, medical care, etc. Another project I'd really like to do is mixed use type, Modern style, Live/work units with ocean views!
I would buy about 8 SFR at around 40-50% leverage to hold as rentals, bank about $100k as reserve and use the remaining $100k to fund flips as I continued to grow my asset base to acquire additional rentals.
I would find a nice newer retail strip center for 4 million putting down 25%. Cap rate would be 8.5%. With a 4.4% 10/30 loan, I would be looking at a 15.97% cash on cash return. I know the property and the loan program, now where are you Genie.
No offense to Robin Williams (RIP), but he is not who I picture when I think of a Genie.
I would give the majority of it to St. Judes Childrens Hospital. They do great things for children & their families regardless if they can afford it.
Account Closed Hahaha...YES, I love it. I was thinking Aladdin but I like where you took it to.
@Lonnie Pickard Good answer! Did you know that this is Children's Cancer Awareness Week? Of all the money given to cancer research, Children's Cancer Research only receives 4% of those funds. Shameful! I have several young children as "friends" on Facebook that are battling cancer, one of which is neuroblastoma, a very aggressive form.
Now ... back to real estate investing :) We have several threads on BP similar to this, what would you do if you had $X to invest?
With $1 million dollars I would buy about 14-15 SFR in the Cleveland area. on a average 10% cap rate I'd net about $8,500 a month or $100k a year. I would then refi the properties and take half the equity out. Assume appraisal value is 20-30% higher than what I purchased. The leverage would def eat into my cash flow but with the $500k of money I just generated I'd buy 7 more properties. I'd rinse and repeat until I'm comfortably leveraged and have a strong cash flow. When all said and done I'd end up with about 25 properties, $7,500 monthly cash flow and about $1.3M in equity.
I would invest $500K in a SFH with a 10%+ cap rate and then invest $500k dividend paying stocks or indexes.
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