Hypothetically, if you were to receive $1,000,000, how would you go about investing this money? Would you quit your job and try and do your own thing? Would you invest passively into the stock market? how much would you keep in cash etc.?
Would this be enough money for you to jumpstart your own company if that is a goal of yours?
Any specific plan of how you would leverage 1MM into a downpayment for CRE and which asset type/strategy you would take to start your own "empire." I am aware that 1MM isn't a lot of money in the world of commercial real estate, but my question is geared towards how you'd make best use of the money as an entrepreneur and reap the rewards in the future as a long-term play. Once the money is fully deployed, what's next?
any creative thinkers out there?
$1MM? Honestly I'd buy $1MM of VTSAX and ignore it for a few decades. That's not enough to build the things I want to build.
If I had to invest it into real estate, I'd either try to team up with others on the GP side so that my million plus their money would be a sizable enough GP or maybe try my hand at townhome development.
I would buy a small ranchette in the Texas hill country and build casitas at the foot of the property that I lease out on Air BnB. Run the bare minimum goats/cattle to get an ag exemption on the property and offer some F&B service to run all my life expenses through the business. Dig a well and install solar to be fully self-sustainable.
Hah, this is fantastic
Use all of it as a downpayment to acquire non-resource debt to purchase an attractive piece of dirt. Then enter into a 99-year ground lease with a developer who wants to build on the site.
The annual return will easily outperform the market. Your core asset (the dirt) will appreciate. You have no headaches or expenses. You can either enjoy the long term cash flow (which is quasi-secured)...or sell off the dirt at a 4-5.5% cap rate (which would net you a few million).
I know a few families who did this and made out like a bandit. They're still collecting cash 30+ years later.
Yeah name a peice of dirt like that you can buy for $1MM the idea is that dirt in NYC people ground lease is worth like $400MM they cant afford so they enter into a ground lease as part of structured financing on their development with the hope to refi and get out from it.
Ok. I'll indulge you.
I didn't say a purchase price of $1MM. I said using the $1MM as part of a financing package that includes debt.
You really believe it's difficult to find land at that price point? I'm involved in two ground leases right now at a comparable price. There's a whole big world out there outside Manhattan.
I highly, highly doubt any parcel in NYC is worth $400MM (land value) unless it's several acres.
There's other reasons people do ground leases besides the value of the land being cost prohibitive. I'll give you three reasons from the perspective of the land owner: cash flow...estate planning...and taxes.
Co-Invest with my fund at the GP level across like 10-20 deals
Buy primary residence in cash. Enjoy newfound life flexibility.
If I were given a "small loan" of 1 million dollars I would wait to a recession hits then put it in the vanguard high dividend yield investment fund. I would get some investment work experience than prob start a hedge fund after 5-8 years.
Lol really? It would be the best time to snatch up once in a life time deals in stock market.
Two chicks at the same time
Bitcoin and I know I will get burned for it. I think BItcoin in the future will be worth $1,000,000 per bitcoin. You just need to hold it HODL (Hold onto dear life). Disclaimer, crypto-currency is extremely volatile and it will fluctuate everyday in value. Don't invest in things that you aren't willing to go zero.
You can throw monkey sh*t at me but the Winklevoss twins became billionaires off bitcoin. It's a speculative asset that you can't do a valuation on. Wrong asset class if you want to value it. Chamath Palihapitiya, owner of Golden State Warriors is a Buffet disciple but he is a Bitcoin believer and against what the mainstream.
P.S A guy paid 10,000 Bitcoin for a Papa Johns Pizza, if he held the bitcoin, at the top, he paid $196,000,000 dollars for a pizza.
https://www.investopedia.com/news/bitcoin-pizza-day-celebrating-20-mill…
“Don’t invest in things you aren’t willing to go to zero”.
This is antithetical to investing.
Yeah the quote here is "don't gamble with money you aren't willing to lose"
TBH better off going to a casino and dropping it all on green than "Buying crypto" (Also WTF does that even mean there's hundreds of Crypto currencies out there).
$1 million, is too small. I'd prob invest in art, a couple pateks, and a nice car.
$10 million
Pay $7.92 million in taxes
$4 million in a laddered A- to BBB+ corporate and municipal bond portfolio with 1-15 years maturities, for living expenses = $400,000/ year.
$2.5 million in mutual funds & ETFs
$2.5 million in VC and PE funds. (Would be nice to be a qualified investor)
$2.08 million - buy ~600 acres of good farmland somewhere in the Rocky Mountain West
$1 million to build a distillery and barrel house on the farm capable of producing ~4000 to 6000 cases/ year
Sit on the porch with my dog and watch the barley and corn grow.
When my last bond matures, my first bottles of 15-year-old whiskey ought to start rolling off the bottling line....
I'd buy a condo in which I could do two chicks at the same time.
Invest it in the shitshow that is the WeWork bailout
I would do an acq/rehab LIHTC deal. Put out 300-400k in predevelopment costs. Get reimbursed at construction closing. Collect an additional developer fee of roughly 800k. Collect modest CF. Rinse and repeat.
A lot of gambling and drinking
I spent half of my money on booze, women, and gambling. The other half I wasted.
Modeling and bottling, blow all that and go back to IB jobs to start all over.
That's barely enough for a night out... what is OP talking about
"I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years."-Warren Buffett
I saw a listing for a $1 million, 6 unit building with a vacant unit. NOI = 60K in a cool neighborhood. Couldn't you just buy it, live there, and collect $37,800/year after taxes? Or am I missing something?
Or you could lever up 80% and buy 5 of them
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