Real Estate & Leverage Question

Buildings, that depends on how much the buildings cost, but depending on how the lender views your background (experience, net worth, etc. etc.) you should be able to get at-least $5.5MM+ in loans on your $2MM in equity with a traditional commercial mortgage. Expect a 5 year in the mid 4%'s or 10 year term in the 5% both amortized over 30 years. Commercial mortgages are somewhat similar to corporate debt in the fact that you refinance your unpaid balance every 5-10 years.

assuming you want to acquire stabilized properties? Leverage will vary +-15% based on your experience and whether you're willing to put up recourse (which it sounds like you have no experience and no recourse to offer).

I would be careful. Cap rates for multifamily are low right now (for both class A and B assets); the market could turn slightly and that measly $2mm equity will disappear pretty quickly.

2 million? you could purchase a 2 bedroom condo in the city for that...

After reading your post, you should probably put ALL of your inheritance into a 5 year CD.

Given your experience and the fact that you probably are not able to provide recourse, you could probably go up to 65% LTV, or 5.5mm+. I'd be hesitant going higher on a first project. GS tackle also makes a good point about cap rates...if they go up and you don't have the $ to remargin at maturity you're sol

I dont know why you are trying to give a coherent answer to an incoherent question.

Stick that two million into index funds and be done with it.

I suppose it also depends on what your financial goals are, but unless you see a future for yourself in real estate, I would put the money into index funds. There is also the option of investing into REITs, you do not get the advantage of real estate's depreciation, but you do get a return of 6% at least (depends on the fund). There are a million different things you can do, but it comes down to what your goals are. Echoing some previous posts; that money could be used to start your own small deals and get the experience, which you could then leverage later down the road to do bigger deals, but if not, index funds, REITs or other investment vehicles might be the right answer.

I would start out buying a duplex or very small apartment building where you wouldn't have to invest over 10% of your 2mm (aka 200K). Look for one in a good area, but perhaps needs some TLC so you can purchase under market value. Fix it up, rent it out for a year. Maybe even live in it yourself and rent out the other rooms. Take that time to decide you if like being a landord. Trust me, its not for everyone.

Like posts above, you are very fortunate to have such a large inheritance. Dont throw all of it in to an industry/investment that you have limited/no experience with right away.

I know a guy who started out doing what I described above. Started out buying a single duplex right out of college. Rented out the other side for a few years and then sold it at a profit. This allowed him to learn how to manage real estate/tenants and learn where the pitfalls are. He liked it, so the next place he bought was a little bigger. He did this over and over again. Since then he has developed/bought/sold many, many, many millions of dollars worth of multi-family units. He also started what is now one the largest brokerage firms in the US.

Basically...dont be afraid to start small. If you like it and learn the business, you will still be able to make a lot of money over time.