Hello everyone -

Let me present this scenario to you and see how you would handle it...

You have $1 million cash in hand. Your primary residence is paid off. You live in California (Bay Area or Southern California, where the average home price is ~500K+).

How would you turn that single million into many million over the next few years?

If this is too broad, then set the goals to turning the $1 million into $5 million over the next 8-10 years.

I have a similar question, but at much lower entry $.

I just cashed out a bunch of stock options to ensure I "diversify."

After taxes, I will have a modest $283K and am looking for ways to build this to get cash flow so I can retire within the next 3-5 years. I currently owe $420K on my home (California!) that is worth $650K. My other debt is pretty low (a car loan of $20k). I own a second property that is renting at breakeven (value $400K; loan $290K).

I have more stock (assuming co. continues to do well) that will vest over the next 3-5 years - the remaining 65% of my options.

I've been researching this weekend on apartments but this doesn't seem to enought to enter this market.

Should I start with some Single Family Homes, or duplex/fourplex?

All advice welcome.

It all depends on the level of risk you are willing to take and how close / far you are from retirement. There are 3 broad areas one can make money in (excluding work) . Here they are :

1 ) Real Estate
2) Stocks- equities, commodities, forex , options etc etc
3) Business .

1) Real Estate- Most of the rich in this country have a substantial amount of holdings in real estate and many of them have gotten rich throught real estate. Consider investing in real estate in areas that are expected to see increasing job and population growth . With a million dollars in cash one can put 20% down on several SFRs an apartment building or a combination , hold it for 10 years and watch the property price double. In this case if you use 1 mil to acquire 5 mil of property and in 10 yrs the property doubles , your 1 mil is now 6 mil . Ofcourse you would want to make sure that the property you acquire is break even at the very least in terms of cash flow. There are numerous other ways to make money in real estate like developing property , flipping, using options , buying preconstruction and selling for an immediate profit etc etc.


2) Stocks - Turning $1 million into $ 5 million is very possible in the financial markets. Basically you need to consistantly grow your money 20% a year over 10 years. This can be done by choosing a portfolio of stocks that are expected to out perform the market in the coming years. Look at high growth sectors and companies on the cutting edge. I personally recommend small and micro cap stocks - market capitalization under $ 1 billion. Small cap companies have historically grown faster than mid cap or large cap companies.Even though small companies themselves are considered a risky investment, a balanced and well choosen portfolio of small and micro cap companies will more often than not out perform the market.

3) Business - You can build your own business or invest in someone elses business . Obviously building your own business is time consuming , stressful and has a high rate of failure. But if you are persistant , willing to learn from mistakes and are able to bounce back from failure , 8-10 years is a fair amount of time to achieve a high degree of business success and $ 5 mil + in the bank.

As far investing in SFRs or duplexes , personally with the market the way it is in California I would not invest in Real estate . Statistics show little or even negative job growth for the area as a whole over the next 5 years and property values are inflated by 30-50% in most major cities. Las Vegas - 20 % job growth and Phoenix - 10% are better choices for investors living on the west coast as far as real estate is concerned. $ 283,000 as a 20% downpayment will allow you to acquire approximately 1.4 mil worth of property. Buy a few SFRs in for example the Las Vegas area , aim to atleast break even ( and use depreciation and other expenses to create negative income on your tax returns and write it off ) , hold the properties for 10 yrs and you should the properties double in price and you could see an additional 1.4 mil .

Whatever way you choose to go good luck and feel free to ask more questions .

You can not separate risk from reward. Taking a dollar and making it into $5 after only ten years involves taking too much risk for me to be confortable. My personal goal is to make that dollar into $2.59 after ten years {shooting for a 10% annual return}. I am doing this through investments in the stock market and writing covered call options at a slight premium a couple of times a year. The way I look at it is that I am investing in companies that I would not mind holding for the long term if my strategy does not work.

On the other hand, I understand that my 10% goal might be too rich and that I might have to settle for something less.

For the original poster: There is no way to separate risk from return. If it were possible, everyone would be doing it. I guess it all depends how risk averse one is. I have to admit that being in a profession that looks for “what could possibly go wrong” all the time, I might be more risk averse than most.

Good luck

I am looking to figure out how to best invest about 120k I have after selling my first property in just over a year. I am in Florida and I am 25. Im a newbie so pardon me, by what means do I qualify for anything more than the typical debt-to-income ratio. How do I find these lenders. Are there lenders who are true no-income verification???? I really want to buy more than one property. Thanks for any help.

Young,

Yes there are lenders out there that can help you with your scenario. Especially with Florida market you can double that 120K by next year. Call me or email me so I can contact you to discuss your options and properties that you might be interested in.

Jason