If someone gave you $ ONE MILLION Dollars today ?

If someone gave you ONE MILLION Dollars today and told you that you had until 25 DEC 2008 to get the most return out of it (Highest ROI) and you could keep the gains, but would have to give back the One Million Dollars…

What strategy would you use to do it? :huh

Legally? :smile

Call Martha Stewart. I’m sure she would have some “inside” information. :biggrin

Down Payment Assistance, possibly…

I would continue doing exactly what I’ve been doing. Paying cash, no hard money, no private lenders, no banks for GREAT deals on single family homes. I’ve been on a pretty good tear here. Last home I purchased came from an ad I run all the time. Took $8000 and rolled it into $24,000 in 10 days.

I buy houses that need work directly from the owners, none of these homes are listed. I market directly to these people. I don’t get a lot of them, about 6-9 a year, but the returns are great. Most of the time I’m buying for 30 to 40 cents on the dollar and just list the home as is, offer a 12% realtor commission if sold in 30 days (6% after the 30) and this is the important part… I leave money on the table for the next guy. I have my agent give me a price he feels he can get in 30 days. I know the market so I KNOW what that number will be. They’ve been selling like hot cakes. The old saying has never been more true.
“You make your money when you buy them.” I just do not buy unless I can steal them. Plain and simple. I’m walking away from about 5 to 10 homes a week because they don’t meet the buying criteria. I don’t waste my time with Bank REO depts, auctions, MLS listings. I look at it like this. THEIR stuck with it NOW, I don’t want to be stuck with it LATER. Couple that with the knowledge that 2008 is going to make 07 look good, and I see very good things ahead (as far as deals go). At some point I’ll keep a few of these for rentals.

I sold everything I had in 2004 and 2005 because I had seen this movie in 1991, same ending. I knew it was time to sell when I put a for sale sign in front of a three family I had. The sign was for a motorcyle I was selling, it started to rain so I put the bike in the garage and forgot the sign. I got 38 phone calls that weekend from people who thought the HOUSE was for sale. They just kept outbidding each other, it was insanity. It sold for a number I KNEW was crazy. That weekend I decided to sell all my rentals. Now I’m sitting on cash and cherry picking. Funny thing is… THAT, is exactly how I bought those rentals in 1991-93.
Same circus, different clowns!!

Keep flipping houses or be a money partner on flips/new builds.

Use it to purchase half a million dollars worth of property.

Yes Legally, :anon :grim

I would take all that money. Go to the bank. Get a whole bunch of quarters with that money. Dig a 50 by 50 foot hole. Then jump in it. People would be amazed at how much quarters I have and would most likley add more quarters to my hole.

Thats what I would do. :beer

Vegas, baby! :evil

Often the highest returns carry the greatest risk. Is preservation of capital part of the game plan, or is this all money that you are willing to risk losing?

The highest return is infinity. I get an infinite return when I make a profit with none of my money invested. Do a subject to with nothing down, nothing out of pocket. Sell the property the next day for a $1 profit.

You have just made the highest return possible – infinity.

What would you do?

I believe you put money into investments that do best with cash. Real estate does best without cash. Without leverage real estate is no better than any other investment. I leverage my houses as much as possible. For example I bought my last house for $99k. The house had an ARV of $140k. I put $8k in it for purchase and fix up and borrowed all $107k for the acquisition and fix up. That means I calculated my return by dividing the amount of money I have in the deal by the return from that deal. I divide by zero. That gives me a return of infinity.

The best use of the money is not to maximize the ROI but to give me maximum cash flow. In that case I would buy a 50 unit apartment complex for about $10k per door. I would put $100k down (20%). I would also borrow enough money to upgrade the structure. (New A/C, new appliances, new roof etc). I would then raise the rents by 30% to 50% (depending on the market). This would raise my income and lower my operating expenses (since new stuff doesn’t break) and then the value of the apartment would have risen from $500k to about $800k. If I divide the increase in value by the amount of money I have in the deal I get a return of 300%.

It depends.

Do I have to give the $100,000 back in Sept of '08?

If I have to give it back, I’d just put it into cds. One of my banks is paying over 5%.

My local real estate market is unsettled and edgy. An unsettled real estate market nationwide could possibly make the stock market more risky than usual.

A $100,000 balloon payment hanging over my head and due in less than a year would kick me into fiull convervative investment mode.

Now, if I don’t have to return the $100,000, that’s different. Although illegal is still out. I am jail-adversive.

If I don’t have to give the money back, it would go into real estate.

Hey, maybe that is enough money to open one of those off-shore gambling web sites.

Some one here was asking about passive income. There’s your answer.

On the plus side, you would have lots of opportunities to travel out of the country to check on your investment-- so pick a nice vacation location that doesn’t do extradition.

we have two valleys here in Calif: Silicon Valley and Silicone Valley. One place you could start a business with that money and other one would get you about 1 millionth of a percent in a tech start-up. In both places in terms of real estate, $100k would get you a tool shed with a leaky roof and a bad foundation.

I have similar question as the original poster. Aside from the tongue-in-cheek humorous responses, its a valid question.

I also have some substantial cash that has been sitting in money market earning 5% tax free for a couple years. To me, this is like LOSING money. But the stock market is scary. The best I might hope to do there with reasonably low risk is maybe 12-15% and that scenario will have down times during which the stock absolutely must not be liquidated…which can last for 5 years or more.

I have been trying to study about how to invest in real estate. Unfortunately, the vast majority of the books and especially guru information is based on a target audience that does not have a lot of real equity to use for real estate. Its all about how to buy, move or otherwise control real estate in a profitable way, without needing a lot or in some case ANY money up front to do it. So infinite ROI. great. However, I believe that I should have an advantage by having some cash to start out with. But where is that advantage? How does someone best take advantage of a sizable cash position to invest in real estate and also simultaneously take advantage of finance leveraging, etc. to maximize returns while also keeping risk and taxes to a minimum? Strategies for this approach do not often seem to be discussed much in the various educational products that are available. When I talk to my conservative tax advisor he just says to “stay out of real estate, its too complicated”.

BlueMoon, your advice seemed closest to good sense that I have heard so far. Leverage the cash position to obtain a larger property, such as an apartment building that needs work. Seems like it still gets down to the same formula as everything else only larger scale. Get into everything at no more than 20% down, including repairs, etc, look for deals and opportunities where the value can be raised through improvements to capital or management, then either run it or get out for the profit.

So putting $100k into real estate only makes sense (compared to say a mutual fund), if you can take advantage of bank financing to leverage a higher return on your money, in combination with using your own skills to find the right property and develop it effectively. Just has to be bigger deals I guess.

I would toss it in with my hard-money lending program I’m part of and am currently getting 24%/yr. I’ve already had one payout from them and am expecting the big one in January. In the next 10 months, I am expecting 15-18% returns, so that would give me a reasonable $15,000 - $18,000 if I invested $100,000 with them. Nearly $20k, for doing more or less nothing but waiting, is a pretty good return.

First of all congrats on having a 100,000 in cash…

Secondly KEEP IT… Letting someone else use it or you using it when you are not sure where to invest it is a gamble and one I wouldnt take…

There is little reason to put money into real estate especially in a downward market… That doesnt mean dont buy real estate just dont use your money or credit… learn how to without needing either…

I would spend a little on a Great Mentor and go from there…

Again keep your cash…

Michael Quarles

For the folks who took the question seriously - I say “BRAVO” :beer

Some interesting viewpoints here…

For the one’s who have no Idea what One Million dollars is :banghead2


How does changing the question from $100K to $1 million change the answer?

I am assuming that you don’t have a spare $ million laying around to pay back this loan in a year.

Since all of the money has to be given back in one year, you can’t afford risk and you can’t really use illiquid investment vehicles. Put the money in risk free investments such as Treasury bonds, or municipal bonds. Your return won’t be that great but you won’t risk losing the money either.