Looking to invest $1M-$1.5M, are my expectations of return too high?

[Matt E.]

My wife and I are looking to do a 1031 exchange on a property we have in escrow. We stand to net approximately $1.5M in profit, and we are looking to roll it into a long term investment. Ideally, we would like to pull $75K annually as income for ourselves.

Is it sensible to put $1.5M down on a $3 million or $4 million Multi-family building and expect that kind of return? We live in California and plan on staying in California. We are both just under 30 and would like to use the $$ as a source of income, then reap the benefits once the mortgage on this new investment is paid off.

Based on what I see for sale, it seems possible. What am I missing? Is my logic flawed? I would appreciate if some of the veterans could point out the holes in my plan.

Also, I would ask for alternative scenarios on how we could invest the $$ to maximize our return. Due to the 1031 provision, it will have to be in real property to defer tax liability.

Thanks,

Matt Evans