High growth potential investments?

[Clayton W McGehee]

Hi, I currently put 600-1000$ a month into a fairly safe 5% interest bearing account and I want to start putting about 100$ a month into something that is more high risk/high reward as well. I am considering doing this via 2 ways and just wanted opinions from people who may be more knowledgeable than me. 

1: Investing in Prosper Loans buying C and lower loans (25$ per loan to diversify)

2. Buying something like the AMLP ETF. It seems to have a yearly payout of roughly 8%. 

I would really like some opinions on these options or maybe other options. This is meant to be a long term investment so being liquid doesn't matter. 

On a side note the 600-1000$ I put away a month to my other account is to buy real estate in the near future. I will be able to buy a home completely outright with no loan whatsoever hopefully within the next 6 months. It will be a cheap home mind you, but luckily my father was a contractor and can help me fix it up very cheap. 

[Steve Vaughan]

Regarding RE leverage vs buying outright.  I have both and here are my findings.

The ROE/COC of my non-leveraged assets is right around 7.3%. Most of these started as leveraged but I paid them off strategically and on purpose because of the unfavorable commercial terms, higher seller-financed risk or old higher rate commercial mortgages above 6.5%. I keep fixed long term loans with rates below 6%.

The COC of my leveraged assets is usually in the high teens like 17%. Some 22, some 12. I wasn't chasing COC, but that's how they worked out. I haven't sold below an IRR of 20% yet and I haven't only been investing since 2010 like half the podcast guests. This is pre and through the GRC.

So, a good purchase (Most important thing) bought with good leverage will definitely magnify returns.  A bad purchase will suck with leverage or without.  If using cash, get a big discount.  I have found the best discounts by buying odd or otherwise non-bankable properties, then making them so.  Equity bumps avg 50% when your future buying pool increases 100x.