Investing with a lot of equity.

[Frank S.]

Hi everyone. This is my first post here and I’d like to hear some of your opinions on how to invest in real estate when someone is on a situation like mine.

My dad was a developer and investor. He passed away several years ago. At the age of 21 I inherited his portfolio of properties both commercial and residential. They are all paid off, there are no mortgages, just cash flow.

The portfolio value of properties that are currently rented is around 11.5 million dollars, of which I make 612K a year before taxes and after property taxes and management fees which are taken care by the management company.

Anyways, due to covid 19 I saw that reliable stream of income falter for the very first time. At the beginning of the lockdowns my income went down to 10%. Now it’s back at 100% but it really made me think about the future of my portfolio. It’s heavy on commercial rentals and has very few residential properties.

I just need to diversify it with more residential properties but I don’t know where to start since all the residential properties in my portfolio aren’t as good as the commercial ones. Maybe that’s because there are far fewer residential properties than commercial ones on my portfolio.

I spent the last 10 years investing in properties for my own use, vacation properties in California, Nevada, France, Portugal and South America. Those are also paid for but most of them are vacant for family use or for me to use. I’ve grown emotionally attached to a couple of those properties too.

Since I’m not mortgaging anything, I am just thinking of the buying potential I would have if I did decide to leverage some of those properties and start diversifying.

But I don’t know where to start. I looked into apartment buildings to buy or build (using prefab technology), or should I go with buying residential homes in different markets?

I’m also not so comfortable in taking a 5 million dollars loan and going on a buying spree. Because I don’t want to jeopardize something that has proven to work for decades over something that I’m not sure of. So maybe I should just buy one or 2 properties at a time and pay them off like in a year and then get more, that’s a strategy I’m considering.

I know I wasted 10 years not doing my research or buying what I should have bought to diversify but I guess I thought I would never have to worry about living without the security of those sources of income. Until the lockdowns came along and showed me that I’m not as safe as I thought I was.

I fired 3 financial advisors over the last 10 years for their incompetence that has cost me money. The last one I fired was less than a month ago. So this time I want to do it on my own.

In the last 10 years I also wasted too much money on silly things like cars, golden visas and fake friends.

What would be the safest route, market, strategy to leverage what I’ve got with the smallest risk possible to what I already have?

If it ain’t broke don’t fix it, but the lights just flickered.

Kind regards