Best advice to maximize cash flow for life, with inheriting $1.8M

[Vince Beusan]

I am looking for the best advice in regards to how to invest $1.8M from an inheritance.   Part of the clause of the inheritance reads, all the proceeds would go into a Trust between (2) family members, the inheritor and his niece, where the inheritor (who is married) gets 100% use of the inheritance & when they die, all the proceeds go onto to the niece.

Knowing this information, what suggestion would you give a family member in how best to maximize cash flow for the rest of their life? They believe that $5500-$6000 per month rental income on the proceeds of a $1.8M SFR sale, is the best they can do. The inheritor is married, and his wife also wants control of the assets, but can not due to the rules of the trust do not allow her any control; therefore, I believe he is getting bad advice.

They technically want to 'set it and forget it', by owning a couple rental properties & that's it, I believe they can do much better, as he is age 45, and could have another 40-50 years ahead of him.

The inheritors current mindset it to purchase (2) SFR for all cash, and have no mortgage because they (he and his wife) don't 'technically own' the asset, as it is in a trust, and they don't want their investment to benefit the niece who inherits the asset after they die. I am looking for some smart suggestions, maybe someone has encountered this already or is currently going through something like this and can lend some advice.

Thanks in advance for taking the time to read and reply.

VB

[Greg M.]

First off, this is way above the level of free internet advice. A financial planner and estate attorney are needed to be consulted for this. For $1.8M, spend a few dollars on professional. It can even be paid out of the Trust.

I'm very confused. I think what you're saying is that the guy gets to invest the $1.8M and receive the dividends from that investment. Then when he dies the niece gets the Trust assets which were producing the dividends? So the purpose of the Trust would be to two-fold, to provide money for the first beneficiary with the requirement to preserve assets for the second beneficiary. If that is accurate, there may be an extremely limited area of allowable investments. I'm a Trustee for a Trust whose purpose is the care of a person and preservation of assets. What I can invest in is crazy limited. If I deviate and lose money, I'm personally responsible for repaying that loss. 

Assuming that he has freedom to invest in a variety of assets, rentals is not necessarily it. The "set and forget" attitude is laughable. Rentals is a job. Re-read that sentence. It is a job. You can pay a Property Manager to handle the stuff for you, but that costs 10% or so. 

$5500-$6000 a month cash flow seems low on a $1.8M investment. That's a 3.6%-4% annual return. A diversified bond fund should easily beat that. There are REITs that return much more than 4%. Could do hard money loans at 10% + one point and get a great return.