If you have 1m, where you would invest and how would you invest?

[Stephanie Yi]

I often seen discussion in BP that the house price is too high, there will be next crash coming. I am curious what people would do if you have $1m available at this time? Will you hold cash to wait for downturn so you could get deals? Here are the options,

1. Hold cash in CD

2. Buy bonds or notes.

3. Buy cash flow properties in midwest.

4. Flipping houses but be very careful and caculating in 10-20 percent market change

5. Put in some new construction, or large development projects so there will be enough margin

There might be other ways...

[Don Konipol]

@Stephanie Yi

I invest 50% of my capital in high yield mortgage notes I originate and notes I buy at a discount from banks. I obtain a weighted yield of about 17% annualized on this portion of my portfolio. The other 50% I invest in real property, both direct and through syndications. The property is leveraged 50%, thereby providing 100% inflation protection for my entire portfolio (theoretically). In the last 8 years the real estate equity portion of my portfolio has averaged wighted gains of 11% annualized.

One. Just realize that the period were speaking about for the equity portion is one of the best investment periods in history. The return on the debt investment portion is much more admirable as it includes the 2008-2010 recession.

I have the advantage of being the the private mortgage syndication business as well as syndication equity ownership in office/warehouse properties. Past performance is not always an indication of future performance LOL, my worst period as an investor was investing in Houston during the 1982-1986 oil price bust. Negative returns

Experience, expertise, and luck are required for success in the long run. But all of that is subjective. At what point do you have enough experience? Enough expertise? At some point you have to pull the trigger if you want in the game. When banks were paying 12% interest "investing was easy - buy a FDIC insured jumbo CD. Now it seems like it's another full time job for many people.

No matter what you invest in, you need to determine your goals, desires and risk tolerance.

For most investors who aren’t empire builders, I believe in a few hard and fast rules

1. Diversify over a number of different “bets”, I.e if you decide to invest in real estate syndications, invest $50,000 in 10 different properties with 5 different syndicators, not $500,000 in one deal.

2. Only invest in what you understand. If you are not cognizant about how a reverse option hedge works, don’t invest in it.

3. Invest only in investments that allow you to sleep at night, and don’t drive you nuts during the day.

4. Determine your interest level in investing, if it’s low find a good asset manager.

5. Always do at least the basic due diligence. Even a google search will yield some enlightening information.

6. Always plan for a worst case scenario and how you’ll recover. Never bet the rent money.

Good luck!