Originally posted by @Gabriel Craft:
Ok. Hypothetical. You have $10,000,000 to deploy. You have to deploy it right away or you lose the money. What would you put it into? (it should all go in one asset type and class). My hope is that this helps people see what folks are keen on in early 2022.
I always feel these questions are rarely on the up and up, but here goes.
Attorney response: it depends.
Depends on desired target return, risk tolerance, active participation willing to make, etc. etc. etc.
Fire and forget (forward all mail to Tahiti): Drop all $10M with 3-5 HML funds sprinkled around the USA at a solid 8.00% ROI.
Work now/Play later #1: 2-3 ground-up multi-use facilities in central Texas (my back yard) paid for with mostly cash. Typically grade+1 level retail, 1-2 floors office, 3-6 floors of residential (apartments or condos), attached parking structure, below grade storage facility, roof-top solar, and rainwater capture for common areas.
Work now/Play later #2: like #1, but add in a land play. Buy with more land than needed, sell off unused to fund all-cash or same debt with more facilities.
Work now/Play later #3: like #1 or #2, but sell off different parts (POA regime).
Debt fund: I self-fund the same HML fund (above), that buys HMLs at 80-90% face value + X points. Many HMLs use lines of credit from banks to table-fund their loans. Institutional investors sell off loans all the time. This is the same. Returns vary by product, and 16% is not much of a stretch but 20%+ requires a bit more creativity. Target returns can be leveraged up (or down) with use of borrowing (going from $10M to $15M by borrowing from other lenders).
