All Forum Posts by: Scott Eadie

Quote from @Jay Hinrichs:

Quote from @Scott Trench:

Scott, 

A couple of things here: 

1) If this is true, and you will be getting $10M, then you should be cautious - alerting people to an amount of money this large can be dangerous, and you will get advice looking to separate that money from you from very hungry people, who will come off as very polished, but who can really do damage to your wealth.

2) If you are coming into $10M all at once, then depending on the source, you will pay taxes on this. If ordinary income, in NC that will be a tax rate of about 43% between federal and state taxes. About 25% if capital gains. So, your after tax proceeds will be $5.5M to $7.5M. 

3) You must form a hypothesis about what good looks like for this portfolio, on your own. You should absolutely get advice from many directions, but at the end of the day, you need to make the decision. Many financial planners and wealth advisors are going to be super hungry to get you to hand over $5M in investments to them to manage. They have a powerful incentive - $50-$100K per year in fees on a 1-2% AUM fee is enough to make them really pressure you into making a decision immediately in working with them. 

Definitely choose "Fee-only" financial advisors (who have NO AUM incentive!!!) as part of this process. Even if they charge you a few hundred or $1-$2K for a initial financial plan. 

4) On a $5.5M portfolio, something like this would be very appealing to me personally, as a thought starter: 

- $1.25M home, car, and "toys", paid off

- 250K in cash

- $2M in stocks

- $2M in paid off or lightly levered real estate

This is just me, and I'd personally view the name of the game as wealth preservation and maximizing enjoyment of life with this level of wealth, all liquid, all at once. Portfolio should spit out $160K in tax advantaged cash flow per year, easily, and with a paid off home, that will go very far. Presuming RE is important to you, because you are on BP, but know that you will need to devote some serious time to learning the ropes. 

Scott that brings up an interesting question if this is all real.. sounds like this might be a medical malpractice case he won. I wonder if that is taxable or not.. ?? that would be the first question.
then after that buying rental props to me would be the last thing to do flipping even worse.. double tax free muni's 30 day T bills  Other very conservative investments.. RE is work and risk.. Unless its something you have experience at and like it..

Thats my conern the risk portion of it but I do have to invest the money otherwise my healthcare costs will eat it up and I dont want that. I am going to talk to a CPA and all kinds of people I just know that the housing market in this area houses are skyrocketing and here is a housing shortage which is driving everything up. I have a meeting with an investor real estate agent and she is gonna talk to me about that front and Ill see where I go from there. 

Quote from @Jake Andronico:

@Scott Eadie

Welcome to BP! 

If you're truly getting a check soon for $10M, congratulations!! 

In my mind with that capital you'd be in a completely different ballpark of investors. Large investors tend to take much smaller risks with larger amounts of capital. 

At an extremely reasonable 5% return you'd be earning $500K per year. 

$5mil in RE and $5mil in REIT's/stocks gives you great diversification, liquidity, and cash flow in my opinion. Of course, you have to make the decision for you and your family, and only you will know what's truly best.

I agree that SF homes are always more liquid than apartment complexes but tend not to cash flow as well. 

We've built a model for Northern Nevada that analyzes ever single family and multifamily property on the market and ranks them by cap rate. 

We're looking to eventually expand this analysis into other markets. 

I'm curious what you end up doing and congratulations again! 

 Thank you! The sum is medical in nature and the reason I would like it to be relatively liquid is if I have any medical needs stemming from said issue. But seeing that yearly income, I really dont think I would need to. its kind of mind numbing to imagine those kinds of funds coming from working for $19.50 an  hour.... I think once I get the money I am gonna meet with a bunch of people and take a minute 

Quote from @River Sava:

Hi Scott, 

Welcome to BP. Are you are you interested in rehabs or something more turnkey? A house hack is a great place to start, especially if you are looking to get into BRRRRs and/or flips. However, since you will be aquiring a substancial about of cash, you could look for something turnkey/light cosmetic work. Also,I'd recomend starting with a single family or small multi-family before jumping into an apartment complex. 

 Definitely looking for more turn key because the nature of the money is due to medical reasons. So I cant be swinging a sledgehammer to do demo for reno its all going to be outsourced and have to be worked into part of my margins. Slight cosmetic or even larger cosmetic issues like cabinets and stuff I have no problem negotiating the price down and holding it to complete a remodel to then turn and rent it out or even if I find something undervalued picking that up and rehabbing it and reselling it. again I am WAY new I just finished the book and I am sure my agent will  help me she's wonderful! But I don't wanna be a child she's having to explain every slight detail I want to be able to have an educated discussion with her regarding my investments and business because with that much property I am assuming I am going to have to incorporate maybe even hire somebody. I really am trying to wrap my head around the scaling of things because the book assumes your still in the saving stage.... I am fortunate and don't have to start there but am just unsure of what to do. Definitely will look into more single family homes and such. How much property am I looking at with a $10M investment? 20 properties? 50? 100? 200? because I see the initial investments are relatively small. so I would assume with that kind of capital I can buy a lot? 

Quote from @Nicholas L.:

@Scott Eadie

welcome.

i'm not sure what your question(s) are.

can you start with a house hack?  that's the best way to get started.

https://www.biggerpockets.com/real-estate-investing/house-ha...

i'd spend 6-12 months saving and looking for a house hack.  then buy a house hack.  then go from there.

hope that helps

Thats the thing, I am going to be getting a check for ~$10M and I need to invest it I just gotta figure out where to put it and how to deal correctly.

Good Morning,

I  have reached out to a wonderful investors real estate agent and have read the book " The Millionaire Real Estate Investor " which has given me a good introduction including Mindset, Charts, an Understanding of Generalized Topics and so much more. However, this book talks about getting a margin of $20,000 to $30,000 off a property off rip and from what my understanding is, the current housing market wont allow for that I will lose that deal most times. Furthermore, I don't know in what direction I should go for decent liquidity as well as profit margin. For instance, an apartment complex would provide good cashflow however, it would be quite difficult to sell in a timely manner if I needed the money. Single family would be easy to sell providing its kept in good living condition but isn't nearly as lucrative as an apartment complex. Then I begin to think multifamily homes and I am unsure of  how well they sell either. Do they sell decently well enough to where if I needed the money for healthcare reasons it wouldn't be a long time of me trying to sell it? Let me know what category you think that I should take a look at! I thank you for your time!

Thanks

-Scott Eadie