where to invest a couple million

RyanB said:
The first mistake was selling the apartments ;), because we all know real estate is one of the best investments there is! :)

That said, I’d more than likely take half of it and put it into some good ETF’s or mutual funds and forget about it until I near retirement. The other half would go back into real estate and/or start a business.
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As the OP has noted, real estate is having issues for him since it's gotten harder to evict people who don't pay rent. Plus you have a physical asset and if it turns out your renters use the place as a meth lab (happened to friends of mine) then that can really cause you problems.

Starting a business? Well, that involves a lot of risk, not to mention a lot of work (BTDT... more than once). It would work for your phase of life (young, single adult), but that doesn't necessarily go well with retirement.

Of course, stocks and other investments have all kinds of other risks associated. But a diversified portfolio with a good advisor would be how I'd go.
 
How much are the indigent tenants costing? How does that compare to the loss to capital gains? Unless the OP buys more rental units, but then you have the same issues all over again. I think the OP is making a huge mistake, letting his emotions get the best of him vis a vis money.
 
ja_user said:
First thing I'd do, is ask a bunch of pilots ;)
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Yeah, in reading through the advice on here I see some good advice, and a lot of advice from people who clearly have no idea WTF they're talking about.
 
Ted said:
As the OP has noted, real estate is having issues for him since it's gotten harder to evict people who don't pay rent. Plus you have a physical asset and if it turns out your renters use the place as a meth lab (happened to friends of mine) then that can really cause you problems.

Starting a business? Well, that involves a lot of risk, not to mention a lot of work (BTDT... more than once). It would work for your phase of life (young, single adult), but that doesn't necessarily go well with retirement.

Of course, stocks and other investments have all kinds of other risks associated. But a diversified portfolio with a good advisor would be how I'd go.
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Bitcoin, only half kidding, I would put some in and now is a good time, it's down right now, but no more than you can afford to lose.

Real estate is a great investment, but I can certainly see the downside of owning apartments now. It's a perfect storm against the landlord right now, and it's not going to get better soon. Getting deadbeats out is pretty much impossible plus I imagine some great tenants are having issues also. So cash flow has to be bad. Of course while cash flow is down, there is no relief from taxes and other bills. If the OP has the sale then I would probably go for it.

There are ways to stay in real estate via REITs there are some good ones out there.

I agree with Ted here, starting a business is a great dream, but it is a vortex, especially if it is successful, and can easily suck you into servitude toward the business. The more successful the business, the more difficult it becomes to extract yourself from it. Definitely not something to delve into if you want to retire, unless it's a hobby type business like repairing watches or shoveling snow occasionally.

I second finding a good advisor and building a diversified portfolio. And bitcoin, lol, you have to do that yourself.
 
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PaulS said:
I agree with Ted here, starting a business is a great dream, but it is a vortex, especially if it is successful, and can easily suck you into servitude toward the business. The more successful the business, the more difficult it becomes to extract yourself from it. Definitely not something to delve into if you want to retire, unless it's a hobby type business like repairing watches or shoveling snow occasionally.
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The more I think about starting a business, the harder it is for me to convince myself it would be a good idea. I'd work more than I currently do and have a lot more stress and responsibility all for maybe making more money, maybe making less, maybe losing it all. Hard for me to convince myself that's worth investing $1M in (not that I'm in that position anyway) vs. some kind of other investment that I may lose, but at least I don't have to work on every day.
 
High dividend stock and enjoy the quarterly payments. There are investing services that will help you find different ones to pick so you get a monthly check. I have two 7.5% dividend stocks that I enjoy the quarterly check from. Easy money.
 
Ted said:
The more I think about starting a business, the harder it is for me to convince myself it would be a good idea. I'd work more than I currently do and have a lot more stress and responsibility all for maybe making more money, maybe making less, maybe losing it all. Hard for me to convince myself that's worth investing $1M in (not that I'm in that position anyway) vs. some kind of other investment that I may lose, but at least I don't have to work on every day.
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It can be tough unless you have something like the next facebook, or tesla and can fund it. Your kids are still pretty young from what I can tell, give it a few years, maybe one will get the entrepreneurial bug (along with a good idea) then you can partner with them, they work, you fund and share in the profits.

My son has the bug, and he has a bunch of good ideas, the problem is he is in a job in SF where they are paying him so much it's not worth the risk to leave. I think in about 5 years he'll be set and venture off.
 
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PaulS said:
It can be tough unless you have something like the next facebook, or tesla and can fund it. Your kids are still pretty young from what I can tell, give it a few years, maybe one will get the entrepreneurial bug (along with a good idea) then you can partner with them, they work, you fund and share in the profits.

My son has the bug, and he has a bunch of good ideas, the problem is he is in a job in SF where they are paying him so much it's not worth the risk to leave. I think in about 5 years he'll be set and venture off.
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I certainly see that happening. My son is very interested and has lots of ideas. We'll see.
 
TCABM said:
Self storage place. Build, don’t buy.
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My commercial re broker always said never buy a self storage and never build a laundromat.
Too much work either way.
 
FORANE said:
My commercial re broker always said never buy a self storage and never build a laundromat.
Too much work either way.
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Which is why you instead buy EXR and let them do the work. Unfortunately their massive growth has slowed. If you invested 10 years ago you'd be a happy camper.
 
Ted said:
Yeah, in reading through the advice on here I see some good advice, and a lot of advice from people who clearly have no idea WTF they're talking about.
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I've been a landlord in the past. Have you?

All that's happened is the OP's costs have gone up a bit. My guess is functionally they haven't gone up much, it's always been tough to get rid of deadbeat tenants. I could be wrong, I suspect the 'rona has made a lot more deadbeat tenants, though I can hardly blame the tenants for their vagrancy. Even if that impinges costs more, it is temporary in nature and likely to affect the whole rental industry. There are now lots of low wage earners out of work, and they aren't easily dislodged. So if the OP sells out his apartments he's going to face the same problem no matter where he goes.

Were he just looking to retire the hit from capital gains might be worth it to get the money out, but that doesn't seem to be the case from what he wrote. I'd ride out the bad times, but I'm not in the biz.
 
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Ted said:
As the OP has noted, real estate is having issues for him since it's gotten harder to evict people who don't pay rent. Plus you have a physical asset and if it turns out your renters use the place as a meth lab (happened to friends of mine) then that can really cause you problems.
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We've had that experience as well. I'll say that being a licensed certified meth cleaner is lucrative. it cost us around 5k for one afternoon of his work. At the time there were only about 13 guys licensed to do it in all of Tennessee.
 
FORANE said:
We've had that experience as well. I'll say that being a licensed certified meth cleaner is lucrative. it cost us around 5k for one afternoon of his work. At the time there were only about 13 guys licensed to do it in all of Tennessee.
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In the case of our friends, it was bad enough that they had to strip out most of the interior of the house. It was a lot of work, they lost a bunch of money that they could never get back.
 
Ted said:
In the case of our friends, it was bad enough that they had to strip out most of the interior of the house. It was a lot of work, they lost a bunch of money that they could never get back.
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And insurance won't cover it either...
 
FORANE said:
Into what?
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Other apartments. Commercial properties. Farmland. Owned as a shareholder in a larger entity. Turn X apartments in socialist wonderland into into Y% of a multi-family development in some place with contract laws.
 
On the real-estate theme, if you like the cash flow - 1031 into more real-estate, consider higher end condos or student housing (yeah, they get heavy wear, but parents co-sign and you can rent for 9-10 months for full 12 month in some places).

My best rentals were nicer homes 4/2.5/2 with cheaper than market rents that incentivized the renter to stay for years, pay on time, and essentially leave me alone. Low turnover, low vacancy, lower expenses and hassle. Severe background checks and selectivity a must.
 
455 Bravo Uniform said:
My best rentals were nicer homes 4/2.5/2 with cheaper than market rents that incentivized the renter to stay for years, pay on time, and essentially leave me alone. Low turnover, low vacancy, lower expenses and hassle. Severe background checks and selectivity a must.
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The other end of the spectrum are concrete block section 8 multi-family units. Tiled and linoleum floors with the most basic appliances the agency allows. Painted washable walls, no laundry. Government pays the rent on time. Must-have is a manager and a handyman in between you and the tenants who only deal with some nondescriptly named LLCs as recipient of the checks.
 
schmookeeg said:
Who were the big winners when the Weimar republic fell? :D
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Defense contractors, initially.

If anyone has too much money, I'd like to see someone produce a certificated, all aluminum version of the long EZ.
 
steingar said:
I've been a landlord in the past. Have you?

All that's happened is the OP's costs have gone up a bit. My guess is functionally they haven't gone up much, it's always been tough to get rid of deadbeat tenants. I could be wrong, I suspect the 'rona has made a lot more deadbeat tenants, though I can hardly blame the tenants for their vagrancy. Even if that impinges costs more, it is temporary in nature and likely to affect the whole rental industry. There are now lots of low wage earners out of work, and they aren't easily dislodged. So if the OP sells out his apartments he's going to face the same problem no matter where he goes.

Were he just looking to retire the hit from capital gains might be worth it to get the money out, but that doesn't seem to be the case from what he wrote. I'd ride out the bad times, but I'm not in the biz.
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What makes you think he was talking about you?
 
weilke said:
The other end of the spectrum are concrete block section 8 multi-family units. Tiled and linoleum floors with the most basic appliances the agency allows. Painted washable walls, no laundry. Government pays the rent on time. Must-have is a manager and a handyman in between you and the tenants who only deal with some nondescriptly named LLCs as recipient of the checks.
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We have had this almost exactly. One of the best changes we made was to non-renew the mod-rehab contracts with housing. Housing tenants didn't have any deposit to speak of, and the damage to the units was significant. Also housing paid rates below market.
 
Ted said:
The more I think about starting a business, the harder it is for me to convince myself it would be a good idea. I'd work more than I currently do and have a lot more stress and responsibility all for maybe making more money, maybe making less, maybe losing it all. Hard for me to convince myself that's worth investing $1M in (not that I'm in that position anyway) vs. some kind of other investment that I may lose, but at least I don't have to work on every day.
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It's gotten harde and harder to start one, and the government is still so used to traditional employment that I don't expect it to get any better soon. And yes, I work with a lot of entrepreneurs.
 
I like the self storage idea. Considered building one on property that I sold last year.

But as far as 10-20% on stocks? A few good mutual funds should get you at least 10%. The way the market has been 20% isn't that hard. But yeah there are risks. I got about 35% on mine last year. I have it split up into about 4 or 5 different funds but mine are a little on the aggressive side. You could get into something with a little less risk and should still be able to get 10%. Call a few brokers. Schwab, TD Ameritrade, etc. Call them and see what they offer. They have managed accounts that they will set up and manage or you can manage it yourself. My daughter is a financial advisor for Northwest Mutual. This is the kind of stuff she does. You would call her and get ideas then let them manage your accounts. Not saying to call my daughter but find someone local to you and talk to them.
 
wsuffa said:
It's gotten harde and harder to start one, and the government is still so used to traditional employment that I don't expect it to get any better soon. And yes, I work with a lot of entrepreneurs.
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If I were going to start another business, it would probably be a one-man operation, and probably just something I enjoy doing. Opening an auto repair/upgrade/customizing shop comes to mind.
 
One of my friend's family has been in the funeral service business for 130 years. He told me over our last beer and meal that cremation is now 49% of the final arrangements today.

His funeral home has lost close to 3 million a year in vault, casket and associated sales as a result of this trend.

wsuffa said:
Or a funeral home. No shortage of people dying to get in.
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FORANE said:
Assuming one were to sell some apartments they own and received a couple million. What would be good options for investing that money today? Of course this would be after buying the obligatory Bonanza...
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If you had 2 billion, you could try going in as a (relatively small) independent investor and trying picking and influencing individual stocks.

At 2 million, you're still very much a small investor—about the same level as a retired couple who just sold their house and moved into a condo in a decent real-estate market—and at that level, you have no real influence and few rights, and won't have the technical or analytic capability to know about and respond to new information before it's common knowledge and already built into the stock price (it's about shaving off milliseconds, so don't even try to pick individual stocks or arbitrage new information). And run away from snake-oil financial advisors who give you hot tips on individual stocks, because if they were actually able to predict those things, why would they be working as financial advisors rather than sitting on their yachts anchored off their private islands?

Pick some ultra-low-fee, passively-managed SPDRs that follow a few major indices, then buy and forget. Go for a bit of diversity (geography, sector, equity vs income, etc) but don't overdo it. Ignore the historical performance of hot-shot managed funds with 2–3% fees, because they mislead you via survivor bias: they kill off the funds that don't do well, so the historical average is only for the funds they didn't kill off.

I'm personally fond of indices tracking mid-cap value stocks — "growth stocks" are often more about hype than potential, and mid-cap is (IMO) the most-efficient size for a company — but you won't go too far wrong choosing in a different way. The key is a) passively managed and low fee (if you're saving 2% in fees, that's a guaranteed extra 2% every year), b) a bit of diversity, and c) buy and hold (don't keep changing your mind).
 
Folks, let’s remember that religious debate is not permitted, per the RoC. Let it go please!
 
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