What’s the Best and Highest Use of $20 Million in Real Estate Investing?
Our Best Ever Show Community on Facebook is full of real estate entrepreneurs who love to share ideas. To do so, we post a new question each week regarding various real estate topics, particularly property investment strategies. Our question this week started off with a hypothetical: Someone is handing you $20 million in property for FREE. Which asset class would you choose?
This week’s question was a little different. We conducted a survey in addition to asking for written responses to the question, particularly for those who selected “Other.” The breakdown of the answers regarding the best real estate investment strategies was as follows:
- Multifamily: 58
- Self-Storage: 15
- Commercial offices, retail centers, etc.: 11
- Other: 5
- Mobile Home Parks: 4
- Single Family: 2
- Urban Mixed Use: 2
Property Investment Strategies Focused on Self-Storage
Mitchell Drimmer is one of the 15 people who selected self-storage, mainly because he has purchased multifamily in the past and is not a fan. He admitted that multifamily may perhaps have a higher cap rate but are nothing but problems day in and day out, especially in “value neighborhoods.” Mitchell hasn’t purchased self-storage in the past. But as an outsider, he says self-storage seems like a business with almost no clients, no hard luck stories from residents, no evictions, no complaints about certain maintenance issues, and very little code enforcement issues. Done properly, at the right price and in a good location, Mitchell believes self-storage is a great property investment strategy.
Ryan Gibson also selected self-storage for similar reasons – it is an asset class with the lowest “resting heartbeat” (no tenants, little maintenance, minimal employees). But, additionally, he picked self-storage because it has the most automation and the highest returns.
Single Family Homes as One of the Best Real Estate Investment Strategies
Brandon Moryl was one of only two people who selected their $20 million to be in the form of single-family homes. In particular, luxury homes. According to him, that part of the real estate market has yet to fully recover, meaning there is the potential for a lot of growth. Additionally, there is less competition in the high-end SFR space compared to your typical $75,000 fixer upper. He also said, “with the stock market killing it and the overall economy rocking, combined with programs like 5% jumbo [loans], that’s is where I would be.” Finally, and maybe most importantly, he says it’s sexy owning million-dollar homes. Indeed!
Niches are the Best Real Estate Investment Strategies
The investors who selected “other” offered more creative or niche property investment strategies.
Danny Randazzo went with a diversified approach. Chibuzor Nnaji Jr. concurred. Danny would look for a deal in each asset class and invest in a few of the most attractive opportunities. “It could be one deal requiring $20 million or it could be a deal in each. Share the love!”
Deren Huang, with the support of Michael Nerby, would invest in NNN, or triple net leases. According to Wikipedia, a triple net lease is a lease agreement on a property where the tenant or lessee agrees to pay all real estate taxes, building insurance and maintenance (the three “nets”) on the property, in addition to any normal fees that are expected under the agreement (rent, utilities, etc.). He said NNN is the true passive investment.
Leaving Real Estate Behind
The last two individuals left behind property investment strategies entirely – at least in part.
Lane Kawaoka selected two answers. He would invest in multifamily because it “it’s the sweet spot in terms of the sharp ratio risk-reward matrix. Not too hot, not too cold…just what the baby bear likes.” However, he would consider accepting the entire $20 million amount in the form of a savings bond and just live off the interest.
Finally, Diogo Marques would forgo real estate altogether and purchase solid, stable companies that he could see operating in 10 years’ time with a 10% to 15% net profit margin annually.
Finding a Property Investment Strategy for You
Do you have a business plan that is not included here? Please leave it in a comment below! Maybe you need help finding the best real estate investment strategies for your unique business model and financial situation. Consider applying to my private program, during which you will receive expert feedback and actionable advice that can help you build your strategy. Additionally, learn how to raise money for your deals and how to choose properties for great returns.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.