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Why debt? Why not? It is for your dream home. I assume a "good" income can afford that amount of debt, if not you can cut down. Its almost impossible to buy a home without going into debt and if you are going to build a home for life, you might as well do it right the first time around...
Yeah unfortunetly a "millionaire" is not considered rich anymore. And your vauge indication of where it's coming from leaves alot in question. 1.) Taxes - without knowing anything else I would say that million will be more like $600k after the Uncle gets his share. 2.) Will you get it or not, nothing is sure in life, nothing. Don't bank on having it unless it's in the bank.
You can't retire on it, you certainly won't be living the "lifestyles of the rich and famous", but you can set yourself up for retirement at least. That's about it.
Location: central, between Pepe's Tacos and Roberto's
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I can't advise you on your current situation, as I don't know the specifics. However, if I had $1mm I would invest in commercial retail property.
Let's say that you purchased a $3.5mm property, with a commercial mortgage of $2.5mm. In Vegas that will get you between 12,000 and 16,000 sq ft of retail space. The average yearly rents out here range from $30 per ft to $45 per ft, so let's use $2.50 to per ft a month to be safe. On a 12,000 sq ft property you are talking about a gross operating income (GOI) of $30,000 a month. The mortgage on this property would run you just under $17,100 a month for P&I based on a 25 year term at 6.625%, so lets say $21,000 a month PITI (estimations on the taxes and insurance, I could be way off but I tried to estimate high). Subtract 10% from the $30,000 for property management, maintenance, and vacancy (again that figure is high based on what commercial lenders factor in). That leaves you a net operating income (NOI) of $26,000, with a debt service coverage ratio (DSCR) of 1.24, which is about industry standard.
In summary, your million would be earning you $60,000 a year plus you would still have that million as equity in your property plus that property would likely appreciate. This is all based on certain assumptions and as such I cannot guarantee that accuracy of my scenario, but in my specific case it would be close.
Again, not advising that you specifically do that, just saying what I would do. What I wouldn't do is use that money for a house, cars, jewelery, vacations, or anything like that. You can set yourself and your children up nicely if you do it right.
Ok, here it goes. In about 5 years I'd say, I am going to come into a whole lot of money (not from a death, so don't think I'm one of those types). It will probably be about a million. I will be in my early 40s when this will happen. I have two small kids and a husband who makes pretty good money. I don't earn any money right now, but plan to go back to work in a few years.
What do you do with a million bucks? We just bought a house, but not my dream house or my dream location. We are simple people who generally live below our means. I just feel like I need to start thinking ahead and trying to figure out what to do when the time comes. Any thoughts?
So you just married someone worth $2 million and planning to divorce them in 5 years?
Seriously I couldnt/wouldnt pretend to advise someone in your situation other then to plan now on what you'll do with it to avoid taxes, pay off your home, and only spend the interest.
Location: central, between Pepe's Tacos and Roberto's
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Quote:
Originally Posted by Lakewooder
Yeah but what happens if your tenant is Countrywide Mortgage?
That's why I specifically mentioned retail and not office space. For one, office space has a much higher vacancy rate. Two, office space does not pull in as much rent on average. Many people can work from their home office, or shop for car insurance or mortgages online, etc. Everybody needs a grocery store though.
Location: central, between Pepe's Tacos and Roberto's
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Quote:
Originally Posted by pghquest
Yes, thats exactly what I would be doing, NNN leased properties to tenants like McDonalds etc.
With $1M cash down, one could buy a decent Rite-Aid, Target, or even a Wal-Mart property... (properly financed)..
It would be highly dependant on locality but a Wal-Mart is possible, although they might not lease. I am in the process of trying to put a 40,000 sq ft commercial retail center development deal together for one of my clients. The location is great, alot of traffic in the next couple of years. No existing retail centers on that side of town just yet. He will probably need to come in with about $3mm, for a deal that will total $10mm. His NOI should be aorund $50K a month though!
If you put together a small retail building with a seperate anchor building then you could get a bank to ground lease that anchor building space, $60K to $100K a year on average, and you won't even need to cover any of the construction costs!
It's been said a million times but it takes money to make money, any real money anyway.
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