$5m cash to play with

Not quite; not yet, for me. But, I've been wondering lately; consider a multi-million-dollar cash injection. Tatts, inheritance, divorce proceeds, business sale. Whatever rocks your boat.

You then upgrade and / or pay out the PPOR, pick up the various toys and book the holidays that you may have had half an eye on previously, and you've got $5m left to play with.

What would you invest it in?

Cash, for interest?
Many, lower-valued residential properties?
Fewer, higher-valued resi properties?
Several smaller (retail?) commercial properties?
One or two larger (industrial?) commercial properties?
Shares, for expected growth?
Shares, for dividend yield?
An existing business or franchise?
A new business venture of your own design?
A mix of the above?

Something else entirely...?

Would you leverage further; to say a 50% LVR and have perhaps $10m to spend instead? Or, would you pay off all existing debts and then use only cash for future purchases as well?

And why? I've deliberately not attached a poll as the statistics are useless - I'm more interested in a collection of ideas than than a collection of numbers :)

Then, with all of the above in mind... does this match how you invest today? And if not, why not?
 
For me, I'm investing to reach a point where I'm financially independant. Where I have enough dough to fund my lifestyle and any ventures of my own choosing. That may be working 9-5, but most likely it won't be.

Assuming I'm left with 4M after paying off debt, I would quite happily wack it in the bank and start collection 200k interest pa.

I would use this to pay my way while I explore other "opportunities". These include, in no particular order, starting a web design business, snowboarding the world, building a chalet in Niseko, volunteer work, playing golf etc etc.
 
I would definitely not put it in the bank long term.

I would invest it in anything that is giving me an income of 10%+ per annum and also giving me capital gain greater then inflation.

It could be something like resort/retreat place, commercial property, residential property.

All depends on what I could find and whichever one will make me the most money in the long term......
 
What a delightful problem to have. 2 things occur to me immediately:
a) Number one rule is protect your capital, and
b) The beauty of property to me is ability to gear and achieve CG.
So property would be out for me at this stage. I could get better yields elsewhere with shares/derivatives or business. $5m would be plenty for me without needing to concentrate on further growth.

Given my emphasis on "a" above, I would put a max of 50% into my own business venture or charitable institution. The rest would be on shares, perhaps with some gearing (max 30%) and adequate protection (options).
 
Play time

Not quite; not yet, for me. But, I've been wondering lately; consider a multi-million-dollar cash injection. Tatts, inheritance, divorce proceeds, business sale. Whatever rocks your boat.

You then upgrade and / or pay out the PPOR, pick up the various toys and book the holidays that you may have had half an eye on previously, and you've got $5m left to play with.

What would you invest it in?

Cash, for interest?
Some urgent cash funds say 200,000 in a TD
Many, lower-valued residential properties?
Yes would look for high land content IP's in a municipality that is keen for development (and rates) and in an area that is next to one that has gentrified and shown good CG. I'll take four at say 300,000 a pop so circa 1,200,000 here
Fewer, higher-valued resi properties?
Nup. Got these already and there is a plan to harvest them in a staggered manner. Their work has been down. They are the future sacrificial cows ;)
Several smaller (retail?) commercial properties?
No, have holdings like this.
One or two larger (industrial?) commercial properties?
** salivates** Yes a decent shed would be nice. Allocate 2,500,000 (with flexibility to gear this up to a 5,000,000 purchase or slightly less....stay well under lenders radar for LVR. There should be some value addpotential so existing shed would be 25 % or less site coverage. Corner with as many street frontages as possible
Shares, for expected growth?
200,000 for a trading account with aim to grow that base and later pump more into the divident strategy below
Shares, for dividend yield?
500,000 here.
An existing business or franchise?
A new business venture of your own design?
A mix of the above?

Yes a mix is nice

Something else entirely...?

I am left with around 400,000....gee I'm frugal.....might park this into an online at call (or shorter TD) and look for opportunities to invest (as venture/seed capital) in a short/medium term start up.

Would you leverage further; to say a 50% LVR and have perhaps $10m to spend instead? Or, would you pay off all existing debts and then use only cash for future purchases as well?

May also leverage the CIP as indicated above. I have enough conservative debt which can continue to tick over, no need for any more leverage. I am only in competition with myself not looking at beating anyone else to have the most houses/toys/sheds/trinketts before I pass.

And why? I've deliberately not attached a poll as the statistics are useless - I'm more interested in a collection of ideas than than a collection of numbers :)

Then, with all of the above in mind... does this match how you invest today? And if not, why not?

For the most part am following this path. Not all asset classes above are entered into however the reasearch and plan is in motion.....just (for now) the numbers a bit smaller.

Seeing as I have no personal debts that are not tax deductible anyway, it is a given that I now drive a ML 63 AMG and my lovely wife being somewhat more conservative would settle for an E 500.

Nice thread James.
 
1. put some of the cash into existing offset accounts
2. Seek advise on where to park several million dollars while planning where to put it.
3. renovate existing IP's
4. probably aim to leverage the remaining money at 30 - 40% to buy further IP's (commercial & resi), aussie shares.

Points 3 & 4 would likely take many years to plan and implement.

Q. How is this different from what I am doing now?
A. Switch from part time to full time investor. Still control all investment decisions however drawing from a wider pool of advisor's/professionals for advice. Overall gearing will be lower.
Note: All IP's would have 70 - 80% loans with extra cash parked in the corresponding offsets - this will allow flexibility to purchase other investments(for cash) when good opportunities come up
 
Ditto what Michael said except instead of buying more low value rentals I would just pay down the ones I have. some in TD some in an internet account with reasonable interest. and a flutter into commercial at a conservative level of gearing. .....must put in the lotto for tonight!:D
 
For me it's all about lifestyle choice and hence a focus on low maintenance, passive income. So for a more passive income producing investment approach I would choose the following:

Shares including low risk LICs and ETFs etc, for dividend yield (say 60% allocation) and Cash, term deposits & fixed interest for the remainder. Spread these across own name, disc trust and SMSF to minimise tax and legislative risk.

I would also reduce existing debt to a low LVR but not get rid of it entirely.

Then mostly forget about the investments, get out and enjoy life as time is the most precious commodity we have.

Cheers - Gordon
 
Buy IP in a reduced buyer base.( propertys in the 2.5 to 3.5 Mill range )
Purchase at a price that will return minimum of 10% after all costs.( buy below market val place on market before settlement).

Gerd
 
$5M?

Pay off PPOR - $120,000
Pay of all other investment loans - $1,680,000

Leaves $3.2M

At this point I'd have to admit that my goals will be met and exceeded. This being the case I'd have to think I'd add $1.2M to my shares portfolio, and spend a few months building a low risk, cash based portfolio for the other 2 million. I would hope to get 5% p.a. for the cash portfolio.

This would give me, all up, several hundred thousand a year in income (ie 3-4 hundred thousand), which would allow me to live very comfortably forever. In reality, I'd probably restrict my spending to $250k per year (only 5 grand a week, sheesh!), and put anything extra back into investments and saving.
 
Pay off & renovate PPOR. Purchase 2nd PPOR in Melbourne ("Cause half the time would be spent there - damn kids:rolleyes:). Reduce LVR to well below 50%. Renovate properties that have been waiting for us to have the time to do them. Sell some, keep some. Put granny flat on another, subdivide yet another and probably sell. Seek professional advice and enter the sharemarket with a substantial portfolio. Purchase some more properties interstate again with very conservative LVR. Hire someone to do the damn bookwork, because I hate doing it.
 
$5m cash - i'd be off to the US in a heartbeat and buy 2x large MF apartment blocks with half of it and have about $1m in income streaming in PA. i'd quarantine the income thru the tax treaty and only pay 15% tax, so $850k pa after tax isn't a bad start.

i'd probably sell the business, and buy a nice large river-front country block somewhere, and spend all my days gardening with the kids and living like Jamie Oliver.

the rest of the cash - well, i dunno. i'd like to buy a few local properties, have a cool mil buffer, i'd also like to buy a large apartment block to generate income for a few charities as well, like OXFAM, B1G1 and local women's refuges etc.
 
jv

What an interesting topic. I'm impressed with how specific you all are.

My contribution will look a little nuts in comparison.

I would continue a JV dream with my philanthropist friend which we have started and stopped for about 25 years. Our concept is to build an eco-friendly and energy efficient retirement community.

We would locate the property which is approximately 1+ acre preferably with an established huge tree bang in the middle. Around this is built a green grass plaza. There are several homes built around this plaza which are individually designed with a mixture of private garden courtyards/light filled rooms.

These designs have happily occupied us in detailed research and animated discussion for years.

Our object is to provide the housing for people to age gracefully in light, space, dignity and a sense of community.

$5 mill would be a way to start on my own without waiting for my friend to finish her current building projects. :)
 
Realistically... first, I'll use the first 1M to pay-off my properties and build a pool :D. Second, I'll take a break from work for a year or two and see how it goes. Thirdly, I'll use another million to play with - i.e. to buy a few toys and play the share market. For the remaining 3M, I'll put 1M each in term deposits in 3 banks and live off the interest. In all (including rents), that's more than 100K nett a year which is much much more than what we spend now. I'll do that for a few years and see how it goes (knowing me, I'll be bored after a few months). I'm investing to have enough for a good and relaxed life, and to retire early. Why would I put myself into much more pressure when I already have what I've aimed for?
 
For me I would be sticking it in a term deposit for a good 12 months.

That's more money than most people have here so needs long term thought about how to structure the right investment to last for the rest of your life, and your kids.
 
With $5m, first would be to reduce the LVR to 50% (more tax but less edgy). Current income streams for day-to-day living
that is less $1.1m

Boost SMSF for family members over time, 15% tax environment
less another $1m

Create a charitable foundation, nil tax environment for charity projects, third world country, orphanage, educational facilities
less another $1m invested in cash management facilities yielding 6% or $60k pa cash

Put the remaining $1.9m in Family Discretionary Trust with $1m in secured loans yielding up to 6%, $60k to distribute to beneficiaries

Should be very adequate and satisfying with lots of activities to engage mind and body. :)
 
5 * ~$950k luxury apartments

~$500k pa in rental income

My numbers might not be sound, and to be honest if I actually had $5mil cash laying around I'd do my due diligence, but at a glance this seems like an easy way to invest.

How much would something like this cost?

Maybe just a touch over 1mil + stamp duty and buying fees.

I might have to settle for 4 instead :p
 
With that much cash I'd be looking at making commercial property acquisitions. Say 3 purchases around the $3m mark each, using $4m deposits, leaving $1m as a buffer.
 
Yes what a wonderful problem to have....


5 Million. HMmmmmmmm ;)

1. Pay off PPOR and IP. $500000 or so gone.
2. 1 Millionish into deposits for 10 or so Low end +Ve apartments dotted around the country.
3. 1 Million into commercial real estate of some kind. Not sure what :)
4. 1 Million into shares portfolio for Dividends.
4. 1 Million to help out family's repayments and loans.
6. 1/2 Million on whatever the hell I like. New Boat, Spend a nice amount on me old car and build that nice new outdoor area we've wanted for ages :)


Something along those lines anyhow.
 
I'd buy 4 million Perseus Mining shares (PRU) at up to $1.85/share

....(using a margin loan at 55% lvr and keeping remaining $ as a buffer)...

then wait patiently whilst the company lists on the Toronto Stock exchange (probably in the next few days) and then develops its 8 million ounces of gold deposits in Ghana and Cote d'Ivoire (or is acquired by a major North American Gold mining company for around $3.50/share).

More here:-

http://www.perseusmining.com/

http://af.reuters.com/article/investingNews/idAFJOE60701420100108


P.S. To Joe C,

if that 282m2 duplex at at Rose Bay with parking for 2 cars, 3 double bedrooms and 3 bathrooms renting for $3000/week is selling for just over $1m it would be a bargain. Based on a rental yield of about 5% (at a guess) it would sell for around $3m
 
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