How would you deploy $2 million of investor capital in the real estate market?

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Hello sir i am a nigerian prince

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There are pretty standard deals where the active principals of a real estate deal take a portion of ownership and give the rest to investors. Then they give the investors a return say 12% plus a portion of anything over that say 50%. I’ve been involved in them as a principal and an investor. It usually works best when you have an event in a period of time. For example buy, upgrade, stabilization of rent, sell at a cap rate. Then rinse and repeat. A buy and hold strategy probably wouldn’t be worth it to you unless your investor was willing to give up significant ownership in addition to your “management fee"

As far as investments, it depends on your location, time horizon and risk tolerance. For $2m in a tier 2 City, you could get a mid sized apartment building in the 8-9m range and still have some money left over for improvements. Or a small commercial strip mall. For the same you could try to flip a single family Home in Southern California and hope to take advantage of the continued foreign interest for investment places.. good luck!!.!!.

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Working class and lower end working class multi-family properties.
Get in at caps over 10
Leverage with high LTV gov sponsored debt
Hire professional property manager (assuming you are just the promoter and not property manager)

Are you getting equity in the deal?

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My buy and holds are in Chicago and Chicago burbs. I have done deals in la, SF, florida, and Texas.

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Did you search stackexchange?

Investor has asked to focus capital in real estate. Thinking through structuring a JV for rental properties where we split profits after they get all their capital back plus a management fee of overall gross rent. Interested to hear what everyone else thinks. Very early thinking.

What is your background PwC2?
I am interested to move into real estate but have no contacts

No real estate background per se. I started buying up condos in 2004 and just kept doing it and expanding. Best advice is to just get started. Remember though that it’s a totally different industry than consulting. Keep your guard up and be very careful. People vary much more in their honesty, capability, greed, etc

What area are you buying @pwc2

I’d put some in Blackstone’s BREIT fund, put some in Broadstone net leased fund, some on RealtyShares or something like that and then maybe buy a SFH or two to get your feet wet with direct ownership.

Find a good REIT with a 1/10 structure. Offer a 1/10 structure on top of it to your investor. Hassle free money.

PwC2, what rent/home price multiples are you looking at? Those are expensive markets to be buying and renting condos in. I will most likely aim for true Tier 2 cities like Charlotte, Baltimore, etc., to find decent deals.

For example, you can buy a 2-bedroom condo near the university in Charlotte for ~$120k, in an area where you can rent it out for ~$1k/mo.

Plus, both rent and home prices are going up faster in Tier 2 (Denver, Nashville, Minneapolis, Boulder, Austin, etc.)

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