“She did touch a lot of lives since we moved to Chanute in 1969,” Patton said. “Aside from her family, her love was real estate and she lived it and breathed it.”.
I just won $180 million dollars. What should I do?
Fun, fun, fun!
If it’s a lottery win, don’t take the lump sum. Take the long-term payout.
The reason is that if you won $180MM, your going to end up with roughly $108MM after taxes, if you take the instant payout. If you take the long-term payout, you can borrow 70% of the entire $180MM. That allows you to have an extra $18MM working for you. Because your funds are guaranteed, you may be able to put your winnings up as collateral and get a loan for around 1/2% interest. You should be earning at least ten times that amount if you are conservative. Just the extra $18MM would earn you $540,000 after you paid the 1/2% bank interest. That’s more than enough to live on, while the entire balance of your winnings is earning you “screw off” money, for life! If you only make 5% interest, you would pre-tax net another $5,400,000 annually and never touch your principal.
If you hire the right advisors, you can become a billionaire in your lifetime.
I took $150K and became a multi-millionaire.
You could follow the same basic investment strategy of investing in real estate, and you could become a billionaire fairly easily… plus it was just a super fun journey.
A few readers have asked where I got $150K to invest, what I invested in and how long it took to become a millionaire and a multimillionaire, so here goes:
I started buying real estate 40 years ago when I was 19. My new wife and I invested in a $47K townhouse. After living in it for seven months, we sold it for a net $7K profit. After taking business classes in college, we started a business that I was hired to open. About the same time I started a business from a cramped desk in our bedroom. A few years later, we built our first house to live in. A year or two later I bought 5 acres on highway. I started acquiring shares of the business that I was hired to start. Eventually I owned the entire company, but before that, I bought buildings to start new stores in. I always put the least amount down as I was able to. Sometimes it was an SBA 10% down loan, sometimes it was owner finance with nothing down. I had an ability to find bargain priced properties. One of the properties that I bought in 2001 for $55K is worth $750K today. One property that I bought for $350K in 1991 with 10% down, is worth around $12MM today. We (my wife and I) are trying to buy out the last tenant’s lease in that property for $500K, so they will move down the street and I can tear the building down. I am planning to build a $50MM 253-unit luxury apartment community, with 5,000’ of high-end retail space where that building currently stands as soon as we can get them out of there. They still have six years left in their lease and they can drag it out if they want to. I leased to a public company and they have a large legal staff, so for now, they are staying.
I’ve skipped ahead, sorry. I got the $150K from the sale of a home that we built for $119K and sold for $292K. I had put in a pool and still owed a little on that. After paying off a credit card or two, we were left with $150K to work with. I bought the $55K house, and a few more in that price range. I put minimum amounts down, and leveraged my investments as much as possible. I paid $30K cash for two lots as soon as I found out they were zoned for duplexes. They had been listed for about two hours before I put a contact on them. Three weeks later I turned down $75K for the lots. I wanted to build on them. A few years later I designed and built two duplexes. I paid $15K for each lot and $120K for each duplex, thirteen years ago, for a total for four units of $270K Today they are worth $379K and $369K. My PITI is $1090 on each duplex and each unit is rented for $1250. I keep that around for cash flow.
Oh, those buildings that I was buying to put our businesses into: I eventually sold the businesses… they were pawn stores that I started in 1981. I sold the last store in 2015. I had a hard time deciding if I wanted to sell it or not. It made us about $20K a month to $50K a month, I still owned the buildings, although I have started to sell them off. I paid $55K for one, it’s for sale as of last week for $265K. The same day that I bought that building, I bought another building in a different city for $130K. I sold that one for $650K.
Without getting too boring, I took all of the $150K and found bargain priced real estate to invest in. I leveraged it as much as possible. We lived way below our means. We shared our success with our employees as much as possible. We helped our employees buy new houses when nobody in their families history had ever owned a house before. The employee’s parents cried with joy and were filled with pride. We had huge employee Christmas parties at our home each year and would pass out bonuses, presents and award Rolexes to store managers at that time also. Fun times. Even after selling our stores our employees still stay in weekly contact with us. It’s a nice feeling.
We no longer needed the stress of running stores and smaller properties. I started selling assets to buy larger assets… more real estate.
Anyway, it started in 1978 when we got married. Today, along with our real estate, we own a business that I started for our oldest child, our son. It’s a good buying business. We only buy about $1.5MM a year, so it’s a micro-business, but that’s what he wanted and is happy with. Our daughter is happily married into a family that owns a lot more real estate than we do. Her father in law was also an pawnbroker and he sold his stores also and retained his buildings to lease to the new business owners.
I had an investor come to me late last year and asked me to buy a property using 100%!of their money and we would split the deal. I started an LLC, started a bank account, put their money into it and bought a small shopping center with it. Zero down for me and I own half. They earn 20% annually on their investment and we both get a nice monthly check from the rental income.
It may take a little time, but it’s really not that hard to make a million dollars, if you are investing in real estate. The second million comes within a few years. The third, fourth, tenth, etc, cone much more rapidly as properties are paid down, or paid off, and appreciation kicks in.
We still live below our means. We live in a house that we paid $352K for when we built it. It’s worth $650K or so now. I drive an eleven year old BMW M6 convertible and a Hummer H2, that I’m considering selling. It’s a 2005 that I bought in February of 2006. It should bring $15K or so. I’ll likely use that money to buy another little property. I’m working on refinancing $1.2MM in property currently so I can start lending hard money to other real estate investors. We’ll add that to what we have and a number of other real estate investors will soon be able to start in their adventures. I have a meeting set with one of our attorneys tomorrow to work on the final details of the business plan.
Oh man, I’m so sorry! I’ve written a book here. I apologize. I hope our journey and these memories will help you in some way.