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Last updated: June 17, 2022 • Real Estate Investing

How to Invest a Million Dollars on Real Estate to Live Off the Interest

While rampant monopolization and commercialism have made the American dream a lot less attainable than it used to be, this country is still one in which the ambitious can still hope to make it big if they work hard. There’s no guarantee of success, but those with a healthy reserve of discipline and determination can achieve even the loftiest of goals. 

At the start, achieving your dreams of greatness is bound to be a difficult task. Naysayers and detractors stand along both sides of the path towards success, constantly telling you that your goals are unachievable and that you’re never going to make it. Nevertheless, you push on, deaf to the cruel words of the small-minded. 

Once you’ve gotten some experience and accrued a bit of wealth, things will start to get easier. It takes money to make money as they say, and once you’ve saved up enough you’ll be able to begin investing it in ways that will start to net exponential returns. The hustle never stops, but it does get easier eventually. 

If you’re smart and you’re lucky, you might just have a million dollars before too long. Once this happens, it’s time to invest it so that it doesn’t just sit placidly in your bank account. There are a number of ways to invest; from index funds to classic cars and antique guitars, the options are so vast they can be overwhelming. 

There, however, few investments that net the same returns as real estate investment. Not speculation, mind you, but investment. Speculation can be a tempting prospect with its promises of huge profits and a fast track to the top of the ladder, but if you don’t know what you’re doing there’s also a not insubstantial chance that you’ll lose all your hard earned money. So how can you invest a million dollars in real estate and live off the interest? Let’s find out! 

First things first: investment basics

real estate agents talked about the terms

Before you can start investing, you’re going to need to know a few things. Don’t worry, we’ll be giving you the crash course here presently. Ultimately, the most important things to keep in mind when investing can be summed up in three foundational principles: diversify your portfolio, research your investments and never invest more than you can afford to lose. 

First, let’s talk about diversification. As any experienced investor will tell you, diversification is the best security against sudden and unexpected losses. If you’ve ever heard the saying “don’t put all your eggs in one basket”, that’s the general idea. If possible, you should always invest in multiple holdings rather than one big one. This will lock you out of certain markets, but it will also prevent you from losing it all should the market go belly up. 

Next, researching your investments. If you’re going to invest a million dollars to live off the interest, you’re going to need to carefully and diligently research every investment. The internet makes this a lot easier than it was in years gone by, and there are also plenty of human resources that can be utilized. Our advice is to find a real estate agent and ask for their advice; as the saying goes, two heads are better than one. That’s especially true if the other head has more experience than you! 

Lastly, never invest more than you can afford to lose. If you dump all your funds into one property or investment, you won’t be able to invest in any opportunities that come along, and you’ll be especially susceptible to unexpected losses. If something such as this does happen, it could set you back to square one, hungry and without a dollar to your name. 

Now that you’ve got the basics of investment solidly stuck in your head, it’s time to talk about how to invest a million dollars in real estate to live off the interest. It won’t be easy, but with some careful research and rigid adherence to the golden rules of real estate investment, you should be able to invest your million dollars and come out the other side with a profit. Let’s get into it! 

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Investment ideas for big budget investors

stock market investor hand holding phone

Now that we’ve discussed how to best invest a million dollars to live off the interest, it’s time we talk about how to invest a million dollars to live off the interest. These strategies have proven successful for countless investors, and you could be the next success story to prove their viability. Without further ado, let’s take a look at some investment strategies! 

Single unit rental properties

One really great way to invest a million dollars to live off the interest is to get into the rental game. With rent prices higher than they’ve ever been in cities across the country, there’s never been a better time to become a landlord. With a million dollars to spend, you should have little trouble finding quite a few viable properties that you can rent out to those who need them! 

With rentals, smaller and more affordable properties often have far lower risk and far greater profit margins than large scale developments. These single unit rentals go for surprisingly large prices on the rental markets in larger cities across the US, and they’re a lot more manageable than larger properties. 

The best thing about single unit rental properties is the fact that you can invest in multiple markets across the country, shielding you from anything but a full scale market collapse. If you invest in rentals in Las Angeles, New York, Chicago, Miami and Dallas, for example, you won’t be nearly as adversely affected by a market downturn in any of those cities. 

Single unit rentals are also a lot cheaper to manage and find tenants for than large developments. In contrast to larger developments that require large numbers of tenants in order to be profitable, single unit rentals only need one tenant to provide you with return on your investment. As an added bonus, they’re also a lot easier to manage than large developments. 

Rapidly appreciating properties 

3d illustration rising house prices

Another great way to invest a million dollars and live off the interest is to purchase property that is rapidly appreciating in value or set to rapidly appreciate in value. If you know a bit about the market you plan to invest in, you should have very little trouble finding properties that will increase in value over time, netting you a hefty profit when you sell. 

There are a number of reasons that property value appreciation occurs. Often it’s due to a general increase in demand in the area that the property is situated in, as is quite common in large metropolitan areas or cities that have recently become home to large company factories or facilities. In the case of the latter, you can often buy property at a fraction of what it will be valued at in five to ten years. 

Another cause of anticipated appreciation is zoning revisions. When an area is redesignated from a residential area to a commercial one, the property values in the area are virtually guaranteed to skyrocket in value. Should you purchase a property in an area such as this, that property will likely be worth far more than you paid for it in short order. 

Lastly, property value appreciation can often be anticipated by researching municipal growth of medium-sized cities. In many cases, these cities have the infrastructure and industry to sustain massive population growth, but are still home to reasonably priced real estate. When population density increases, your real estate will be in great demand, netting you a substantial profit when all is said and done. 

Commercial real estate development 

realtor showing empty space

The third and last investment idea we’ll explore in this article is commercial real estate development. In cities with increasing demand for commercial spaces, buying property and constructing offices, warehouses and manufacturing facilities is a sure way to slowly but steadily increase your net worth. If you’re looking to invest a million dollars in real estate to live off the interest, that’s exactly what you want! 

In cities with accelerated commercial growth in sectors such as tech, banking and finance, office space can be rented out at eye wateringly high rates. Most small- to medium-sized companies have large amounts of capital to invest, and relatively minimal space requirements; this being the case, a million dollars can be turned into a very profitable office building. 

Warehouses and bulk storage are also very profitable, especially in cities that are home to large shipping or corporate storage facilities. Companies that operate in cities such as these are always looking for places to store their inventory, and opening a commercial warehouse or storage facility can be a direct path to vast profits. 

In cities with low real estate prices but well developed communications infrastructure, you may also be able to score a substantial return on investment by constructing a data center. These facilities require meticulous planning in order to be commercially attractive, but can net massive return on investment due to the high premiums placed on data management as a service. 

Conclusion 

If you’ve worked hard enough to have earned a million dollars, it’s time to invest it and live off the interest. Money makes money, and a million dollars is enough to make quite a bit. Invest it wisely, and you’ll be set for life with very little effort. It will take some hard work and planning for a time, but once it pays off, we guarantee you that you won’t regret it!

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