On Wednesday, January 13, 2016, three lucky players purchased the correct numbers to win the record setting Powerball jackpot of $1.5 billion. In the hope of striking it rich, $1.3 million tickets per minute were being sold during Wednesday evening’s rush hour reported Gary Grief, executive director of the Texas lottery.
We can only imagine how many people dreamt of what they would do with their winnings. What would you do if you had won your share of that massive pot of cash? Though it may seem like you couldn’t spend it all, according to a recent article in Time Magazine, the National Endowment for Financial Education stated that about 70 percent of people will lose the money within a few years.
So what could you do, if you won the Powerball lottery, to ensure that the money would out live you? I hope you are not surprised that we would suggest investing in real estate. Locking it up in real estate not only creates cash flow and appreciating wealth, but it secures the money from vampire-like family members that just want to suck you dry.
If you won a $100,000 what could you do with it?
If you have $100,000 cash to invest in real estate, you have a couple of options. Option #1, you could buy one single family home out right and enjoy the monthly rental income. Option #2, you could buy approximately five $100,000 single family homes putting a $20,000 deposit down on each and financing the rest. Though you would have five mortgage payments, it will earn you more money. Check out this article to see how.
If you won $500,000, what could you do with that?
Half a million dollars is money that you want to invest wisely. On the surface it seems like a lot, but it can be spent quickly. Rather than buying a nice home debt-free, investing it in income producing real estate will pay you back for your investment – earning you money each and every month.
What would be the best real estate investment if you won the Powerball lottery? Though one to four family homes are good investment opportunities, they historically do not perform as well as larger apartment buildings. Buying a 20 unit or larger apartment building would be a better use of the lotto winnings.
Another option would be to step over into the commercial sector where the investment choices can suit any investment plan or lifestyle. Buying a bed and breakfast or hotel could make retirement a little less boring. Investing in a retail storefront with a franchised absolute net lease tenant (such as a Walgreens or US Post Office) may not give you the highest return but the financial stability cannot be beaten and it beats the socks of Treasury Bonds.
What could you do if you won the Powerball Lottery?
I would still recommend investing every dime of it in real estate and then wallowing in the monthly income. For example, take the Powerball winners of Wednesday. Let’s assume the split the $983.5 million lump sum payoff give each $327,833,000. Uncle Sam will scrape off the top 39.6% leaving the winner with $198,011,333.
If all of it was used for a 100% cash purchase on properties that generated annual rental income of 2% of the purchase price and 50% set aside for expenses (both are standard investment gauges), the annual NOI before tax would be $2,376,000. Could you live on nearly $2.3M annually? Meanwhile, all of your rental investments are appreciating meaning that your initial investment is not only earning you dividends but increasing in value as well.
What would you buy with $198M in lotto winnings? Pretty much anything you would like. Perhaps the investment that comes to my mind would be purchasing a regional mall – or several. But, regardless of the type of investment, you will want to hire a skilled financial investor to balance your portfolio and assemble a team to manage your investments.
What were the odds of winning the Powerball Lottery? About 1 in 292 million – not so good. Nevertheless, we all have the potential to make wise financial investments, albeit smaller ones. If you want your money to work for you, then invest in real estate and wallow in your winnings.