If I Had a Million Dollars: Buy Some Real Estate?

Despite the current mortgage crisis in the U.S. and the fact that homeowner equity is at its lowest point since 1945, there are wealthy people buying multi-million dollar houses. As in $49 million for a 29-room townhouse. Wow.

Personally, I don’t know anyone with that kind of money but I have known a few millionaires over the years. In my mind, owning a million dollars in property is attainable, and it’s a starting point for more wealth. (My father used that base to build up to several million in property in the 1980s, though he overextended himself and lost a lot of it.) That’s my answer to “If I had a million dollars.”

But I wouldn’t buy a single home for a million dollars. Some options:

1. Two properties at $500,000 each.
2. One property at $500K, and two at $250K each
3. Three properties at $333K each.
4. Four properties at $250K each.
5. Five properties at $200K each.
6. Five properties at $180K each, with $100K in reserve for maintenance, renovations, emergencies, etc. ($180K is about the lowest price for a bachelor condo in downtown Toronto.)
7. Four properties at $200K each, with $200K in reserve.
8. Three properties at $250K each, with $250K in reserve.

Why? Why not make it simple and just buy one? Well, it really depends on what your needs are, what your plans for prosperity are. Me, if I were able to, I’d buy three condos in the same building (in Toronto, Canada, if you’re wondering). And I wouldn’t even need a million dollars. Here’s what I’d be doing with them:

1. One for my living space.
2. One for my film studio’s office, which could probably write off.
3. One to rent out to celebrities during film festivals, or to host entertainment industry parties or to have guests. (The celebrity rental market in Toronto is reputedly pretty hot, with many Hollywood types even buying homes in Greater Toronto, not just condos downtown.)

The other reasons for buying three units instead of one property worth the same amount of money:

1. Separation of work and living space. After over two years of working from home, I’m going stir crazy. A bit of variety would be nice.
2. I can flip one or more properties without having to move. Profit without pain?
3. I can experiment with different interiors and film the work, in order to produce television or web broadcast content.
4. I can shoot movie scenes without adding to my costs, as well as have a place for cast or crew to stay temporarily.
5. Assuming I don’t run into any problems paying the mortgages, I can build equity, which can be leveraged to buy additional properties later.
6. I can “get away” from one apartment, if I get tired of one of them.
7. I could later turn two condos into rental properties, if I need to financially. (Though rental mortgage rates are higher than regular rates - at least in Canada.)

So you see, there is some method to my madness. Of course, I have very specialized reasons to want these properties. You may not, but you probably want to pursue prosperity nevertheless. The key thing is that I try not to think linearly. If I buy just one property at the same total cost, I limit the leverage that I have. Multiple properties open up opportunities for prosperity. Prosperity-mindedness requires non-linear or outside-the-box thinking.