Getting started with $50k / no debt?

[Holly Ross]

Hey all. I want to get started in real estate and am hoping to get some insights on the approach... I have $50k cash and don't really want to take on debt (or do creative financing). Is this a do-able starting place financially, or a pipe dream? 

Do markets still exist where you can buy nearly turnkey rental property for $50k?

I've been taking in so much info that I'm in the analysis paralysis phase but I'm curious how someone more seasoned would get the ball rolling with just $50k cash today. 

Thanks so much for any insights you could share. I'm learning as much as I can and currently in the "i'll never be able to do this" phase (but giving myself a pep talk out of it!) 

[Jordan Ray]

Quote from @Andrew Stringfield:

Quote from @Taz Zettergren:

@Holly Ross If you're comfortable holding rentals in that price range Memphis would provide opportunities for you. That said, I personally wouldn't invest in that type of area, in my opinion (for whatever that's worth) I'd advise taking on some debt and going a little higher in price to get a more consistent area that will provide a safer investment. 

Feel free to reach out, I'd be happy to discuss with you in further detail. Best of luck investing! 

 Do not go outside without a Kevlar vest in Memphis.

😂

[Robert Ellis]

Quote from @Holly Ross:

I'm actually not against debt, I was just curious if I could get a start without it since I'm so new to my first mortgage. I appreciate all of the input!

Generally speaking, my primary interest is in BRRRR or fix and flip, and I verrry much want to be in the trenches on reno and commit my time to the process fully. But since I have no current experience with distressed properties I'm finding it really hard to assess which distressed properties are good deals or which are too far gone. The blind spot adds another layer of uncertainty with debt because I want to feel confident in my purchase if I'm taking on debt.

My dream for a first step would be to buy a 2 unit with a 2.5k mortgage and have both units renting at $1500! I just feel like I can't figure out how to get there with my renovation blind spot. 

For example there's a property that I know is in a GREAT area here in Buffalo, huge 2 unit house with potential for a 3rd unit listed at ~150k. It's been on the market a while. I toured it but found that it would almost need to be an actual rebuild since the foundation is cracked, the roof has a tree growing out of it, and just about every surface in between is painted or ruined by former tenants. I know without a doubt that the ARV would be high (well kept houses go for 500k or so in the area) but my realtor thought that unless they were selling it for 20k, the reno costs would be too much to possibly break even.

I reached out to an investor-friendly realtor locally to see if they can help guide my thinking here. It's hard feeling like I need a mentor but also wanting to be respectful of peoples' time and not ask too much of them to teach me, so I'm trying to do as much as I can on my own first. 

TLDR: If I can feel confident in the deal itself, I have no problem taking on additional debt. I just lack the confidence in the deal and the process which makes debt much scarier. 

an easier entry to fix and flip or repositioning an asset through BRRRRR is building. we do ground up in Columbus Ohio I'll send you a colleague request if you want to chat more my cell phone is in my signature

[Randy Charboneau]

Geez so many Debbie Downers in this thread.   

Holly, I have some pretty incredible news for you.   Yes, you can absolutely still buy a $50,000 home and make money on it still.   Muskegon MI is the place for you.    We have homes over here in rental condition and occupied for as low as the $30,000 range!   I just sold an investor a 2 bed 1 bath home in Muskegon Heights with updated kitchen and newer roof and vinyl siding that is occupied and paying rent at $700+month for $49,500!    This is absolutely possible.   If you wanted to do a quick flip and buy it for $25,000 and put $10,000 into it and resell for $50,000 we can certainly do that.   For a cheap/low money/starting investor, I can't think of a better place in the USA right now to invest than West Michigan.

[Jordan Ray]

Quote from @Randy Charboneau:

Geez so many Debbie Downers in this thread.   

Holly, I have some pretty incredible news for you.   Yes, you can absolutely still buy a $50,000 home and make money on it still.   Muskegon MI is the place for you.    We have homes over here in rental condition and occupied for as low as the $30,000 range!   I just sold an investor a 2 bed 1 bath home in Muskegon Heights with updated kitchen and newer roof and vinyl siding that is occupied and paying rent at $700+month for $49,500!    This is absolutely possible.   If you wanted to do a quick flip and buy it for $25,000 and put $10,000 into it and resell for $50,000 we can certainly do that.   For a cheap/low money/starting investor, I can't think of a better place in the USA right now to invest than West Michigan.

Wow thats amazing! I may want to check out that area myself at those price points

[Marc Rice]

Quote from @Holly Ross:

Hey all. I want to get started in real estate and am hoping to get some insights on the approach... I have $50k cash and don't really want to take on debt (or do creative financing). Is this a do-able starting place financially, or a pipe dream? 

Do markets still exist where you can buy nearly turnkey rental property for $50k?

I've been taking in so much info that I'm in the analysis paralysis phase but I'm curious how someone more seasoned would get the ball rolling with just $50k cash today. 

Thanks so much for any insights you could share. I'm learning as much as I can and currently in the "i'll never be able to do this" phase (but giving myself a pep talk out of it!) 

 I'm selling a house for $50k in Columbus, OH right now that will rent out for $750/mo.

[Patrick Drury]

@Holly Ross
In Cleveland, you can find deals that are turnkey with a 50k downpayment or less. Turnkey duplexes on the West Side in more C locations are in the 150-190k range. Just depends on the finishes and location. 

[Zeke Liston]

Quote from @Holly Ross:

Hey all. I want to get started in real estate and am hoping to get some insights on the approach... I have $50k cash and don't really want to take on debt (or do creative financing). Is this a do-able starting place financially, or a pipe dream? 

Do markets still exist where you can buy nearly turnkey rental property for $50k?

I've been taking in so much info that I'm in the analysis paralysis phase but I'm curious how someone more seasoned would get the ball rolling with just $50k cash today. 

Thanks so much for any insights you could share. I'm learning as much as I can and currently in the "i'll never be able to do this" phase (but giving myself a pep talk out of it!) 

 Finding a property under $50,000 in the Ohio market is possible. There are a few seller financed opportunities out there but I think you'd have an easier time finding a deal you can buy cash. 

[Engelo Rumora]

Quote from @Holly Ross:

Hey all. I want to get started in real estate and am hoping to get some insights on the approach... I have $50k cash and don't really want to take on debt (or do creative financing). Is this a do-able starting place financially, or a pipe dream? 

Do markets still exist where you can buy nearly turnkey rental property for $50k?

I've been taking in so much info that I'm in the analysis paralysis phase but I'm curious how someone more seasoned would get the ball rolling with just $50k cash today. 

Thanks so much for any insights you could share. I'm learning as much as I can and currently in the "i'll never be able to do this" phase (but giving myself a pep talk out of it!) 

Hi Holly,

Here here.

I'm not a fan of debt either lol

We loose 90% of business because we turn down turnkey investors looking to finance.

The reason is mostly two-fold:

1) Our price points are low entry and we have the luxury of not being volume focused so we just refuse to deal with closing delays when it comes to selling via financing.

2) I don't believe in leverage when first starting to build a portfolio. Slow, steady and with as much control as possible. Firm foundation with cash only owned properties.

I don’t believe in the blogs, podcasts and sales cashflow “guru’s" that push financing.

There are hidden agenda's there and they make more money if someone can purchase more properties..

Money makes money.

Leverage makes you bleed money when things turn South and eventually they always do because real estate is a roller coaster.

Just ask the over-leveraged folks what happened during the GFC of 2008 or during the Covid times of 2020 or even now with all of the multifamily home owners. Many aren't solvent or on the verge of bankruptcy because of poorly underwritten deals and using too much leverage.

The interest rate and inflation fluctuate, the economy changes.

When you use financing, you don’t control the outcome as much. You don’t have "full" control per se.

The lender does IMO…

Nobody declares bankruptcy if they own properties with cash unless they make dumb mistakes and cross collateralize.

The cash investors might loose money but they won’t be bankrupt.

Also, only when you build a base of 3-4 properties with cash, and fully understand the true income of your portfolio after consecutive years of performance.

Only then should you consider adding “gasoline to the fire” and use finance.

Even then, you should always own 30-50% of your portfolio with cash only properties.

This is for the purpose of having a strong foundation that will minimize risk from any “Black Swan” event and will also increase your long term cashflow.

When investing in real estate or business in general, one should always look to protecting the downside first before looking at the upside.

Just my opinion 🤷‍♂️

Regarding your $50,000 budget for turnkey.

It will mostly be C or D class which I would advise against.

High crime, lot of volatility, unemployed tenants and property management collects rents with a bullet proof vest and shot gun.

On paper things look great, in real life they are much different.

On the other hand, if you DIY in a markets like Ohio, Michigan and Indiana.

You can definitely be into a B class asset for $50,000 purchase and rehab.

Wishing you much success

[Engelo Rumora]

Quote from @Randy Charboneau:

Geez so many Debbie Downers in this thread.   

Holly, I have some pretty incredible news for you.   Yes, you can absolutely still buy a $50,000 home and make money on it still.   Muskegon MI is the place for you.    We have homes over here in rental condition and occupied for as low as the $30,000 range!   I just sold an investor a 2 bed 1 bath home in Muskegon Heights with updated kitchen and newer roof and vinyl siding that is occupied and paying rent at $700+month for $49,500!    This is absolutely possible.   If you wanted to do a quick flip and buy it for $25,000 and put $10,000 into it and resell for $50,000 we can certainly do that.   For a cheap/low money/starting investor, I can't think of a better place in the USA right now to invest than West Michigan.

Hi Randy,

Interesting numbers.

Is this B Class?

Everyone has different perceptions for B Class and this is mine based off our market in Toledo.

1) Mix of investor owned and home owners (Last few years leaning more toward home owners buying)
2) Infrastructure supporting tenant and home owner demand (Car manufacturers, ProMedica hospital, Washington Local School District, Toledo University, etc...)
3) Homes well kept, yards mowed, none or very few bordered up homes, cars with wheels, pride of ownership, lower crime, no riff raff roaming the streets lol
4) All tenants employed and submit rent payments online. No government subsidies or cash collections

Thanks mate and looking forward to your reply 

[Randy Charboneau]

Quote from @Engelo Rumora:
Is this B Class?

Everyone has different perceptions for B Class and this is mine based off our market in Toledo.

1) Mix of investor owned and home owners (Last few years leaning more toward home owners buying)
2) Infrastructure supporting tenant and home owner demand (Car manufacturers, ProMedica hospital, Washington Local School District, Toledo University, etc...)
3) Homes well kept, yards mowed, none or very few bordered up homes, cars with wheels, pride of ownership, lower crime, no riff raff roaming the streets lol
4) All tenants employed and submit rent payments online. No government subsidies or cash collections

Thanks mate and looking forward to your reply 

I think "B" class is fair.   Muskegon Heights 15 years ago was not "B" class and was depressed but there has been a lot of investment in the Muskegon area the past decade and everything is on the upswing.   I wouldn't consider Muskegon "A" class yet by any means but they've definitely jumped out of the boarded up/depressed era and are on their way to respectability.   Crime is down.  Foreclosures are down.  Everything is pointing up here.

[Engelo Rumora]

Quote from @Randy Charboneau:

Quote from @Engelo Rumora:
Is this B Class?

Everyone has different perceptions for B Class and this is mine based off our market in Toledo.

1) Mix of investor owned and home owners (Last few years leaning more toward home owners buying)
2) Infrastructure supporting tenant and home owner demand (Car manufacturers, ProMedica hospital, Washington Local School District, Toledo University, etc...)
3) Homes well kept, yards mowed, none or very few bordered up homes, cars with wheels, pride of ownership, lower crime, no riff raff roaming the streets lol
4) All tenants employed and submit rent payments online. No government subsidies or cash collections

Thanks mate and looking forward to your reply 

I think "B" class is fair.   Muskegon Heights 15 years ago was not "B" class and was depressed but there has been a lot of investment in the Muskegon area the past decade and everything is on the upswing.   I wouldn't consider Muskegon "A" class yet by any means but they've definitely jumped out of the boarded up/depressed era and are on their way to respectability.   Crime is down.  Foreclosures are down.  Everything is pointing up here.

I feel you mate,

Always loved overlooked tertiary markets.

That's how I settled on Toledo in 2014.

Funny story, folks would always ask me "What is an Aussie from Sydney, Australia doing in Toledo, Ohio"

I'd always reply "Because of the beautiful weather and the beaches" hehe

Much success 👍