Where to invest my first 50K

Question

Hello all, I am wanting to get started with buying my first rental or two. I have 50k cash and was wondering in everyones opinion where the best place would be to start looking to buy. I Live in California and as most of you know it is pretty expense to get started here. So my goal Is to start out of state. I want to get a property that brings in $500+ passive income. If any of you could help me that would be much appreciated.

Shiloh Lundahl · Answer

@Brandon Diede You have a good start.  You know what you are starting with and you know what you want, and in my opinion, I think it is pretty realistic.  You want one property out of state that returns $500 a month in cash flow.  The next steps is to determine where you would like to invest.  You will need people in the location where you invest so choosing a location that you are familiar with or a location where you would like to visit to build a team would be your next step.

Also, to be honest with you, I wouldn't encourage you to get a property out of state unless you want to get 5 properties in the same area.  The reason why is because it takes time to build a team where you want to invest.  And if you are only looking to buy one property in that location then you're not getting as good of a return on your time and it would be more profitable time-wise to invest in something more passive such as a fund or syndication.  So I would suggest going into a location where you would like to own 5 properties or more.  It is fine to start with just buying one property, but I would encourage you to only go into a location where you plan on buying more.

Next, with 50k you can probably buy a property just off of the MLS and use the 50k as a down payment.  Then you can have a property manager manage your property.  This is the easy way to invest, but it is not the most profitable.  A more profitable way to invest would be to find a discounted property (either a distressed property or a distressed seller) through your own marketing or through wholesalers and then get the property ready to rent through renovations.  Understanding the numbers will give you a better idea of what the property will be worth after it gets fixed up. You don't want to spend a ton of money and time, and take on the added risk of buying a property to rehab without understanding the numbers really well.  If you don't know your numbers well, you risk spending all that time and money just to bring the property up to market value, or worse, you have more money into the property than what the property is worth.  So know your numbers so that you can create forced equity which increases your net worth as soon as you have finished rehabbing the property.

The people you would want on your team to help out with the property would include:

• a real estate agent and or several wholesalers
• a title company or law office that closes properties
• a hard money lender and or a long term lender (bank)
• a property manager or assistant on the ground
• contractors/sub-contractors, and or a handy man
• skilled laborers (electricians, roofers, plumbers) 3 deep

Hopefully this helps.  Let me know if I can be of more help.

Nicholas L. · Answer

@Brandon Diede welcome.  When you say you have $50K cash, is that $50K to invest?  Or is that all of your cash including savings, emergency fund, etc.?

Michael Dumler · Answer

@Brandon Diede while picking a niche market is important, selecting your investment strategy is far more crucial. Every REA and investor is going to advocate their market but will fail to share which investment strategy they are implementing in their business. What may work in one market, may not necessarily work in another. Before selecting a market, I would advise that you first establish your criteria and strategy. You're already off to a good start but identifying that you want to invest to bring in at least $500 in cash flow per month, the question is, what does that investment look like? SFH buy and hold, STRs, BRRRR, house hack, small multifamily, etc. Hope this makes sense and helps!

Matthew Irish-Jones · Answer

@Brandon Diede a 10% cash on cash return is achievable in a lot of rust belt cities, Buffalo being one of them.

There is a lot more to think about than just your cash on cash return though.  You need a team, a strategy, a defined risk tolerance, and someone you can trust to bring you a deal and make sure it’s a good one.

10% CoC can be found In our specific market but I like 6% returns much better.  Over the last 3 years prices have gone up and now where we can find 10% returns are high risk areas.

Keep risk in mind when you set your goal.

Wade Woo · Answer

@Brandon Diede 50k can get you into one rental property that cash flows on average $500 per month.  DM me if interested to know more.

Brandon Diede · Answer

Thank you for the helpful tips I appreciate it. That is my goal, to have more than 5 properties in one area.

Brandon Diede · Answer

I have 50K to invest.

Tyler Peitzmeier · Answer

@Brandon Diede

Good morning Brandon,

I live in Orange County and I completely agree that the barrier to entry is high here. I don’t where you’re at in your life but I would start looking a house hacking here is your in California by buying a property with an FHA loan and rent out the other rooms or make an ADU and rent that out.

If you are looking out of state, I invest in states like Nebraska, Missouri and Kansas. I can answer any questions you have on those markets but I would really recommend to start here where you know and grow from there.

Hope that helps!

Tyler

Where to invest my first 50K

Most Popular Reply