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Updated over 1 year ago, 04/18/2023
$50k saved. Where to start?
Hi Everyone,
I have been on this forum for quite a while and got all the motivation to start real estate investing from here. I have finally saved around 50k to start investing in real estate. I live in California but I want to invest out of state to get a better deal. My aim is to achieve financial freedom through real estate and make atleast 3000$ with a few real estate investments I make.
If there is anyone who was in the same position and achieved what I am planning to achieve or can help me please let me know.
Thanks in Advance
@Stephen Brown I am in a similar position and curious about your answer. Why do you recommend syndications first? Thank you in advance! JW
@Vivan Bhalla
I would recommend looking in the Midwest. Columbus OH is a great place to start looking in the Midwest. It's a nice balance of cash flow and appreciation. Also, it has lots of job opportunities and population growth.
- Patrick Drury
- [email protected]
- (614) 412-4565
Quote from @Jordan Workman:
@Stephen Brown I am in a similar position and curious about your answer. Why do you recommend syndications first? Thank you in advance! JW
I see a lot of people start in single family and hate it. It's a slower game and doesn't align with their goals. If you are trying to get freedom fast, I would learn from someone going at a much faster pace and go for the ride. I'd be happy to share more.
I have several clients from bay area. The trick is you need to buy class A/B and rents need be $1200+ a unit. This makes it so cap/ex/management doesn't kill your returns. Repairs will cost more when out of state simply because you can't as easily shop rates. You need factor that in for success. I have an out of state client who now has bought 14 units here through me and is getting double digit returns in B areas. They increased all the rents rather then taking on big rehabs which I think was key. I have seen a cali buyer get killed trying to rehab out of state and going with a differant contractor then I recomended they ended up with $50k or so in BS charges so there are risks.
I think there are plenty of markets to go to to make this happen the hardest part is finding which one works best for you. The worst thing to do would be picking a couple markets as it is intensive to find the right teams and systems in those areas especially with only 50k. 50k focused in one cash-flow affordable market is the best way to do it, so I say chose a market you have some connection or competitive advantage in. Is there an area where family is? Or do you travel for work to a certain part of the area, etc. Having those connections could really keep the costs or mistakes down as you learn the area and find your team.
- Jared Hottle
The market doesn't matter as much if you have a solid team in place, you can invest anywhere. However, the Midwest is still pretty affordable so I would check out some markets there. @Vivan Bhalla
- Brandon Goldsmith
- [email protected]
- 614-963-3340
I would house hack hack and invest locally. You could put down very low DP on a MF (duplex or triplex) and your buying power is much more. For example you maybe able to buy up to 700K with 5% down. But you would need to go to cheaper parts of Bay Area. Also depends on your W2 if you could afford the mortgage. I would def look into house hacking. I live in Bay Area as well but invest in KC market. But if you are younger and can afford to move around I would invest locally.
@Vivan Bhalla rent a house and air bnb per room. You're in a prime location. Or buy a shed build it inside and air bnb a small house.
Hi Vivan - a lot of Ohio love in this thread. If you have any interest in Cleveland, I'd recommend you attend the next "Winning in Cleveland" virtual meetup hosted by @Erin Dorsey Robinson. I attended the first one last week and there was a lot of great energy and ideas. As someone who is looking to deploy a decent amount of capital next year, it's helpful to hang out with and learn from some like-minded people.
Quote from @Carlos Villalta:
@Vivan Bhalla rent a house and air bnb per room. You're in a prime location. Or buy a shed build it inside and air bnb a small house.
Most of the places in California are not airbnb friendly otherwise I would have considered it.
Quote from @Vivan Bhalla:
Quote from @Nick Shri:
Quote from @Vivan Bhalla:
My goal initially is to make 3k not only :)
Have you identified any strategies for investing your $50K? As mentioned in my post above, you could consider a long-term buy and hold strategy. Let's take OH for example. I bought a property last year, invested approx $40K and it CFs few hundred dollars a month. If I pay off the mortgage (invest another ~$100K) I will CF quite a bit more, but I don't have that kind of cash with me. You can run the numbers accordingly and do the math, that will answer you on what & how long it takes to get $3k/mo. There are bunch of other strategies like syndication, fix/flip, brrrrr, and more. Do some more research here on the forums. If you want to talk about purchasing via TK provider, feel free to DM me.
All the best!!
Buy one quality asset in a market you want to continue to do deals in. $50K should be able to get you a solid duplex, assuming 75% leverage.
50K is enough to get started in some of the mid west markets. I used turnkey companies to kickstart my investing journey out of state and chose Cleveland as the market to scale. Let me know if you want to connect and we can chat some more
@Vivan Bhalla I work with many out of state investors! 30-50k is a great starting point as a down payment and reserves! Most of the properties I sell in Kansas City are priced between 100-200k. Lenders are typically requiring 20% down payment.
- Mackaylee Beach
- [email protected]
@Vivan Bhalla I would say what you should do is dependent on the type of return, liquidity and control you want over your investment. Here are a few ideas and where they fall on the spectrum.
You can do a single-family value-add rental. It requires less capital to purchase and you can do a hard money loan to purchase and fix up and then refinance out at a higher value and pull your money out. Also known as the BRRRR method, that can produce high cash on cash return, decent liquidity, and complete control over your property. The only downside is that you can have a much lower return due to vacancy because it is only a single family.
You can house hack by purchasing a multifamily property living in one unit and renting out the other. This will allow you to save more since you won't be paying much for rent. A good option is a combination of the BRRRR and house hack which will allow you to get primary residence loans.
A third option is becoming a limited partner in a syndication deal. They offer high IRR (generally 12%+, with 8% at a preferred return), normally make disbursements on a quarterly basis and tax advantages by using depreciation to offset income from other passive investments.
If you have any questions please feel free to reach out.
All the best,
John
Hi Vivan
Congrats on getting your feet wet and jumping into real estate! I too, had $50k in savings when I was looking to invest in real estate.
2 options I considered: 1) buy a LT out of state rental, or 2) buy a househack in the Bay Area. I ended up buying out of state simply because most of the investors I knew were also buying out of state and it seemed like the safer investment.
One thing I didn't consider (that I wish I had) was the velocity of my money and how much rents are increasing in the bay every year (both good and bad!). Had I purchased in the Bay at the time I bought my OOS rental last year, there would have been much greater appreciation that I could have leveraged and used to buy more rentals. Also, I still had my accounting job and was a strong W-2 earner, but wasn't flexible with location preferences which is why I didn't end up househacking - I wanted to stay in South Bay and it was way out of my budget
Hope this helps!
@Vivan Bhalla that's true. It's worth finding out. I'd download the app and check out airbnb places around your area. If they can do it why not you? I'm hearing people making $3-4k month for a shared room!
If you want to find out what other Airbnbs are doing in ur area, che k out wheelhouse. It will allow you to create a test listing. You only start posting when you get bookings.
House hack !
hey good for you on accumulating that much money for yourself. you will all of that and more to get into a decent deal, depending on area. important to align yourself with a good finance partner, that helped me alot. happy to share more.
- Ryan Deasy
- [email protected]
Hi @Vivan Bhalla! If you have a life, and/or a family, and/or a career, I highly recommend you invest passively. After talking to thousands of investors, I can honestly say it is very hard to multitask and make a great profit.
One great resource for investing is @Jim Pfeifer's Left Field Investors. This community has a lot of folks who are in the same boat. as well. Good luck and happy investing!
Great job building up the cash reserve. House hack is a great idea to increase disposable income to start investing. I would recommend that as the first step. I am also starting my journey right now and used the past few months to research markets, hone in on one, built the team there and started making offers. One recommendation I would make is to find a mentor in the market you decide to invest. Reach out to people here who are already investing in your desired market and already executing successfully on the strategy you plan to follow . This will help you avoid 'big' mistakes starting off. Also 'analysis paralysis' is the biggest issue for new investors. The only way to learn is to jump in :).
Quote from @Ruchit Patel:
I am in the same boat, working in a bay area and investing out of state.
In general, for people who are saving money through W2, and going for a cash-flowy buy & hold strategy, turnkeys in the midwest is the way. For specifics, let's connect.
Quote from @Lauren Keenan:
Quote from @Ruchit Patel:
I am in the same boat, working in a bay area and investing out of state.
In general, for people who are saving money through W2, and going for a cash-flowy buy & hold strategy, turnkeys in the midwest is the way. For specifics, let's connect.
Feel free to message me. Happy to help.