~50k+ to put into investment property. what/where is best option for me?

Question

Hey y'all,

I'm currently based out of Seattle, WA, and I've been looking into potentially purchasing an investment property. I hope to spend less than 50k total on the property but can go up if needed. I've considered the following options: 1) a mid-term rental condo in Seattle, 2) a duplex/triplex in a Tier 3 market or smaller Tier 2 market (like Minneapolis), or 3) Single family home in a place like Houston. For the last two, I'd need a property manager though.

I have the following three questions: 1) Is 50k enough to make a down payment + repairs on any of these options and still be cash flow positive?, 2) If so, which markets would you recommend, and 3) If not, realistically how much more would I have to invest to make this feasible.

Since I'm a total noob, any advice is much appreciated. Thank you!

Sherief Elbassuoni · Answer

@John Shotton, $50K is enough if owner occupied since you can put very little money down (3.5% FHA, or 5% conventional, ....). It may not be enough though if you wanted a single family investment loan (15% down), or a duplex/triplex/Fourplex investment (20%-25%)

Ruchit Patel · Answer

It will be tricky to fix a house with $50K after a downpayment, but you can definitely purchase a turnkey cash flowy property somewhere in the midwest. $50K can buy you a $250K house or a $200K home with 25% down. That's not a bad price range at all except for big metro cities.

However, Seattle might not work out. I lived in Seattle for 2 years.

Jeff Schemmel · Answer

1.) no, not in Minneapolis.  The average duplex is about 350k, 100 yrs old, and needs at least some short term repairs.  Don’t forget you also need to pay closing costs of 3-5% on top of your 20-25% down payment for a non owner occupant investment property.  You could buy a single family rental in Saint Paul with 50k and rent it via section 8 for a reasonable return.

2.) @Jordan Moorhead how far can 50k go for a non owner occupant investment property in Louisville?

Jordan Moorhead · Answer

@Jeff Schemmel pretty far! We also have an agent on our team in San Antonio who just found a great triplex deal off market too

Dennis Nguyen · Answer

Hey John! I'm an agent here in Seattle with a couple of rentals. Have you considered house-hacking? 50K is do-able if you do an owner occupied loan with a lower downpayment. If you're open to living in one room / one unit and rent out the others, you could significantly reduce your living expenses and your mortgage payment. If you are not planning on owner occupying, 50K will be hard in Seattle because you'll have to put at least 20% down. I connected with you incase you have any additional questions.

Grant Schroeder · Answer

Thank you for the shoutout @Lawrence Potts! Appreciate you brother!

Lawrence Potts · Answer

There are some products that allow you to go 10% down on non-owner occupied properties but that doesn’t help you with cashflow if it’s marginal to begin with. $50k is a good chunk of change but with down payment, closing costs, immediate repairs, reserve requirements, and then having a safe cushion for when something happens, it all goes away fairly quick.I don’t know your current living situation, but I’m a big advocate of house hacking to begin with. It’s a great way to get your foot in the door and leverage your living expense and pay down the “ignorance debt” without losing your shorts.If I were you, I’d connect with an investor-friendly lender and see what makes sense for you financially. @Grant Schroeder is my go-to lender, he’s built a great portfolio and has helped a lot of my investor clients. He can find a great agent for you as well.

Hope that helps! Send us some examples that you like and we can help run some numbers!

Dave Skow · Answer

@John Shotton- thanks -  if interested in  staying in WA - maybe look at  places  like  Moses lake /  spokane valley /  etc.....

Rob Bergeron · Answer

I'd BRRRR a larger airbnb personally, I'm in Louisville.

Dave Skow · Answer

@John Shotton- thanks for the post - feedback :1) Is 50k enough to make a down payment + repairs on any of these options and still be cash flow positive?-  when  buying a 1 unit rental - you will need a min of 15% of the price for your down payment ...this means a pruchase price of  approx 330K is your target ....maybe less if you need to use  some of the  50K for remodeling ...if you  buy a 2-4 unit property - down payment requirement is higher

2) If so, which markets would you recommend- the price point noted above  wont  allow you to find much in the seattle area  so likely another lower priced market will be needed

3) If not, realistically how much more would I have to invest to make this feasible...this  depends on the market you buy in  and the type of  property  you buy ....rg....a 400K rental condo would require a 60K down payment

Watch  out for high HOAs as these will eat into the  cash flow quickly

~50k+ to put into investment property. what/where is best option for me?

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