How would you invest $30K

Question

Mark Gallagher · Answer

Ryne V.

I don't think I even had $30 and I made it work.

$30K can do a lot depending on what you're looking to achieve in life. When I started, I was looking for cash flow so I could eventually leave my job. If I had $30K when I started, I would have bought at least 3 rental properties using conventional financing.

If I wasn't as interested in leaving my job, I would have taken $30K and flipped a house to get a snowball of cash going to open up the doors to other parts of investing.

Jeff Filali · Answer

Ryne V. I just started full-time in REI last year and started with exactly $30K saved that I was willing to risk to get started.  Less then a year later, I just purchased 3 more properties last week for cash, and today I currently have over $300K in properties with over $240K in equity built up.  I did it by thinking outside of the box and rehab/flipping, with a few wholesale flips also, and flipped the same money, over and over and over, then also had a few that I sold with seller financing. But my goal was to ramp up my capital for the first few years and plan to start doing buy and holds down the road.  Read my recent Blog to learn more of how I made it work with only $30K to start with: How I Launched my Real Estate Flipping by leveraging 0.0% APR CC's

Anthony Dooley · Answer

I'm with Joe Villeneuve. You saved $30K, good job. How fast can you do it again? If you buy a cash flowing rental with your $30K, then used the increased income to help save another $30K faster than before, you could repeat the process. Once you have 3 or 4 rentals, you can save much faster. This assumes that you are re-investing all of your profit from the rentals into the next house as well as continuing to save from your income.  That is exactly what I did and in a few years, I retired from my day job, and kept buying property.

Jay J. · Answer

@Cuong Nguyen , I believe what @Mark Gallagher is referring to is using leverage (meaning, getting a loan) to cover the rest of the purchase price..  simple, yet not.

So, for example --> Property cost $100k. You put down $10k (of your $30k), and finance the remaining $90k. You do this three times and you've got 3 properties..

The reality of this is that unless you put down enough, the property won't cash-flow for you. (do the math)  Plus, unless you're a seasoned RE investor, banks (most, not all) will want 20/25% down, unless you're living in it. So, the simple idea of using $30k to buy 3 houses might work for some, but not all.. and probably not a noob.

But, to answer, or at least give a response to Ryne V..

With $30k today, I would use a portion to buy a 'live-in-flip', and hold the rest as reserves. Once the live-in-flip was completed, I'd refinance the house (hopefully getting a good appraisal-> CF & PMI and all of that) that would allow a decent amount of cashflow. Then take the remainder of the reserves and go do it again. I'd aim to buy a house every 8-10 months.

Tom Ott · Answer

Have you looked into making it a down payment on a TK, or buy and hold? If you do not have the time or contacts to flip, this might be a good route.

Cuong Nguyen · Answer

@Mark Gallagher Yeah, 30k Houses do not exist where I live in Melbourne. Maybe 350k, which is 50km away from the City. Thank you for your insight.

Cuong Nguyen · Answer

@Jay J. Hey thanks for that. Really appreciate it. This thread helps me as well, because I have double that cash at the moment, and am trying to think of the best way to get myself going

Larry Fried · Answer

Well it would depend on where I lived and what was available price wise in my area, but assuming I live where I live now and not where you live I would undoubtedly deploy that $30k in what I am doing the most of right now - invested in multiple portfolios of 10 SFR properties that are co-owned by the managers.  I wrote about this in my blog Have I Found the Holy Grail of Passive Real Estate Investing?

John Verduzco · Answer

as you start to repeat the process, especially if doing conventional loans on SFR's, bigger is often better.  so I would look hard at putting $30K to work on one good SFR vs the $10K each for 3 homes.  The reason is limitations on conventional loans.  We have maxed out the 10 conventional loans on single family homes and if we had done it with $35K homes, we would have left a lot of great debt on the table.  (approx. $1.5M of great debt vs $262k of great debt)  This all assume that cash on cash returns are equal - which isn't always the case.  In addition, all the cost to buy, cost to hold and cost to sell % are typically less impactful with larger purchases.  Some are fixed costs that will be smaller % (and drag on your returns less) on more sizable purchases.  Just have to find the sweet spot in your market that balances access to capital, access to debt and CoC returns.

Mark Gallagher · Answer

@Cuong Nguyen

@Jay J.

Yes, I'd be talking about putting $10K as 25% down on a ~$35K house. Those exist in my area. But you could also take the $30K and put it down on a $100K purchase, for one house.

How would you invest $30K

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