Have 20k ready to invest but where?

Question

I have been interested in real estate investment as cash flow for a long time. I am 26 and have saved 20k to get started. My down payment amount limits me to some areas I have been thinking about. Please give me your thoughts on Rochester New York and Las Vegas. I live in California so I know I need to go out of state. I am willing to move anywhere to get this started. If anyone owns property in Rochester, ny or Las Vegas please share your thoughts.

Larry Fried · Answer

@Brandon Markos  If you have $20k to work with, and you are thinking of leveraging with a conventional loan and 20% down, don't forget to include money for closing costs & reserves to handle any unexpected costs, as well as that 20% down.  $20k is pretty minimal to get started if you are looking at buying something in good condition in a decent neighborhood even in the midwest (I don't know about Rochester).  You might consider saving a little more first, or looking at an alternative form of REI.

Robert Rayford · Answer

@Brandon Markos, The Vegas multi market is very competitive with most of the 4 plex in the D neighborhoods. A couple of years ago it was possible to enter the market with $20k, I was able to flip 8 condos in 11 months at a average ROI of 85%. Those days are gone so the best way to enter the Vegas market is to team up with a experienced local flipper. This way you can learn and put your cash to work. Find a JV partner on a entry level condo with a good rental return. Buy, repair, rent it out and seller to a buy/hold investor. Do this as many times needed to build up your capital. You would want to increase the quality of your properties every time you repurchase. Eventually you can make a lateral move to the MFR/SFR market. This takes time so be patient and make it happen. I live  in the Bay Area and in Vegas. I totally understand the frustration of a newbie trying to enter the California market, so out of state is your best bet.

Arpan Patel · Answer

I have a bias towards Chicago of course. You get the midwest cash flow but in a global city. Vegas can be good as well but just prone to much to market crashes. Upstate NY can also work especially around college towns (I went to school and upstate and missed out on that opportunity as I found real estate as an investment my senior year...)

Christopher Blanco · Answer

@Brandon Markos what do you bring to the table? Can you find deals? Are you a tradesman? Do you have knowledge? Do you have time on your hands? All of these things can be used instead of money. You need to find out what you possess then market that ability to those who need it. I am doing my first two flips (ARV's around $170 each) with no money of my own. I am doing this by leveraging a network i have built over the last 6 months. You can't do this business alone.

So with $20.000 here is what I would do:

• Write a business plan
• Invest a small portion into establishing a real business. Unless you want this to be a hobby, don't do it in your own name. Establishing a business and writing a business plan gives you credibility.
• Write a business plan
• Invest a small portion into your education, be it books, seminars, meetups etc
• Start networking....friends, family, coworkers etc. All of them are potential investors. Go to REIA meetings, ask questions and follow up with people you meet
• Research, understand and seek out funding sources. Know how to present your deals to guarantee funding.  My two flips that I have right now have a total 3 different lenders. Yes the money is expensive, but I counted for that in my evaluation.

Good luck!

Bradley De comarmond · Answer

Welcome @Brandon Markos!

You're right to go out of state since 20k won't scratch the surface of a typical CA property.  I like St Petersburg, Fl in terms of prices and cashflow but LV may be similar in terms of return.

If you can get approved for an FHA loan and house hack for a few years, that would be a good option or you can partner with someone else that compliments your skill set on a flip and build up some capital.

Best of luck!

Brandon Markos · Answer

thank you for the feedback everyone. I understand I have a minimal amount of money and rushing in could be catastrophic but not doing anything could be worse. Please help with more thoughts on the Vegas market in general. Anyone investing there? 4 unit plus multi family.

Sergio Avina · Answer

@Arpan Patel, Hello Arpan... I'm seriously considering investing in Chicago. What areas in Chicago would you recommend investing using the "buy and hold" model or "flipping"? I have family in Berwyn, Cicero and Downtown. Do you recommend in vesting in Berwyn /Cicero?  Thank you for your input.

Christopher Brainard · Answer

@Brandon Markos

The median home price in Las Vegas is somewhere around $250k, so I don't think $20k will get you very far here. The better question is, what are your investing goals? If its cash flow at a low price point, the Midwest beckons...

-Christopher

Have 20k ready to invest but where?

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