Unemployed 25 year old with 40k savings - where to begin?

Question

I work in the technology industry and made around 74k before quitting in December to pursue further education which I've now completed. I just started looking again but have always been interested in real estate investing as either a FT or PT gig.

I live in San Francisco but pay $0 rent because I live with my long-term partner. My expenses average 1k/month. From digging around BP a bit, it seems like buying and renting duplex in a rising market outside CA is the way to go. What are some of the challenges of buying out of state? With 40k in the bank and very low personal expenses, is there anything I can do right now to make a smart long-term investment - whether rental, REIT/P2P loans, or something else?

I have this money invested mostly in ETFs right now but would like to step up and leverage it better by the end of this year. Thanks for any tips or suggestions for further reading!

David Barnett · Answer

Frankly, I would work on getting a full time W2 job to be able to invest. Starting out, it is very difficult to get financing without a W2 job (or being self employed for 2 years with tax returns). You CAN invest without it, however, the W2 job gives you the greatest flexibility, in my opinion.

Vivek Khoche · Answer

@Anita Lee - Welcome to BP ! I am quite familiar with lot of mid west and new cash flow markets. Dropped you PM to get started.

Good Luck Investing

Vivek

Anita L. · Answer

Thanks everyone! My plan is to secure my next job, hopefully within the next 2 months, and continue learning about REI.

Vivek - Interesting thread about out-of-state and TK rentals! I'm still reading but it seems like cash flow calculations are key so if the numbers here work out, property taxes matter only in terms of how much cash I have to start.

David - I've transferred 10k of my savings into an IRA. If I'm not wrong, I believe that's the maximum that can be withdrawn for the purchase of one's first home.

Nick - Good point. I'm not looking to make a lot of money fast, I just want to set up a path to long-term passive income.

Nick Eckemoff · Answer

I don't think any bank will loan you money with no income or collateral. You could ask your friends and family though. Maybe seek out private lenders too.

You can't really 'make money fast' with real estate unless you do flip (fixing or just passing deals along). That 40k would turn into a meager income that isn't going do much. ETFs are much better for rapid investment, but you could end up losing money (like I did last month) too.

Best to keep that money as an emergency fund or pay off bad debts. Once you get a decent paying job, work at for 1-2 years and then assuming your credit score is good, you'll qualify for a loan to buy real estate.

Investing is what you do when are established and doing well (not the other way around).

George Blower · Answer

@Anita Lee

Maybe look into transferring your former employer 401k into a self-directed IRA which can then be invested in real estate. A company that offers self-directed IRAs is IRA Services Trust Company and they are located in San Mateo.

Unemployed 25 year old with 40k savings - where to begin?

Unemployed 25 year old with 40k savings - where to begin?

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