If you had 20k and u just started. What would you do ?

Question

I have 3 websites. A main site a buyers site and a sellers site. From oncarrot. Not sure my next step. I have 20k saved for real estate investments. Wondering what would you do ? What kind of campaign? I’m willing to jv with someone in the area ‼️well I know I can do a mail out. but everyone starts with absentee. I need the list no one wants. I worked off the books. so I have no real work history. just started my llc 2 months ago. so I can't do the FHA loan. my credit is 640. what would you do?

Shawn Ackerman · Answer

Find about $8 more thousand. Buy an investment property in Milwaukee WI for $25K + closing costs with tenants in place. Get with a national lender who can delay finance you out at 70% of the appraised value(without seasoning in 30-45 days), pull out 70% on a $32 -35K valued property($$22K - 24,500) and repeat the process. I've been doing this for the last 4 years. Just my $0.02. All the best to you. Always remember to persist and you will WIN!!!

Shawn Ackerman · Answer

@Dawn Anastasi many are in D areas for sure. But not all. We source our own deals and the motivation for a seller in a D neighborhood is the same in a C neighborhood. I have a bunch of D class properties in Milwaukee and I love them!!! Many I bought for $17-$20K, Delay financed them at 70% of $30 - $35K value with tenant in place and I'm into the property for $0 and they cash flow hand over fist. I've got mortgages for $89 per month P/I on alot of properties. Do we have to chase rent? Yes. Do we have to evict? Yes. Do we take ACH payments directly from their employer? Yes. Do we have alot of rent assistance tenants? Yes and Yes!!!! Do tenants damage the units? Yes. But many of the properties cost under $165 per month to operate leveraged. I just got a new tenant into one of my 4 bed SFR's on 2300 N/20. Rent assistance is paying $925.00 per month + stipend for water around $67 per month. Bought this deal for $16.5K cash and have a $17.8K mortgage on it. Cash flow on this property is over $600 per month and I don't have any of my money into it and it has $13.5K in equity in it. Thanks for bringing the point up!!!!!

Rebecca Knox · Answer

I agree with Dawn...those are very challenging areas. Many local investors in those areas are either moving out of them or they are getting deals dirt cheap to circumvent the high level of management, high turnover/vacancy, eviction costs and repair costs. Personally, I rate areas that show up on the Trulia crime map as RED as an F. Truly, as Shawn mentioned, you need an excellent and solid team that you trust and share the same vision to be successful in the most distressed parts of our city. The great thing about real estate is there are so many strategies and it depends on your immediate/long term goals, your level of comfort and risk tolerance. Without a solid work or income history, it may be difficult to get a loan. You could build some capital and work history by doing some wholesales or rehabs/wholetails/pre-habs. I would say line up more creative money...your local REIA members and local real estate clubs will have people who are willing to share their HML's or bank investor programs. If I had it all to do over again, as soon as I thought about getting in to real estate, I would've hit up every meetup in the area for two months and networked like a madman---the best resources and ideas come from those doing it in the area you want to invest.

Zac Burke · Answer

@Shawn Ackerman How often are you seeing turn over? If you're cash flowing that high most of the year it seems like it might be worth the turn over as long as its not every other month. I get why some people wouldn't want to go through that hassle if they were managing tenants themselves but if you're out of state it's a PM thats doing the work. They know the game, it's what they do. I understand not wanting to do it as a long term strategy but it could definitely be a quick way to build up your funds for the first few years you're starting out.

Dawn Anastasi · Answer

Keep in mind these properties are generally in D-class areas.

Jacob A. · Answer

@Charles AdamsI would take that 20K and try to find a hard money lender and attempt to do the BRRRR strategy with a hard lenders funds. The money you have saved up could go towards the points and downpayment potentially required. I then would refinance the property and take the profit and combine it with what you save during that period to do the same process over and over again until you have the income/ financial level of security you desire. Hope this helps!

Gene Regan · Answer

@Dawn Anastasi Dawn thank you for bringing that up and I will keep that in mind. I had planned to target mostly C class areas. By the way, I purchased your Investing in Milwaukee Guide and it has been very helpful. Thank you for putting that together.

Shawn Ackerman · Answer

@Gene Regan take a look at the BP marketplace. There are tons of deals there. Also make connections with people who are doing deals in the market. PM and I can help you out.

Gene Regan · Answer

@Shawn AckermanAny recommendations on the best ways to find properties in Milwaukee that meet this criteria? This sounds like a great strategy. I am in the middle of putting some funds together by doing a cash out refi on a rental I have in Houston and I am planning to check out Milwaukee mid to late February. Hopefully I will be ready to make my first purchase in the area by then.