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Updated over 5 years ago on . Most recent reply

Account Closed
  • Los Angeles, CA
9
Votes |
5
Posts

$20k saved & 810 Credit Score but I live in LA-what would you do?

Account Closed
  • Los Angeles, CA
Posted

Hi everyone! I'm brand new to both the site and the concept of Real Estate Investing, so apologies if this is awkward in any way, but I wanted a little starting out advice for my specific situation, and everyone seems really nice and helpful on the forums, so I thought I'd give it a shot!

* My goals: I'd like to generate some supplemental passive income through investing in real estate rentals in cheaper markets, with the end goal being to assist me in saving to buy a home of my own here in Los Angeles (in the $750k range), and maybe eventually replace my current work.

* My job: I currently work from home running my own online fashion brand (it's an LLC). We grossed $275k last year, I kept around $50k -- I'm definitely not rich, but it's pretty chill and I like what I do.

* My living situation: I live in a 3 bedroom home (I rent) in a very trendy neighborhood in Los Angeles. One bedroom is my home office for the fashion brand, the other is mine, and the third I Air BNB, bringing in between $1000-$1500 of extra income per month, which goes straight into a savings account. 

* My budget: I have $10k currently set aside to use towards investing in real estate, and I have another $10k safety net available. I also have an 810 credit score, and my only current debt is around $13k of student loans. I save around $8,800/year from my current income, as well as the roughly $12k per year from my Air BNB room.

* My skills: I am pretty good at online marketing (my company's instagram has around 230,000 followers, my own has 65,000). I'm also pretty skilled at all areas of design (I have my BFA in fashion design, part of the draw of my current home for Air BNB is how it's decorated, and I worked as a graphic designer to pay part of my way through college). I'm also a bit of an overachiever (graduated from high school Valedictorian as a Junior) so I have a go-getter and highly social personality. I'm 2/3 of the way through getting my real estate license just for fun. I am a spreadsheet and math queen (youngest person in my school district to take Calculus in high school). I also grew up pretty poor in a town run by a major gang (shout out Fresno, California), so I have a strong functioning understanding of "rough" sides of town -- I know when a street is run by a gang, or when it's just a bunch of poor but wholesome families trying to get through their day, and how that can change from block to block.

*Here are my starting out questions: 

1) If you have great credit, is it better to finance your first rental purchase or pay with cash? 

2) Is the $10-$20k I currently have saved enough to get me started, or should I be looking to save more money before diving in, to purchase a higher-priced property?

3) Should my first buy be turn-key ready for renters, or should I be looking into fixer-uppers if I have a knack for design?

4) Are there higher maintenance costs associated with buying the midwest or south than, for example, Arizona due to the damage caused by snow and heavy rainfall/storms? 

5) Should I form an LLC just for real estate buys prior to purchasing my first rental?

6) I was originally thinking of purchasing an apartment to rent for my first buy, since I imagine there are lower maintenance fees associated with that than a whole building (even taking into account the HOA fees). Is it better to buy a single apartment, or something like a duplex that is a whole building on its own?

7) Any other advice anyone out there has? I don't know what I don't know at this point. 

Most Popular Reply

Account Closed
  • Los Angeles, CA
9
Votes |
5
Posts
Account Closed
  • Los Angeles, CA
Replied

@Caleb Heimsoth Caleb, thank you so much for all of the info! This is amazing to get me started, and helps point me in the right direction re: financing, funds, and location; I'll definitely search for some LLC threads, too, to see about that.

And lol at the high school stuff. I think sometimes I feel like such a failure in my day-to-day, it's my own little reminder that I'm capable of accomplishing something by someone's standards, but yeah upon reflection definitely more of a "hey buddy" pat on my own back to remind myself maybe I can get SOMETHING going in this real estate world. I appreciate your candor, as well as your feedback and information! Thank you again.

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