23 Yrs old , 40K saved up , wants to invest, how would you start?

Question

Hi everyone,

I’m 23 years old,located in NYC with 40k saved up and want to invest into rental properties. For the investors that are experienced. What would be your first move ? Knowing what you know with all that knowledge, what would you do if you were in my shoes ?

Stephen Akindona · Answer

@Noel Puello, first let me say congrats to you! Primarily, for saving up 40k, which most people won't do and then congrats for doing it by age 23! Now that you have cash in the bank, you are in the best position to try and do deals that require NONE of your own money!

I think it is important to have cash as a safety net, but the goal of a real estate entrepreneur is to find and creatively structure deals that can reduce out of pocket expense. I think that many on this forum would call themselves investors when really what we are, are entrepreneurs!

Look at strategies that allow you to invest as little of your capital as possible. Continue to save but consider using the brrrr method to purchase investment property. Try to use seller financing and or subject 2 to acquire deals. Only use your cash as a last resort. It is good to build the skill of using OPM because no matter how much money you save or earn you will run out of it!

Todd Olson · Answer

Is it possible for you to find a triplex in your area and live in one unit? Rent out the other 2. You could get an FHA loan of about 3% down. In a year you can move out and rent your unit. Repeat the process.

Stan Watkins · Answer

Hi Noel,

I'm out west but born and raised in NYC, I would buy me a tax lien certificate.  Research the process for NYC specifically, you can potentially come up tremendously on a property given the cost there in Gotham. Check out TCMFUND.COM, it will have properties with tax liens available and auctions plus REO's which are bank-owned properties. So, the things to investigate are right of redemption periods and the process for doing a formal foreclosure on a property that will become yours should the current ownership fail to cure the delinquent taxes. In the interim, you will get I believe 10 to 18% in interest from the tax lien, and the lien buy-in is, of course, different on every property. The site also covers Florida, New Jersey, and Connecticut!   -Best!

Theresa Harris · Answer

@Noel Puello  Congrats on saving $40K.  First thing I would do is see how much a bank will loan you for a mortgage.  Then try to find an area where you can buy a place which fits your budget.  Obviously look for something where the rent covers all the expenses, but also look for something that is solid and in a good area.

Is there a place nearby where you could buy a duplex, live in half and rent the other half out?

Craig Bellot · Answer

Noel,

As an investor, you need to know your numbers, cold. Whether you hire out everything or are more involved, plan from the beginning to be able to step away from the business if you need to.That requires careful analysis of the property BEFORE you buy, to determine if it meets your financial goals AFTER including all expenses.If any turn key company sends you a cashflow analysis without at least TIMMUR: 1. Taxes, 2. Insurance, 3. Management, 4. Maintenance, 5. Utilities, 6. RepairsThen run for the hills.In Bridgeport, Connecticut and many North East regions we also include Snow Removal and Pest control.Explore all markets but do your research, as to where net migration and jobs are heading.

Craig Bellot

Jaison Emmanuel · Answer

I used to be from NYC.. and your right 40k, won't get you anything in the city area.

I recommend out of town.   start networking, looking for reputable REagent that can direct you to whatever needs you may need for your future property in that location.

Jason Arcuri · Answer

@Noel Puello I highly recommend doing some house hacking and getting a house for 3.5% down.  It will allow you to keep a lot in your pocket for miscellaneous repairs and also get you used to being a landlord.  Living in the unit gives you a great perspective on what's going on with the house.  Also, you can always move out a year later if you're not a fan of living there.  What's great about this too, you'll be able to purchase another investment so much quicker if you start with 20 or 30k in the bank after you purchased your first place.  Most people have to start from scratch after the first.I agree with others on looking in Connecticut or Pennsylvania.  You want solid cash flow.  Covering just your expenses isn't enough IMO

Craig Bellot · Answer

@Noel Puello 40 K won’t get you much in NYC for sure.  Your best bet would be to look at areas such as Pennsylvania or Connecticut for a triplex that you can purchase for cash flow.

Your best bet would be to look at areas such as Pennsylvania or Connecticut for a triplex that you can purchase for cash flow.

First you need to ensure you know how to analyze properties using the bigger pockets analyzer or spreadsheet. Start doing your desktop analysis from online listings and seeing whether the cash flow will work for you. When you find one that works go take a look in person.

80% of the properties you analyze will have zero cash flow or will lose money. Keep looking and analyzing until a deal makes sense to you.

Good luck!

Noel Puello · Answer

@Theresa Harris

Thank you Theresa! I’m not sure as yet but I love the idea. I will definitely look more into this.

23 Yrs old , 40K saved up , wants to invest, how would you start?

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