I have $30,000 to invest, but no clue where to start. Any ideas?

Question

Hello, Im new to the real estate investment game with $30,000 ready to spend. With so many different ways to invest these days I do t want to make the wrong choice with my money. Any ideas how I should go about my first investment? (Any advice helps thanks in advance!)

Joe P. · Answer

Some heavy hitters in this thread with some great advice, but I've got to second the point made by @Brett Baginski because his advice is the best in my opinion. I've bolded it, underlined it, and italicized it for you..."You have to think about what your goals are"

If you haven't done this, this is step 1. You are actually in a terrible, dangerous spot with 30k to burn -- you're a real estate dog chasing real estate cars. You have no idea what you're doing and you'll go anywhere and everywhere if you aren't careful.

I've been on a real kick with telling people to visualize their real estate goals; as much as it would help smarter investors to get stupid money into the market, you need something to hang your hat on.

You want to be in RE. But that's not a goal.

As I told folks in a different thread, a goal should be SMART (specific, measurable, attainable, relevant and time-bound). My RE goal right now is to have 10 doors by 2030; acquiring approximately 1 door per year with CF of at least $100 in a BRRRR setting and between $200-$300 in conventional purchase. This means by 2030, I should have 10 doors total, cash flow of at least $1000 per month across 10 doors. I also believe in local investing and having my eyes on the property, so I want to be within 25 miles of Philadelphia or less.

Some of the heavy hitters might laugh at my goal because its conservative, it's counting on relatively modest returns, and doesn't make me a millionaire overnight (or even in 10 years). But for me, I love my job and its going to be my primary source of income, so I can keep saving and doing what I want to do. RE is a business for me, a business I enjoy, but a small business. My goal is in-line with my investment theory and long-term plan.

So, I implore you to o this first, before you start investing in turnkeys, rehabs, OOS, syndications, etc...because your investment vehicle(s) should match your goals.

James Wise · Answer

You'd probably want to hit up the turnkey markets. Tons of inventory there that you could stretch that $30k into a couple homes. There are tons of other turnkey markets out there besides Cleveland. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors

• Cleveland, Ohio
• Cincinnati, Ohio
• Dayton, Ohio
• Toledo, Ohio
• Youngstown, Ohio
• Cincinnati, Ohio
• Memphis, Tennessee
• Birmingham, Alabama
• Kansas City, Missouri
• Saint Louis, Missouri
• Indianapolis, Indiana
• Detroit, Michigan
• Erie, Pennsylvania
• Louisville, Kentucky
• Milwaukee, Wisconsin
• Jackson, Mississippi

Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

• Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
• Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
• Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
• Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
• Make sure your property manager is a licensed real estate brokerage.
• Google Clayton Morris and/or Morris Invest for a cautionary tale of what not to do when buying turnkey real estate
• Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.

Brett Baginski · Answer

Hi BJ, welcome!  You are off to a great start by coming to the forums first.  You have to think about what your goals are and what type of landlord you want to be.  Do you want something local that you are going to manage yourself, or do you want to use property management right away?

If you haven't already, I would start off by listening to a lot of the BiggerPockets real estate podcast and read a couple popular books on the subject so you have a better understanding of the language, concepts, and how rental properties work.  You can practice analyzing deals right now also which will be extremely important later on.  Go on Zillow and pick some houses in your area.  Look up what the rents are going for on Zillow, rentometer, craigslist, FB marketplace etc.  Use the BP calculators here or create your own spreadsheet and work the numbers.  Make sure you account for all of the expenses (you will learn about this more from reading the books).  After a while you will learn your market and be able to recognize what a good deal is for you.

Next I would talk to a realtor and a lender so you know what your options are and you can begin looking at houses.  Seeing the property in person can give you a much better feel than just looking at pictures online, especially when you are just starting out.  When you find a property you like, run the numbers, and if it works based on your criteria, make an offer.

Good luck!

Matt Crusinberry · Answer

@Bj Walker, Welcome to Biggerpockets! I recommend you hold fast, and learn as much as you can. I also recommend you figure out where you want to go and why you want to go there, goals. In fact, if you were to type your question in the search box here on BP, you will find that this question has been answered several different times and ways. People with more and less money then you have asked this question.

As for a quick answer, I would start by reading some of the books here on BP, although you may want to buy them on Amazon as they seem to be a little cheaper. Also, continue to search this site, as its contents are invaluable. Check out the YouTube podcasts, and if you have a question please feel free to reach out (PM me), I would be glad to help. Good luck!!!

Tim Jacob · Answer

There is a lot of good advice on this thread.  I would say for 30k assuming its 25% down not including closing costs that prices you out of many markets.

I'm in the Baltimore market which is another good cash flow market.   Like James Wise said do not go for a D grade property because its cheap.  Many people have gone that route only to regret it due to high expenses incurred in those areas.

I would get a property with a college base near it.  I would get a good pm or investors agent.  When I say an investors agent I would really push for 1 with experience in pm that can give you accurate expense estimates BASED ON EXPERIENCE as a pm or owner.  Someone who is not an owner that owns just 1 in those neighborhoods but has owned or managed atleast 10 properties in all rental asset classes for atleast a few years so the law of averages works its way out and has the accounting to back it up.

I would also not do a brrr yet if you are long distance investing especially.  It adds many variables that can go wrong and with 30k I would add more financial cushion before trying 1 and leveraging more with HMLs or wherever you get the capital.  I'd get a well kept single family that hasnt been renovated recently which will reduce the price a little.  Id confirm its in decent shape with a thorough inspection.  Dont be afraid yo spend a few extra hundred on that and be willing to walk if they find a bunch of issues.

In my market for a single family in an area I would feel comfortable managing if you factor closing costs at 25% down you might need a little more though not too much.

Wherever you go ask the local banks what is the minumum they are willing to finance and ask the local pms where they will and wont go for pm.  Also physically go to the place atleast a fee times.  Maybe once at night on a weekend  and once in the day to get a better feel for the area.  All these should act as barriers to protect you against getting a bad property.

It will be tempting to skimp on house quality in most markets as 30k doesnt go too far unless its an fha or va loan where you could house hack in which case things can be diffetent but Im assuming this is an investment property.

Please update as you progress with things.

Susan Maneck · Answer

You can buy a house outright in Mississippi in a decent (but not great) neighborhood for that but you need to be prepared to put in about 5-10K into rehabbing it.

Ned Carey · Answer

@Bj Walker you said

Most of the replies here only referred to buy and hold rentals. You could also buy mortgage notes, Tax liens, do private lending etc. If you are asking for the very best way to invest, there is no way to be sure. There are just too many variables.

However you don't need the best way. You just need to get started and make sure you don't do a BAD deal. Look at the alternatives available to you and pick the best of those that you see. Over time just being out there and actively in the game, you will run into more opportunities.

What if you don't know enough to know whether something is a good or bad deal?  Then you are not ready. You need to learn the market where you are going to invest. Go out and look at lots of deals and analyze them. Keep doing that until you are confident that you know what you are doing. That means looking at many many dozens, if not hundreds of deals. You can make money in any area or with any type of investing.  The difference between the winners and losers is knowledge.

Phil Shearcroft · Answer

@Bj Walker you need to learn as much as you can about RE investing before you dive in but don’t go stale and unmotivated. Learn enough so you can make an educated decision to purchase an asset. Then do it! In my experience I have always had business partners. Some more experienced...some less but in any case aligning yourself with smart and motivated individuals is a huge element to success. Aim to align yourself with someone more experienced so you can learn and be mentored.

Make sure they have some skin in the game but you can learn so much by aligning yourself with other like minded professionals. Do a lot of research on an area and if you like it find someone who is an expert in that area. Qualify them. Get some references on them. If your gut tells you it’s a good fit go for it.

Turnkey companies in my opinion are just as risky as buying an asset and renovating yourself and if you do it right you can have that original $30k back in no time...then do it again! If you’re interested in Missouri or Ohio hit me up and I can give you some solid referrals.

Good luck!

Jim K. · Answer

Your money's obviously burning a hole in your pocket, but asking strangers on the Internet what to do with it might not be the wisest option. Spend some time here, study up, figure out what's right for you.

Marc Winter · Answer

@Bj Walker, welcome!

There is really only one way to start the process of investing for a newbie; inspect, inspect, inspect!

Once you have chosen your area, go inspect every house on the market, windshield all expired listings and recently closed properties.  Become an expert in your market, and you'll be able to recognize a bargain or diamond in the rough when you see it.

Read BP blogs and listen to the podcasts.  Good luck!

I have $30,000 to invest, but no clue where to start. Any ideas?

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