How would you start with 60k

Question

How would you start your real estate investing with 60k?

I've been wanting to begin my real estate investing journey for about 10 years.. I'm currently in a position to do so and looking for some input/guidance.

My situation,

I have about 60-70k to work with. Im in the fort worth Texas area. I currently have a home with a mortgage that has about 80k in equity. Aside from the 60-70k I'm wanting to work with. My family has grown considerably the past few years so we are in the market for a bigger home.. I'm considering refinancing my current home and using this property as my first rental property.. I then would like to use the 60-70k to invest in additional rental properties.. just wondering what your thoughts would be on what type of properties.. Sfh or multi family? Could 70k bring in more than 1 property? In a perfect world I'd like to use my current home as a rental and invest in 2 or maybe 3 additional properties. Maybe a Sfh and a multi family, just not sure if that possible.. Any insights on this would be great.. Thanks

Joe Scaparra · Answer

@Daniel Cejas, I like that you are thinking about buying INVESTMENT REAL ESTATE.  You could not be in a better location to do so. Ft Worth is one of the best values in TEXAS!!!!  Buy only duplexes there are plenty there and you should find 1% fairly easy!!!!!!!

The only thing I don't like about your plan and it is a common mistake MANY a new investors make is renting out your current home instead of selling it outright.  Too many reasons to sell it NOW if you are going to buy another personal residence.

1. I will begin by asking you a question.  If whatever you current house is worth, if you had that money in hand and was looking for an investment property, would you buy it for investment today?  The usual answer is NO!  That is because your goal when buying it was to use as a personal residence not an investment property.  There are better cash flowing properties to invest that your current home.

2. The gain from the sell of your personal residence is TAX FREE.  That goes away in 3 years after you move out!

3. SFH when between renters bring in ZERO $$$$ thus causing anxiety and stress when vacant.

4. Your personal residence carries emotional baggage and when a renter tears it up you will be heartbroken.  But more importantly your residence probably has a lot of carpet and is larger than say a 800sq ft duplex unit that is easy to bullet proof from renters.

5.  Your cash flow with a duplex will be greater than your cash flow from the SFH.  I know it is easier to just move out and rent it vs selling it and buying another property.......................Sooooooooo What do it anyway!!

If you really want to fast track your wealth building, sell your house, find a nicer duplex, move into it (you now have the choice to put as little as 3-5% down as owner occupant).  Live in it for two years and then move out (don't sell) and buy your next personal residence.  In the meantime, after you are in your own duplex, chillin like a villain, use some of the profits from the sale or additional monies and buy you anther duplex.

Now fast forward two years from kicking off this plan and here is what you have:  2 duplexes and one person residence (5 homes in total).  Now you have lots of experience and you will be giving out this advice.   I own 19 units and manage another 6 units for my kids.  Good luck!

Timothy Hero · Answer

Find a MFH listed between $200k-$250k. It would more than likely only be a duplex, but if each side rents for $1,300-$1,400, the cash flow will be nice.

Sakib J. · Answer

@Amanda Mack

Hi Amanda

I am seeking to enter Ft Worth and Dallas area as OOS investor. Primarily seeking SFH to but and hold to rent.

Can you refer or assist with my goals

Sakib

Jerrad Shepherd · Answer

At this point if I had $60,000 I wanted to throw at something I would throw it at gold.

Ron Flatt · Answer

Joe is correct, in selling your current home and pocket the profit.  Buy the larger home that you want with part of your equity.  Then you have a larger down stroke for your investment properties.

Lots of folks talk about the 1% rule, for buying rentals.  I will not buy if I cannot get a better rate of return.  I understand some areas are hotter, but if you take your time, you can find a much better deal.

I like the SFRs, but also have a triplex, duplex and a commercial building.  The bread and butter is the SFR for me.  If you want to come south, I am in Hillsboro, TX.  I can show you my operation and we can share some ideas.  At least you will get a cup of coffee out of the deal.

Joe Scaparra · Answer

I own a duplex in Ft Worth, call me and we can discuss.  Too much typing for me.  PM for my phone number.  Joe

Daniel Cejas · Answer

@Joe Scaparra

Thanks so much for the advice.  Since making this post indeed have decided to sell my home. The profit was too good to pass up. The profit from the sale along with the 60k I saved will give me some options.. I agree with you on the duplex, that is my goal and look almost everyday for one.. I am currently in process of buying our next home but will still have 60 to 70k to throw on a duplex if I can find one.. do you have any advice on location or price point is good for a first time investor? I do see a few out there but typically I'd pretty rough parts of town. Is that something you would why away from?

Amanda Mack · Answer

Absolutely. We have very few duplexes and the ones we do have are not in the most desirable locations. There are some in good areas but the price of often too high and they are rare to come by.

Travis Fairbairn · Answer

@Amanda Mack Funny, I've been looking big picture, in general at the market particularly on the Fort Worth side, and it seems that we don't have the 2-4 unit-plexes that other markets have. Is that what you find as well?

Anthony Dadlani · Answer

@Daniel Cejas You ask a great question. In general how do people with a small amount of capital start in the real estate business ? Our best suggestion is to Joint venture on a fix and flip project.

1. It allows you to pool your resources with someone else for a greater result.

2. The fix and flip strategy provides a short term boost to capital (90-120 days)

3. It is relatively safe if you find the right deal, You are adding value to a property and creating a livable new product for someone to enjoy.

4. You can scale up the business by doing more projects at a time and build your capital to invest in long term rentals.

Best of luck in all your endeavors.

How would you start with 60k

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