I Have some money to invest......Advice where to start?

Question

I know with the title of this subject I am baiting every scammer on the earth, but I feel safe here at BP. Seriously though, I will have 15K (not a lot of money) to start my RE investment pursuit. To be honest I'm not sure where to start. Fix/Flip sounds like a good option to me. Any Advice is very much appreciated.

Bryan H. · Answer

Honestly, start with educating yourself. It doesn't even need to take a lot of money. Read posts, blogs, books etc.  Join a local REIA in your area, attend meetings, network, talk to others about what they are doing, how they got started etc. You need to study your local market and understand where profits can me made, because the same strategy may not work in the next city.

With $15k, you would need a partner or hard money lender in order to fix/flip, plus you need to find the great deal, find reliable contractors (which is the hardest part of fix/flip)

Bird-dogging or wholesaling can be done with the money you have but dont let the guru's lead you to believe it's easy and no-money needed. The wholesalers I know work hard, they talk to A LOT of people. They have a 100:1 ratio of people to possible deals. They spend money on marketing, mailings, driving all over the place.

I'm relatively new to RE investing. I took a year before I made any moves to understand it, to learn what I wanted to do. I found I needed to have the end in mind, why real estate? What can real estate do for you that other investing cant? Do you want to be active (a job)? Or truly invest (passive)?

What ever you decide to do, take your time, educate yourself, be patient. Dont rush in because you think prices are going up and you will miss out. Money can be and IS made in every market, regardless of what the news tells you.

Good luck.

Dawn Anastasi · Answer

Jason Cotner I believe on other threads you can find mention of loaning money out at 10-12%, sometimes even higher.

Jon A. · Answer

Jason Cotner yes sometimes being patient can be a challenge.

Find a "train station" that works for you.
If you miss one train, don't worry anther will come along :)

jon

Rick McCray · Answer

Jason,

What are your desires and goals?  How much do you want to grow that $15,000 into and how fast do you want to grow it?  Do you want to work with partners to invest in a substantially bigger deal or are you simply going solo with all of your endeavors?

Now the "if it were me" story.  If I had $15,000 to invest, I would put most of it into tax liens.  That is because that is the area of real estate I am most interested in and I would be most comfortable either getting a good return or a good property after the full foreclosure process.  That may be a less "active" form of investing than fix-and-flip, but I would feel more secure in my ability to analyze and control the deal.

Ben Reese · Answer

Hi Dawn,

It speaks well of you that you have that level of mutual trust with your sources!  Good for you!

Ben

Dawn Anastasi · Answer

Ben, I appreciate your comments.  I don't have experience with hard money lenders as I've never gotten money that way, my funds for cash deals have come from private investors who did not have a lien secured to the property.

Ben Reese · Answer

Dawn A. I would have to respectfully disagree with your comments about trust, past performance, borrower's credit scores, as the place to begin in HM/PM lending.

As an experienced HM lender told me when I started out a few years ago,  "There's only two things you need to be a successful hard money lender, good loan-to-value and clear title."

With Private or HM lending it is not the credit quality of the borrower that protects the lender, indeed that's a bank's business model. Rather, it is the value of the secured asset that allows the lender to sleep at night. Consequently, any loan investment discussed in this forum ought to be one secured by a lien against real property.

Regardless of the borrower's performance, if a PM/HM lender loans at a conservative ratio of loan-to-value (LTV), ensures that the borrower has clean title to the asset, and liens the property with a properly recorded Deed of Trust or Mortgage, then -no matter what - it is almost certain the lender will ultimately be made whole. This is what asset based lending is all about and I never lay awake at night worrying if I'll ever be repaid. The only question sometimes is when.  I know that sooner or later I'll be repaid because the property that secures my loan is substantially more valuable than the amount I loaned against it.  And to further cover the bases I make sure the borrower provides me with an extended coverage title policy so that there will be no nasty surprises if I ever do have to foreclose. And I rarely ask for a credit report and prefer if the borrower has actually been rejected by a bank.

Now some think that asset based lending is a backdoor attempt to acquire assets on the cheap in the event of a borrower's default.  And while I'm sure there are some unscrupulous lenders out there, the fact is this is very difficult for a lender to do. The only way a PM/HM lender can forcibly take title is through a foreclosure sale, and in such a forced sale the lender can only receive the amount owed. Any remainder goes to the borrower.

Jason Cotner · Answer

Carlos F. Thanks, Yep I think taking it slow is going to be the plan.

Carlos Flores · Answer

IMO $15k isn't enough to be a direct lender.  You'll end up with a fraction of something (likely being the smallest creditor and not be in a position of power) ... or a whole piece of something you may have trouble liquidating.  Moreover, no reputable investor/HML/etc should accept "all your money" if $15k is all you have to invest.  You might be better off partnering with someone else on a single deal, using hard money to make up the difference.  Just make sure you educate yourself first and take it slow.

Chris Klein · Answer

Im also in the same boat so thank you for your replies and question. Jon, I have been on the fence about growing an awesome mustache such as yours and you have inspired me to do that. My wife.... not so happy!

I Have some money to invest......Advice where to start?

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