Do I have enough money to start?

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Hi Michael G, Welcome to BiggerPockets! My initial question is whether your mutual funds are held in an IRA or not. If they are, then your options become somewhat limited or constrained because everything would have to happen within your self-directed IRA. It's doable, but you have to follow the rules. If your funds are NOT within an IRA then you have many more possibilities, and yes, $30,000 would be enough to purchase investment property (as a down-payment). The type of company you're referring to above is sometimes referred to as a "turnkey" property provider. There are slightly different "flavors" of turnkey since there is no formal definition of what that means exactly, however, for me it means: * the property has been carefully selected with renters in mind; * the property is in a stable or growth market; * the property is new or has been newly rehabbed; * the property is leased, or in the process of being leased; * the property is under professional property management; and * the property is cash-flow positive. $30k is enough for a down-payment plus your closing costs in markets like Indianapolis, Memphis, Charlotte, Kansas City, San Antonio, and several others that I consider to be prudent investment markets. Finally, to be "fair" and "balanced", investing in notes is also another option to look at, especially if you're funds are in a self-directed IRA. Feel free to post any other questions you have. Continued success!

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Michael G my first suggestion would be to read, listen to podcasts, whatever you can to learn about the different types of investments that are available to you (you are just focused on one at the moment - paper assets). While i admit, that answers sucks and I hated when people said it to me, it is a lifesaver b/c you yourself want to know why you are investing in something (and just as importantly if not more so be able to explain it to your spouse!) As an example, inflation was mentioned as were mortgages. 2 of the several reasons, i really like REI. It will beat inflation to death and the mortgage (leverage) will allow you to control more money AND have tenants pay it off for you. 2 very simplistic and not very thorough explanations, but that would give me carpal tunnel. If only they had taught me something, anything other than "paper assets" in business school! That's what most of the magazine and schools teach (stocks/mutual funds), but I strongly believe its not the best investment. HOWEVER, there is more work (not necessarily physical labor) involved in REI or any other investment. Mutual funds are just a click away. Joshua Dorkin and @brandon turner have put together a list of books on the website that would be a great start, not to mention the podcasts and newsletters. as far as the turn key provider @ali boone has written several articles on that topic and i know she is a big proponent and can provide some advice.

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The best option is to buy a rental property free and clear. 30k is not really enough to buy a property to give you the types of returns worth your time and the type of property that you would want to have. You should consider being a private money lender to increase your cash as well as saving additional funds from your earnings. If your goal is to build a retirement nest egg, then you might also consider using your IRA funds to purchase rental properties.

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Yes, you do. You can buy a 25k house for cash or finance a 100k house. But the question is What's your goal? If you plan to just buy the one house, it's not a good idea. Out of state investing takes time and effort to learn the market in another place, building a trusted team etc. not worth it for one house. There are turn key suppliers but as with any investment you have to do due diligence. If you are not willing to spend the time, you are likely to get burned.

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Definitely! Reach out anytime. My email address is below and you can always get me through my website too.

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Ali Boone It sounds like you are doing just what I would like to do! It just seems like less hassle to buy a turnkey property. I see your website, I will read up there and here, and in a few months I will be ready to buy. Thanks a lot, I will probably contact you in the near future.

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I feel like the majority of responses on here are more confusing than anything. Simple questions don't need complicated answers. Michael, I live in LA and for the same reasons you mention, I only buy out-of-state and I only buy through the companies you were asking about, the turnkey companies. $30k can absolutely get you a good property in a variety of markets. If you can qualify for a mortgage, all the better because you can get a nicer place. I don't recommend buying a $30,000 property OR paying all cash for properties if you don't have to. The cheap properties will give you a higher risk of bad tenants who can cost a fortune and paying all cash for a property means you're putting all your eggs in one basket and not taking advantage of the benefits of leveraging. If you ever have questions about the turnkey companies, don't hesitate to reach out.

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You could absolutely buy a property free and clear with that money. I just had to walk away from a $25,000 property that required about $5,000 to rehab and it would have generated $800/month rental income.

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Michael- I've been doing rental properties for a couple of years with good success but I also see a lot of people that have rental properties with no positive cash flow and actually have to come out of pocket every month. There are a number of hidden costs in owning a rental property that I suggest you become very educated before jumping on the wagon. I would suggest owning a rental close to your domicile for numerous reasons. I don't know about the real estate prices in San Diego but in my opinion, 30k is a good amount for a downpayment on a house up to 130k. You can download a profitability spreadsheet from BP to get more familiar with the cost of owning a rental property. In my analysis I consider 11 months of income and use 10% less than the zillow estimate for rental estimate to be on the safe side. After putting all the costs involved in closing the deal and getting the house ready for rent I would consider the deal only if it makes 30% or more on my investment (not total purchase price) Regarding your question about keeping the money for your primary residence. That is usually a good investment since the rates are so low and you get to deduct the interest on your taxes. I would also put as little down as possible towards the purchase price and save that money for investing if that's what you want to do later on. Hope it helps. Best of luck!

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Michael G, welcome to BP. As others have said, yes, $30K is enough to get started if you use financing. I have to respectfully disagree with Nechelle Vanias that they best way to buy is with cash. Money is incredibly cheaper these days (4% on investor loans) so why not use someone else's money? The advantage is your cash on cash returns are going to be significantly higher and you'll be able to buy better properties. As Marco has pointed out, you can buy some good, cash flow properties with high ROI in Indianapolis. You can pay $55K-$60K for a C class property and put $11K-$12K down plus closing costs or you can pay $70-$80K for a nicer/newer B class property with $14K-$16K down. These types of properties will produce anywhere from $200-$250 per month cash flow after operating expenses and debt service. Notes and private lending are another option. Notes can be a little tricky and you'd want to spend some time understanding them. You can earn anywhere from 8-12% yields as a private lender depending on the market, but keep in mind that you have to keep turning your money and you don't equity appreciation potential that you do by owning real estate in some markets. By owning, you can expect 8%-10% returns from cash flow plus any appreciation potential down the road. I would not recommend counting on appreciation but consider it icing on the cake. It sounds like you're off to a good start and asking good questions. Keep posting here with any more questions you have.