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Updated almost 4 years ago on . Most recent reply
What would you do if you only had $2,000 to spend?
Hi everyone,
Long story short I lost most of my net worth in the stock market(please save your story about how stupid I was because I already know). I took about a year off of life to move back in with my parents and figure out what I really wanted to do. Real estate has always fascinated me but like most people I just never really took the leap. Over the past few months, I devoured any information I could on real estate investing and decided that this is what I want to partake in.
I pretty much have nothing in the bank to invest right now. However, I was able to find a full-time job and will be able to net about $1,000 per month after all expenses to invest. So after 2 months I will have about $2,000 saved up. I'm wondering if there are any strategies to put this money to work? I know $2,000 isn't much but it's something.
I live in San Jose, CA so $2,000 isn't even enough to cover closing costs let alone down payments. I'm thinking to look at cheaper markets like Ohio or Georgia and do deals virtually. I can maybe buy a distressed property for $20,000 and put $2,000 down using a hard money lender, fix it up, then sell it for maybe $40k-$50k. I know I will need to cough up more money for repairs but I'm hoping I can bake into the loan.
This is the best thing I can think of besides saving up money for decades in order to afford a down payment in San Jose. If anybody has any better ideas, I'd love to hear it.
Thanks and best of luck to all your endeavors.
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Originally posted by @Phu Le:
Hi everyone,
Long story short I lost most of my net worth in the stock market(please save your story about how stupid I was because I already know). I took about a year off of life to move back in with my parents and figure out what I really wanted to do. Real estate has always fascinated me but like most people I just never really took the leap. Over the past few months, I devoured any information I could on real estate investing and decided that this is what I want to partake in.
I pretty much have nothing in the bank to invest right now. However, I was able to find a full-time job and will be able to net about $1,000 per month after all expenses to invest. So after 2 months I will have about $2,000 saved up. I'm wondering if there are any strategies to put this money to work? I know $2,000 isn't much but it's something.
I live in San Jose, CA so $2,000 isn't even enough to cover closing costs let alone down payments. I'm thinking to look at cheaper markets like Ohio or Georgia and do deals virtually. I can maybe buy a distressed property for $20,000 and put $2,000 down using a hard money lender, fix it up, then sell it for maybe $40k-$50k. I know I will need to cough up more money for repairs but I'm hoping I can bake into the loan.
This is the best thing I can think of besides saving up money for decades in order to afford a down payment in San Jose. If anybody has any better ideas, I'd love to hear it.
Thanks and best of luck to all your endeavors.
Well, I guess I'm going to be the dream killer here 😄 . What you are suggesting is a good way to lose your $2k, the HML's $18k, and whoever is fronting the money to fix the property, for at least the following reasons (and this is not an exhaustive list):
1. You are in San Jose and are suggesting trying to do this with no experience from 3k miles away;
2. A $20k property *anywhere* is either totally destroyed or in a war zone (yes, I'm using the term) that no one would touch with a 10 foot pole;
3. You have no money for rehabilitation even if you could find such a property, much less the ability to either pay someone else to do the work or do it yourself (since you are 3k miles away);
4. No reasonable HML is going to lend you money on such a deal;
5. The likelihood of even finding a $20k property in today's RE market is laughable;
6. Even if you could get 1 through 5 figured out, by the time you sold this thing for $40-50k you would be left with virtually nothing after paying taxes, the RE agency, and your interest costs.
Honestly, your idea is a good way to lose the rest of your life's savings. I do have a better idea, though - take that $1k/month and use it to pay for an excellent education at a local college, get a much higher paying job, and start banking serious money to have something to invest with. If the only money you are making is $1k/month, you are either working for minimum wage or you are only working a few hours a week, both of which are conditions you have to fix first. At your age, if you *really* want to do this with RE investing, living at home with no responsibilities, you should be killing it 50+ hours per week making money, minimum, living on mom's homemade cooking and ramen noodles and banking every dollar for a year or two. Then take that money and use it as a down payment on a duplex/triplex/quadplex, and you will start to be on your way.
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