First deal with 150-250k

[Travis M.]

Hi guys, I am looking to make my first investment but I am overseas, ive been working and saving everything I have so I can have some freedom to do what I want when I get back to the US. I have between 150-250k to spend and I really do not want to mess up with my first investment.

1. Any advice on which type of property I should look at (small muliti unit or large)

2. Should I wait until I get back to the US to start? (next summer, but something about waiting is killing me, as I am eager to start)

3. Also targeting the FHA loan but I understand there may be a maximum loan size for this, any experience with exceeding their maximum?

[Chris Clothier]

Originally posted by @Ken Badziak:

I love leverage. If you can find a turn-key provider that will work with conventional loans, then great! They do exist, but most of them want cash.

That being said, even if you paid cash, you'd still be using leverage... When you refinance and pull equity out a year later.

 I'm sorry Ken, but I have to comment here before Travis gets sent down a long path to frustration and confusion before he gets started.  I have no idea where this notion that a majority of Turnkey companies will require all cash??? I know a majority of the best companies in this business and every one of them worked their backsides off to provide properties that will qualify for financing. Most have contact information for multiple different lenders that specialize in working with non-owner -occupied properties.

When lenders refuse to finance a purchase, it is because there is a high risk in financing that property. Why will they not finance $50,000 properties? Because the default rate of homes financed at those levels is too high. It is not worth the risk and the time spent on the file.

The same goes for refinancing that property. Banks that will not finance a purchase are not going to be rushing through the door to refinance them either.These price points you are talking about, three properties purchased free and clear for $150,000 and Turnkey for that matter is a disaster waiting to happen.  $50,000 all in would include all closing costs incurred by the buyer and ignores that he would need to keep reserves off to the side, which at this price point should be a minimum of $10,000 per property.  

That leaves him for $40,000 to buy the property, including closing costs from a Turnkey vendor.  What will the buyer get...absolute junk!  It has been shown over and over again that a Turnkey provider cannot purchase a property, fully renovate that property to a level eliminating most deferred maintenance and make a profit that allows them to make money, cover overhead (team, systems, physical location, property management) all for $40,000.  It CANNOT be done at a level that an out-of-area investor should absolutely expect.

It looks great.  It sounds great and the people selling low-cost, cheap junkers love to tell the story about how easy it is...but it is not and this is where investors get seriously hurt.  This is where investors lose thousands and thousands of dollars and that is if they are lucky enough to be able to get any of their money back out.

@Travis M. gave you the best advice on here and that is to get your money working for you now.  Earn a nice return on your money while you learn exactly where you want to invest and what you want to invest in.

You will be able to find opportunity in the single-family market and the multi-family market if and when you choose to physically own property.  I would figure out what I don't know first, learn the best way to build your passive portoflio second and then decide the route you want to take.

Do not let your money burn a hole in your pocket and please do not waste it chasing high returns on risky investments.  Right now it is more important for you to earn a smart return on your money.  Much more important than buying assets if that is not the smart return.