Best way to invest $100k? Fix and flip, Rentals?

Question

OK here is my situation, I'm 26 years old with $90k I'm willing to start investing in real estate with, I have zero debt and near perfect credit history and not much liabilities in life at this point......no house, still single, no kids etc. So in other words I think now is as good a time as any to start investing in real estate. My ideal plan (obviously with a little tweaking along the way) is to start fixing and flipping homes in my spare time, as I still work a full time job. As soon as my income from flipping homes replaces my existing income I would like to quit my job and flip full time. At this point I would like to start putting my profits into rentals, single and multi-family homes, and possibly apartment buildings down the road when finances allow.

So to all the more seasoned investors out there, what would you do if you were in my situation now? If you were my age again in this situation what would you do or do differently than stated above? I'm still new to the game and am very open minded to any critique/advice you might have. I don't want to get ahead of myself or be too overconfident, It's always easier said than done of course.

So to all the more seasoned investors out there, what would you do if you were in my situation now? If you were my age again in this situation what would you do or do differently than stated above? I'm still new to the game and am very open minded to any critique/advice you might have. I don't want to get ahead of myself or be too overconfident, It's always easier said than done of course.

Watson Smith · Answer

Timothy - I started at 26 with zero experience.  Houses were dirt cheap so I bought my first one and fixed it completely... Took 7-8 months but I learned a lot.  My first renter did 12k in damage 5 months later and I rarely slept. I thought I had lost my mind... So I bought 9 more and looking to buy 50 more.

Point of this is just go out an do it.  90k with construction experience is wonderful.  Flipping and rolling profit into rentals is awesome.  Just make sure you do your comps and research the area so you know the average days on the market and make it happen.  Don't get over leveraged - and only do the deal if it makes you money.  Enjoy.

Account Closed · Answer

@David Thompson Thanks for the reply, yeah I've read quite a few books on the subject by various authors, Phil Pustejovsky, Brandon Turner, Mark Ferguson etc, and spend a considerable amount of time here on Bigger Pockets as well. Yes I'd agree, the next step for me now is getting involved by networking with local investors, mentors, and any potential partners. I think to much book learning at once with no action gives a person the "analysis paralysis".

Kenneth Reimer · Answer

Account Closed Timothy, it sounds like you have some great ambition, partnered perfectly with some healthy skepticism. However, I think asking the BP community what they would do if they were you is an impossible question. The biggest question you have to answer before you dive right in is how you can compete in the marketplace. For example, an investor with a long history of renovating homes doesn't have to search very hard for his niche, clearly he or she will be a fix-and-flip type of investor.

Financially, you're in a great position to get started. What I think will help the BP community help you is answering a few questions.

-Do you have construction experience?

-Have you ever run a project on a budget?

-Do you have a deep understanding of construction terminology, processes, standards?

-Do you plan on doing the work yourself or subbing it out?

-Do you understand the market in which you will operate?

These are all topics that will give you a leg up on flipping homes, and will translate directly to becoming profitable, faster. That being said, they are by no means necessary to become successful in flipping. Flipping homes is incredibly unique each time, and seasoned investors are constantly learning.

Going forward, I would proceed to learn as much as possible, network with others that are flipping currently, and understand what and why flippers are doing in your market.

Account Closed · Answer

@Watson Smith Yeah, they say go big or go home, I like it!

Account Closed · Answer

@Russell Harris Thanks, same to you!

Account Closed · Answer

@Kenneth Reimer Yeah my background is in construction which is another reason I think fix and flips would be a good starting point for me. I've also been considering purchasing a multifamily unit, either a three or fourplex with a FHA or 203k loan depending on the condition. Since they only require a minimum of 3.5% down it wouldn't eat up all my funds, which could be used elsewhere in other projects/rentals, and on top of that I could pretty much live rent free with even some positive cashflow.

Account Closed · Answer

@Eric Le Yes that would be a solid investment, I like that FHA and 203k loans only require 3.5% down. That way finances don't get tied up in one or two investments.

G Pyros · Answer

A huge chuck of money doesn't guarantee a good ROI, I wish it did, I would recommend the 3.5% house hacking, 1,2,3 or 4 units with 4 units being your max. Find renters and get your first house and out of renting. Then pound the pavement looking for deals.

Best way to invest $100k? Fix and flip, Rentals?

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