Buying first rental property at 23

[Ryan B.]

Hey everyone!

This is my first day on BiggerPockets and I've already learned an amazing amount in the two hours I have been on the site, but I figured the best way to learn would be to ask the knowledgable and experienced BP Investors.

I just moved to Los Angeles after graduating with a real estate degree. I am currently looking to buy my first rental property, but am struggling to figure out how to start investing with just $5k saved up for a down payment. A couple financials:

I am making $56k a year

Paying $1,100/month in rent and utilities

Saving $700/month

Currently have $5k saved  

I am aware of FHA loans, but it is pretty tough to find a multi family house around Los Angeles for less than 500k that is in good shape and that I would want to live in. A property just under $500k would still require at least $17k as a down payment.

If an FHA loan can't work in the Los Angeles area, what would be the best strategy to begin investing for someone in my situation? I am very interested in flipping houses, but I think for someone with my experience and little capital, rehabbing a house would be very risky.

The midwestern cities seem to have good price to rent ratio, what do you think about a buy and hold strategy with a multifamily property? Would that property have to be cash flowing already to get a loan? What are some hot midwestern rental markets that have more affordable housing that someone like myself could invest in? What midwestern market do you see on the up over the next 10 years?

Any help or advice is greatly appreciated. 

Thank you in advance.

If you are in the Los Angeles area and would like to get together to meet and discuss real estate investing please let me know. Even if you aren't in the Los Angeles area feel free to reach out as well.