30k to invest what would you do ?

Question

for the new years one of my biggest goals was purchasing my first income property . i had made some sacrifices and its looking like by the summer i should have 25-30k to invest. after talking and researching i have come up with three possible ways i could use this money  in the best possible way.

1. Buy a income property cash free and clear and cash flow it you may be wondering how could i buy a house with 30k cash mind you I'm from camden nj cheap housing

2. Put 20 percent down on 2 houses split the 30k into 15k and put 20 percent done on 2 houses listed at 75keach  cash flow this houses and pay the mortage which should be around 500

3.Use the whole 30k and put it down on a duplex in a better community even if the unit doesn't leave me enough money to cash flow the unit will be going up 10 percent a year .. being that I'm young i can easy wait 10-20 years to sell this property .or i can easily refinance (hopefully) in 5 years and purchase another building

So this are my options i have been beating myself over the  head about this . what would you do ? in my position any advice  is will received ....

Mike Jakobczak · Answer

I'd partner up with someone who flips properties and learn the business.  Then turn my profits into long term rentals.  Keeps your money working, and also keeps you actively investing.

Where if you buy one/two properties and all your money is spent, you are now just waiting until you save up again.  Or start looking for money partners.

All depends on what type of investor you are/want to be.  What type of risk you can handle, etc.

Mike H. · Answer

Use your 30k as reserves to help qualify for hard money loans and the conventional refi's so you won't have to dip into your cash as much. If you're with a good hard money lender and are willing to wait to cherry pick the deals, you should be able to limit your expenses to 10% total of the purch and rehab.

Conny W. · Answer

Lisandro~

since you didn't mention how experienced you are with landlording, rehab or any other part of owning real estate, I can only assume that you have not a lot of experience yet (you mentioned you are still young).   :)

My advice would therefore be....

a) Find a more experienced investor than yourself, and buy a CASH-FLOWING rental building (at least 3 units, better 4 or 6), and "go dutch" with him/her....

b) Buy a cheap 2, 3 or 4 unit property for under $10K, rehab it for no more than $10-$15K (30-45 days), and use a contractor who knows how to rehab (you are NOT moving in yourself, so don't fix it up like you would). And then get the cash flow going by renting to already waiting, pre-approved renters. A good, experienced local property manager can have these tenants waiting (pre-screened and all) before the 30-45 days of rehab are over.

c) Take out a non-recourse loan (takes approx. 2 weeks to 2 months), get 40 to 50% of your original seed money out.

d) Reinvest it (like above) via your Roth IRA into the next project (alone or with partner). And if necessary use PM (private money) or HM (hard money) to do the rehab.

Keep repeating this a few times, and your monthly cash flow from these units can carry.... And make sure that you have somebody advising you who has done this before. My 2 cents.

Conny Wolfram

Ziv Magen · Answer

Smare advice from Mike there...

Ziv Magen · Answer

Great advice, great pointers - my own 2 cents are - consider alternatives with high cashflow, such as Asia (to toot our own, and others', horns). Your 8-12% can suddenly look more like 12-15% - even without any icing, that's bloody good to take to the bank.

Ziv Magen

Lisandro Garcia · Answer

thanks for all the replies..

i should've gave more info i am a small time business owner so i make enough income to cover my expenses a month.  my whole life i know real estate in some form was going to be something i pursued in life .although i don't have experience in being a landlord i have been to many seminars and have had conversations with a lot of landlords i also come from a family( brother and father who are active landlords).You may be saying if u know all this why are u asking because i want to see what other people would do i love hearing suggestions one little suggestion can change my view on investing.

A couple of people made points about rehabbing ,, i  would look into that right now I'm focus on cash flow and rentals.i actually have some investors who want to  buy i may bring up that idea later done the road and J-V with 1 or 2 of them.

somebody also brought up  Appreciation - one of the reasons i do look into that is because as a small business owner i don't have a 401k so without no retirement fund i could use a duplex as my retirement fund also the area I'm thinking of buying this duplex is actually a very hot area .

Will Barnard · Answer

Regardless of your choice of path here, you MUST first fully understand all that is involved as a landlord, paying special attention to operating costs and how to evaluate deals and your market you intend to invest in.

Arthur Garcia · Answer

I would buy a higher quality rental that cash-flows.  Keep heavy reserves, especially for your first property - things come up.

If you can't make that purchase happen with 30K, wait a few more months then buy.  Trust me you'll sleep better at night having money in the bank.  Take your time, especially if you are going to buy rentals.

AG

James H. · Answer

Although I like the idea of two houses, I think you will need more than 30K to *successfully* obtain and operate two 75K homes. There will be more money required for closing. More money required for make ready (most likely) and more money required for reserves. You have only accounted for DP.  I would not want to walk into two 75K mortgages with less than 40K on hand to handle DPs and other minutia that add up pretty quick. I would get a good duplex with 30K, but that is where my goals are currently set, coincidentally.

Danny Day · Answer

I'd go for the 2 houses, thats my .02

30k to invest what would you do ?

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