Newbie with Cash to invest in Real Estate

[Kai Soremekun]

Hi 👋🏽 My name is Kai.

I'm a content creator based in Los Angeles.  I've never owned property but was recently given $500k for a downpayment. It came unexpectedly as a no strings attached gift from a very rich friend and I'm a bit overwhelmed. Currently the money is in a high-yield savings account getting pummeled by inflation. :)

My income as an artist makes it very hard to qualify for any kind of loan. Plus Los Angeles is not a friendly first time property buyer town.

I'd like to leverage this unexpected money coming my way to start wealth building. It feels like a life changing opportunity.  I want to be smart in my choices.

Ultimate goal is to have income properties that support my life as an artist.

I keep my bills really low thanks to a rent stabilized $590/mo  1b/1b apt.  where I also manage the quadplex.

I have an 800 credit score but like I said doesn't seem to matter with my crazy fluctuating income.

My work as an artist makes most of my days flexible so I have time to devote to learning.

One thing I'm looking at is house hacking by taking advantage of the new SB1079 law as an eligible bidder. This involves bidding on a foreclosure which comes with its own set of risks. *sigh*

I've been researching the eligible bidder approach since July and have a pretty good handle on it and ALL the risks but also exploring what other options might be open to me.

So that's my current story. Happy to be here. Hoping to learn lots and open to any thoughts people have about next steps I should consider.

Yay for opportunities.

[Gurbeer Sangha]

Quote from @Kai Soremekun:

Thanks so much for the replies.

Just to clarify.  I applied for a conventional loan and got pre-approved for 1m using most of my money as downpayment.

Interests rates kept changing as the Fed raised them currently the pre-approval rate is around 8% which everyone has told me seems high.

My income was really low this year which means I'm relying on rents to cover the mortgage.

This was to buy a duplex or triplex.

I've been looking for a few months and even with a lower interest rate, say 5%, it's hard to find a property where the price of the property and the current rents of tenants work to cover a mortgage. The pre-approval will only consider 75% of the rental income. It really got me down which is why I started looking at the SB1079 law to see if I could find my first property that way.

The best way to find your first property is going to be to buy a duplex or triplex cash, get tenants in there, and cash out all the money you put in there. That way you get to keep every penny of your money and start building your portfolio. It's the strategy I have used to build my portfolio of investments. I have built my whole portfolio by putting less than $100,000 total. 

You could do that with SB1079,but you could build a lot more with your money by doing the above method, also called BRRR.

I have a few listings I was looking into investing in myself, but my capital is currently tied up in other projects I am BRRRing. I can go through them and their numbers with you if you would like to!