$ 31,000 good starting point?

Question

Hi guys,

So I've read before that you can start at any given sum of savings to invest but you got to have something. Seeing as I don't live in the us and don't know the market either, but would still be interested in getting started with my investments there I was wondering if my savings of $31000 is a good starting point.

My aim is to buy an apartment or small family house through a mortgage and pay the mortgage off through rent and personal salary on a monthly basis. Hopefully repeat that process and repeat.

Any advice I can get will be food for more knowledge so thanks in advance guys!

Ali Boone · Answer

Hey Esteban. Welcome to US investing :) Kelly N. is right, you should only buy a property that allows for ALL of the expenses to be paid by the monthly rent and then still leaves some leftover for you to pocket. You should never dump any of your personal salary into an investment. Defeats the purpose. I'm not a fan of the 50% rule myself, but it will at least get you in the ballpark.

$31k is a great amount to start with. If you are not a US citizen tho you won't qualify for a mortgage, so be prepared. I also don't personally recommend buying a property for $31k simply because it's going to be a lot lower on quality than I care to deal with. That part is only my personal preference tho and far from a rule. I know of a private lender who will lend 50%, so you could get a $55k or so house with that financing (after adding in closing costs). They lend to internationals but only on certain properties, but those properties are turnkey meaning they are fully rehabbed with tenants and property managers in place which is perfect for someone who doesn't live in the states.

Regardless of which way you go, make sure you tax and entity structuring is in place by a professional because otherwise you will be screwing yourself with major tax consequences. And make sure whoever you buy from is reputable. A lot of internationals have been screwed in the last couple years by buying who knows what properties and not having the right teams on the ground.

Joseph M. · Answer

True , same situation in CA as well, especially since prices have risen.

Simon Campbell · Answer

If you are a US citizen, then getting a loan in the US should not be too much of a problem. If you are not, then a local loan may be your only option. In this case, they will no doubt require a higher than average down payment.

The success of an international investment has much to do with your support team. You are going to need a good quality property manager that is not going to eat all your profits. Make sure that you do your research on this one. It can make or break your NOI.

Uwe S. · Answer

Welcome Esteban to our BP world.

With your stated money you can buy one cash flow propertie without taking any mortgage. Certainly not in Florida or Texas or California but in OH, PA, IN, NY etc..

One tip; don't tell anyone on the web how much money you have.

-Uwe

Simon Campbell · Answer

Owning property in the US does not allow you to live here. You will still need to get some sort of visa or green card to be able to live in the States.

Have you looked into your local banks to see if they will loan you money on international property? That may be a very viable option for you.  If you really want to invest in US property, then I would recommend finding a local real estate office that specializes in US investments. Though it may cost a little more for their services, you will have the protection of their network and their experience.

Marco Santarelli · Answer

Hi Esteban Pau,

Welcome to BiggerPockets!

One other consideration you can look at is seller financing.  Although it's not too common, it is an option that does not involve credit and is relatively easy to qualify for.  Usually it's the property that "qualifies" for the financing.

Feel free to ask anything you like here on BP.

Continued success!

Joseph M. · Answer

No problem. It seems like a good market right now. I was surprised that prices were so low until I looked recently. I am considering moving there to take advantage of the deals. I don't know how long the low prices will last. I know there is a lot of effort to right now to pass a bill that will speed up foreclosures.

Uwe S. · Answer

Thank you Joseph M for clarification. Long time ago I checked FL but there was nothing.

-Uwe

Ben Hughes · Answer

Should replace "harder" with "almost impossible" unless it need a full rehab.  I'm referring to TX.

Joseph M. · Answer

Uwe S.  There are several parts of FL where you can buy cash flowing properties under $31k ...and these properties were over 100k at the top of the market 2006/2007. FL seems quite undervalued right now.

Tampa Bay area is one area with under 31k homes. Florida is the #1 foreclosure state so it seems these properties are very underpriced and once the foreclosures/distressed properties are worked out of the system. Las Vegas and Phoenix type appreciation can happen.  Las Vegas and Phoenix home prices have gone up a lot in one year.

Jacksonville,FL is another area that looks promising. 
Just looking at one online priced at $23,000 that sold for $154,000 in 2006.   4 bed / 2 full bath
1,966 sqft    
Cheapest 4bedroom for rent on craigslist in the same zipcode is $975/mo.

I agree though Texas and CA you will have a harder time finding properties under 31k that cash flow.

$ 31,000 good starting point?

Most Popular Reply