$20,000 Cash...What Do I Do?

[Anthony Sorrentino]

Greetings All!

So here is the scoop. I have $20,000 cash and was thinking of investing in real estate somehow. The issue is I am not sure how to use that money in real estate. Do I become partners with someone and both of us invest cash and time and we get a return that we split? Or do I loan out just the cash and get a return on that? or should I buy a super cheap run-down fixer-upper? Maybe there is another path altogether, but that's why I am asking here. I am located in the Boston area.

IF anyone has any suggestions on how I can smartly go about investing this money, I am all ears. My goal overall is to make some kind of return on the money wether I own and hold onto a piece of the real estate or not.

Thanks!

[Erik W.]

@Anthony Sorrentino, I'm glad to see you're thinking about alternatives to owning a house outright, because as others have said, $20K will barely get you a 5% down payment on MA property in some areas.

There are TONS of ways to make money in "real estate."  Most folks here are limited to thinking about owning doors, but you can do a lot.  For example...

Strategy 1: Can you RENT a home for $1,000 / month, with permission to sub-lease, and set it up via short-term rental?  This is called "arbitrage" or as some call it "the spread" method of investing.  You lease for $1000, then rent it out to short-term corporate tenants ($1800/month), or for 3 months at a time to an insurance company looking to temporarily house their clients who lost their home in a fire ($2,000/month) or AirBnB/VRBO (vacation rentals) for $150/night ($3000 per month @ 20 days occupied) + cleaning fees.  The repairs, taxes, and insurance stay on the owner.  Your $20K gives you 20 months + if you reinvest the profits you can keep on churning that money and extending the deal.

Strategy 2: Open-air storage.  Can you find a small commercial lost (1/2 acre) and put a fence around it, then lease it out to folks who will pay $100/month to store their boat, RV, camper?  You might need more than $20K, but probably not a TON more.  Maybe find a partner and each put up 50%....could you do it for $40K?

Strategy 3: Notes.  Discount/non-performing notes can often be purchased for 10-30 cents on the dollar, so you could lock up some good 1st position notes on well-located property for not a lot.  Then either flip those notes to other investors or hang onto them and foreclose.  Takes a lot more specialization, but the good news here is that beause it is harder fewer people are doing it.  Less competition....

So there are just a few methods.  I bet if you think about it, Google a bit, and talk to folks in the industry you can find a dozen more ways to leverage just those cash funds into a nice return while you work up to owning dirt, sticks and bricks.